<PAGE>
As filed with the Securities and Exchange
Commission on October 29, 1999
File No. 333-08153
811-07707
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 6 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7 X
ALLIANCE REAL ESTATE INVESTMENT 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
_______________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Copies of Communications to:
Thomas G. MacDonald
Seward & Kissel LLP
One Battery Park Plaza
New York, New York 10004
It is proposed that this filing will become effective (check
appropriate box)
<PAGE>
_____immediately upon filing pursuant to paragraph (b)
__X__on November 1, 1999 pursuant to paragraph (b)
_____60 days after filing pursuant to paragraph (a)(1)
_____on (date) pursuant to paragraph (a)(1)
_____75 days after filing pursuant to paragraph (a)(2)
_____on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
_____ This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
<PAGE>
THE ALLIANCE STOCK FUNDS
The Alliance Stock Funds provide a broad selection of investment alternatives
to investors seeking capital growth or high total return.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
Prospectus and Application
November 1, 1999
DOMESTIC STOCK FUNDS
o Alliance Premier Growth Fund
o Alliance Health Care Fund
o Alliance Growth Fund
o Alliance Technology Fund
o Alliance Quasar Fund
o The Alliance Fund
TOTAL RETURN FUNDS
o Alliance Growth & Income Fund
o Alliance Balanced Shares
o Alliance Utility Income Fund
o Alliance Real Estate
Investment Fund
GLOBAL STOCK FUNDS
o Alliance New Europe Fund
o Alliance Worldwide
Privatization Fund
o Alliance International
Premier Growth Fund
o Alliance Global Small Cap Fund
o Alliance International Fund
o Alliance Greater China '97 Fund
o Alliance All-Asia Investment Fund
o Alliance Global Environment Fund
AllianceCapital [logo]
1
INVESTMENT PRODUCTS OFFERED
o ARE NOT FDIC INSURED
o MAY LOSE VALUE
o ARE NOT BANK GUARANTEED
2
TABLE OF CONTENTS
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Page
RISK/RETURN SUMMARY 3
Domestic Stock Funds 4
Total Return Funds 10
Global Stock Funds 14
Summary of Principal Risks 22
Principal Risks by Fund 23
FEES AND EXPENSES OF THE FUNDS 24
GLOSSARY 27
DESCRIPTION OF THE FUNDS 28
Investment Objectives and Policies 28
Description of Investment Practices 41
Additional Risk Considerations 48
MANAGEMENT OF THE FUNDS 53
PURCHASE AND SALE OF SHARES 56
How The Funds Value Their Shares 56
How To Buy Shares 57
How to Exchange Shares 57
How To Sell Shares 57
DIVIDENDS, DISTRIBUTIONS AND TAXES 58
DISTRIBUTION ARRANGEMENTS 58
GENERAL INFORMATION 59
FINANCIAL HIGHLIGHTS 61
APPENDIX A--ADDITIONAL INFORMATION ABOUT
THE UNITED KINGDOM, JAPAN, AND GREATER CHINA COUNTRIES 73
The Funds' investment adviser is Alliance Capital Management L.P., a global
investment manager providing diversified services to institutions and
individuals through a broad line of investments including more than 100 mutual
funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the Alliance Stock
Funds. You will find additional information about each Fund, including a
detailed description of the risks of an investment in each Fund, after this
Summary.
The Risk/Return Summary describes the Funds' objectives, principal investment
strategies, principal risks and fees. Each Fund's Summary page includes a short
discussion of some of the principal risks of investing in that Fund. A further
discussion of these and other risks begins on page 22.
More detailed descriptions of the Funds, including the risks associated with
investing in the Funds, can be found further back in this Prospectus. Please be
sure to read this additional information BEFORE you invest. Each of the Funds
may at times use certain types of investment derivatives such as options,
futures, forwards and swaps. The use of these techniques involves special risks
that are discussed in this Prospectus.
The Risk/Return Summary includes a table for each Fund showing its average
annual returns and a bar chart showing its annual returns. The table and bar
chart provide an indication of the historical risk of an investment in each
Fund by showing:
. how the Fund's average annual returns for one, five, and 10 years (or over
the life of the Fund if the Fund is less than 10 years old) compare to those of
a broad based securities market index; and
. changes in the Fund's performance from year to year over 10 years (or over
the life of the Fund if the Fund is less than 10 years old).
A Fund's past performance, of course, does not necessarily indicate how it will
perform in the future. As with all investments, you may lose money by investing
in the Funds.
3
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range
of alternative approaches to investing primarily in U.S. equity markets.
ALLIANCE PREMIER GROWTH FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL BY INVESTING
PREDOMINANTLY IN EQUITY SECURITIES OF A LIMITED NUMBER OF LARGE, CAREFULLY
SELECTED, HIGH-QUALITY U.S. COMPANIES THAT ARE JUDGED LIKELY TO ACHIEVE
SUPERIOR EARNINGS GROWTH.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of U.S. companies. Unlike most
equity funds, the Fund focuses on a relatively small number of intensively
researched companies. Alliance selects the Fund's investments from a research
universe of more than 600 companies that have strong management, superior
industry positions, excellent balance sheets and superior earnings growth
prospects.
Normally, the Fund invests in about 40-60 companies, with the 25 most highly
regarded of these companies usually constituting approximately 70% of the
Fund's net assets. During market declines, while adding to positions in favored
stocks, the Fund becomes somewhat more aggressive, gradually reducing the
number of companies represented in its portfolio. Conversely, in rising
markets, while reducing or eliminating fully valued positions, the Fund becomes
somewhat more conservative, gradually increasing the number of companies
represented in its portfolio. Through this approach, Alliance seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets. The Fund also may invest up to 20% of its net assets in
convertible securities.
Among the principal risks of investing in the Fund is market risk. Because the
Fund invests in a smaller number of securities than many other equity funds,
your investment has the risk that changes in the value of a single security may
have a more significant effect, either negative or positive, on the Fund's net
asset value.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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SINCE
1 YEAR 5 YEARS INCEPTION
CLASS A 42.97% 26.65% 24.38%
CLASS B 44.33% 26.95% 24.48%
CLASS C 47.31% 26.97% 24.48%
RUSSELL 1000 GROWTH INDEX 38.71% 25.70% 21.94%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception date of Class A and Class B shares is 9/28/92.
Index returns are from month-end of applicable class inception date.
Performance information for periods prior to the inception of Class C shares
(5/3/93) is the performance of the Fund's Class A shares adjusted to reflect
the higher expense ratio of Class C shares. The average annual total return for
Class C since its actual inception date was 26.35%. Index return for the
comparable period was 23.66%.
BAR CHART
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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 9/30/99, the year-to-date unannualized return for Class A
shares was 7.07%.
n/a n/a n/a n/a 9.98 -5.80 46.87 24.14 32.67 49.31
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 31.05%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -12.10%, 3RD QUARTER, 1998.
4
ALLIANCE HEALTH CARE FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND, SECONDARILY,
CURRENT INCOME.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
Under normal circumstances the Fund invests at least 65%, and normally
substantially all, of the value of its total assets in securities issued by
companies principally engaged in health care and health care-related industries
("Health Care Industries") (companies principally engaged in the discovery,
development, provision, production or distribution of products and services
that relate to the diagnosis, treatment and prevention of diseases or other
medical disorders). Although the payment of dividends will be a factor
considered in the selection of investments for the Fund, the Fund seeks
primarily to take advantage of capital appreciation opportunities identified by
Alliance in emerging technologies and services in Health Care Industries by
investing in companies which are expected to profit from the development of new
products and services for these industries. Under normal circumstances the Fund
invests primarily in the equity securities of U.S. companies. The Fund may
invest up to 40% of its total assets in securities of non-U.S. companies and
other foreign securities. The Fund may invest in new, smaller or less-seasoned
companies as well as in larger, established companies in Health Care Industries.
Among the principal risks of investing in the Fund are market risk and sector
risk. Unlike many other equity funds, the Fund invests in the securities of
companies principally engaged in Health Care Industries. As a result, certain
economic conditions and market changes that affect those industries may have a
more significant effect on the Fund's net asset value than on the value of a
more broadly diversified fund. For example, the Fund's share price could be
affected by changes in competition, legislation or government regulation,
government funding, product liability and other litigation, the obsolescence or
development of products, or other factors specific to the health care and
health sciences industries. The Fund's investments in foreign securities have
foreign risk and currency risk. The Fund's investment in small- to
mid-capitalization companies have capitalization risk. These investments may be
more volatile than investments in large-cap companies.
BAR CHART AND PERFORMANCE TABLE:
There is no bar chart or performance table for the Fund because it has not
completed a full calendar year of operations.
5
ALLIANCE GROWTH FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. CURRENT INCOME
IS INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of companies with favorable
earnings outlooks and whose long-term growth rates are expected to exceed that
of the U.S. economy over time. The Fund emphasizes investments in large- and
mid-cap companies. The Fund also may invest up to 25% of its total assets in
lower-rated fixed-income securities and convertible bonds and generally up to
15% of its total assets in foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile than investments in large-cap
companies. To the extent the Fund invests in lower-rated fixed-income
securities and convertible bonds, your investment may have interest rate or
credit risk. The Fund's investments in foreign securities have foreign risk and
currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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1 YEAR 5 YEARS 10 YEARS
CLASS A 22.71% 19.72% 21.54%
CLASS B 23.23% 19.93% 20.91%
CLASS C 26.25% 19.92% 20.91%
S&P 500 INDEX 28.60% 24.05% 19.19%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class A shares
(9/4/90) and Class C shares (8/2/93) is the performance of the Fund's Class B
shares adjusted, in the case of Class A shares, to reflect the lower expense
ratio of Class A shares. The average annual total returns for Class A and Class
C shares since their actual inception dates were 23.34% and 20.22%,
respectively. Index returns for the comparable periods (which date from
month-end following applicable Class inception date) were 21.37% and 22.76%,
respectively.
BAR CHART
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The annual returns in the bar chart are for the Fund's Class B shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown. Through 9/30/99, the year-to-date unannualized return for Class B
shares was 2.42%.
27.94 -7.96 62.39 9.81 28.21 -1.84 28.65 22.32 26.22 27.23
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year End
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 29.47%, 1ST QUARTER, 1991; AND WORST QUARTER WAS DOWN
- -20.45%, 3RD QUARTER, 1990.
6
ALLIANCE TECHNOLOGY FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL. CURRENT INCOME IS
INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in securities of companies that use technology
extensively in the development of new or improved products or processes. Within
this framework, the Fund may invest in any company and industry and in any type
of security with potential for capital appreciation. It invests in well-known,
established companies or in new or unseasoned companies. The Fund also may
invest in debt securities and up to 10% of its total assets in foreign
securities.
Among the principal risks of investing in the Fund is market risk. In addition,
technology stocks, especially those of smaller, less-seasoned companies, tend
to be more volatile than the overall stock market. To the extent the Fund
invests in debt and foreign securities, your investment has interest rate risk,
credit risk, currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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1 YEAR 5 YEARS 10 YEARS
CLASS A 56.22% 29.58% 23.32%
CLASS B 57.98% 29.81% 23.38%
CLASS C 60.94% 29.81% 23.21%
S&P 500 INDEX 28.60% 24.05% 19.19%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B and Class
C shares (5/3/93) is the performance of the Fund's Class A shares adjusted to
reflect the higher expense ratio of Class B and Class C shares. The average
annual total returns for Class B and Class C since their actual inception dates
were 30.89% and 30.88%, respectively. Index returns for the comparable periods
(which date from month-end following applicable Class inception date) were
22.38%.
BAR CHART
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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 9/30/99, the year-to-date unannualized return for Class A
shares was 18.82%.
6.00 -3.08 54.24 15.50 21.63 28.51 45.80 19.41 4.54 63.14
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 39.86%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -33.21%, 3RD QUARTER, 1990.
7
ALLIANCE QUASAR FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL BY PURSUING AGGRESSIVE
INVESTMENT POLICIES. CURRENT INCOME IS INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund generally invests in a widely diversified portfolio of equity
securities spread among many industries that offer the possibility of
above-average earnings growth. The Fund currently emphasizes investment in
small-cap companies. The Fund invests in well-known and established companies
and in new and unseasoned companies. The Fund can invest in the equity
securities of any company and industry and in any type of security with
potential for capital appreciation. When selecting securities, Alliance
considers the economic and political outlook, the values of specific securities
relative to other investments, trends in the determinants of corporate profits,
and management capabilities and practices. The Fund also may invest in
non-convertible bonds, preferred stocks, and foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in smaller companies tend to be more volatile than investments in large-cap or
mid-cap companies. To the extent the Fund invests in non-convertible bonds,
preferred stocks, and foreign stocks, your investment has interest rate risk,
credit risk, foreign risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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1 YEAR 5 YEARS 10 YEARS
CLASS A -8.64% 14.23% 11.84%
CLASS B -8.90% 14.35% 11.70%
CLASS C -6.19% 14.36% 11.55%
RUSSELL 2000 INDEX -2.55% 11.87% 12.92%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales charge
as well as conversion of Class B shares to Class A shares after the applicable
period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B shares
(9/17/90) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 13.66% and 15.96%, respectively. Index returns for
the comparable periods (which date from month-end following applicable Class
inception date) were 17.50% and 12.86%, respectively.
BAR CHART
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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 9/30/99, the year-to-date unannualized return for Class A
shares was -4.64%.
28.20 -23.44 34.27 2.81 16.16 -7.27 47.64 32.62 17.24 -4.56
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 23.10%, 1ST QUARTER, 1991; AND WORST QUARTER WAS DOWN
- -28.46%, 3RD QUARTER, 1998.
8
THE ALLIANCE FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL AND INCOME
PRIMARILY THROUGH INVESTMENTS IN COMMON STOCKS.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund normally invests substantially all of its assets in high-quality
common stocks that Alliance expects to increase in value. The Fund may invest
in a broad range of companies, from large to small, but tends to emphasize
attractive opportunities in mid-cap companies. While the Fund's diversified and
high-quality investments cannot prevent fluctuations in market values, they
tend to limit investment risk and contribute to achieving the Fund's objective.
The Fund also may invest in convertible securities, U.S. Government securities,
and foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile than investments in large-cap
companies. To the extent the Fund invests in convertible securities and U.S.
Government securities, your investment may have interest rate or credit risk.
The Fund's investments in foreign securities have foreign risk and currency
risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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1 YEAR 5 YEARS 10 YEARS
CLASS A -6.90% 14.39% 15.02%
CLASS B -7.00% 14.43% 14.87%
CLASS C -4.62% 14.35% 14.85%
S&P MIDCAP 400 INDEX 19.11% 18.84% 19.29%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B shares
(3/4/91) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 14.38% and 15.19%, respectively. Index returns for
the comparable periods (which date from month-end following applicable Class
inception date) were 18.35% and 18.39%, respectively.
BAR CHART
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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 9/30/99, the year-to-date unannualized return for Class A
shares was 5.92%.
23.42 -4.36 33.91 14.70 14.26 -2.51 34.84 17.54 36.01 -2.72
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 23.72%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -24.32%, 3RD QUARTER, 1998.
9
TOTAL RETURN FUNDS
The Total Return Funds offer investors seeking both growth of capital and
current income a range of investment alternatives.
ALLIANCE GROWTH & INCOME FUND
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS APPRECIATION THROUGH INVESTMENTS PRIMARILY
IN DIVIDEND-PAYING COMMON STOCKS OF GOOD QUALITY, ALTHOUGH THE FUND ALSO MAY
INVEST IN FIXED-INCOME AND CONVERTIBLE SECURITIES.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in dividend-paying common stocks of large,
well-established "blue-chip" companies. The Fund also may invest in
fixed-income and convertible securities and in securities of foreign issuers.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. The Fund's investments in foreign securities have
currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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1 YEAR 5 YEARS 10 YEARS
CLASS A 16.14% 19.62% 16.03%
CLASS B 16.24% 19.73% 15.80%
CLASS C 19.59% 19.79% 15.64%
RUSSELL 1000 VALUE INDEX 15.63% 20.85% 17.39%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B shares
(2/8/91) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 15.76% and 18.76%, respectively. Index returns for
the comparable periods (which date from month-end following applicable Class
inception date) were 18.86% and 19.90%, respectively.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was 3.15%.
25.56 -1.69 27.08 4.52 9.96 -4.20 37.86 24.13 28.86 21.23
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 23.25%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -13.82%, 3RD QUARTER, 1998.
10
ALLIANCE BALANCED SHARES
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OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS HIGH RETURN THROUGH A COMBINATION OF CURRENT
INCOME AND CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in a diversified portfolio of equity and fixed-income
securities. The percentage of the Fund's assets invested in each type of
security will vary, but the Fund will not purchase a security if as a result
less than 25% of the Fund's total assets will be invested in fixed-income
senior securities. The Fund invests in common and preferred stocks, U.S.
Government and agency securities, bonds and senior debt securities. The Fund's
investments in each type of security depends on current economic conditions and
market outlooks. The Fund also may invest up to 15% of its total assets in
foreign equity and fixed-income securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk, allocation risk and credit risk. To the extent the Fund invests in
foreign securities, your investment has currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
CLASS A 10.84% 12.95% 11.25%
CLASS B 10.78% 13.04% 11.11%
CLASS C 13.89% 13.08% 10.96%
S&P 500 INDEX 28.60% 24.05% 19.19%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B shares
(2/4/91) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 11.87% and 12.75%, respectively. Index returns for
the comparable periods (which date from month-end following applicable Class
inception date) were 19.56% and 22.38%, respectively.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was -0.17%.
14.12 -2.20 20.47 6.81 9.93 -5.79 26.64 9.36 27.13 15.75
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 13.45%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -8.21%, 3RD QUARTER, 1990.
11
ALLIANCE UTILITY INCOME FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS CURRENT INCOME AND CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY AND FIXED-INCOME SECURITIES OF COMPANIES IN THE
UTILITIES INDUSTRY.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in income-producing equity securities. The Fund
invests in securities of utility companies in the electric, telecommunications,
gas, and water utility industries. The Fund may invest in both U.S. and foreign
utility companies, although the Fund will limit its investments in issuers in
any one foreign country to no more than 15% of its total assets. The Fund may
maintain up to 35% of its net assets in lower-rated securities and up to 30% of
its net assets in convertible securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in companies in a specific industry, there is the risk that factors
affecting utility companies will have a significant effect on the value of the
Fund's investments. To the extent the Fund invests in lower-rated securities,
your investment is subject to more credit risk than a fund that invests in
higher-rated securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR 5 YEARS INCEPTION
CLASS A 19.09% 13.02% 13.44%
CLASS B 19.46% 13.23% 13.56%
CLASS C 22.42% 13.25% 13.65%
NYSE UTILITIES INDEX 33.04% 14.17% 12.58%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception dates are 10/18/93 for Class A shares and Class B
shares and 10/27/93 for Class C shares. Index return is from 10/31/93.
BAR CHART
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 9/30/99, the year-to-date unannualized return for
Class A shares was 7.69%.
n/a n/a n/a n/a n/a -10.94 22.93 8.28 30.65 24.38
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 15.65%, 4TH QUARTER, 1997; AND WORST QUARTER WAS DOWN
- -7.50%, 1ST QUARTER, 1994.
12
ALLIANCE REAL ESTATE INVESTMENT FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN FROM LONG-TERM GROWTH OF
CAPITAL AND INCOME PRINCIPALLY THROUGH INVESTING IN EQUITY SECURITIES OF
COMPANIES THAT ARE PRIMARILY ENGAGED IN OR RELATED TO THE REAL ESTATE INDUSTRY.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of real estate investment
trusts or "REITs" and other real estate industry companies. The Fund invests in
real estate companies that Alliance believes have strong property fundamentals
and management teams. The Fund seeks to invest in real estate companies whose
underlying portfolios are diversified geographically and by property type. The
Fund may invest up to 35% of its total assets in mortgage-backed securities,
which are securities that directly or indirectly represent participations in,
or are collateralized by and payable from, mortgage loans secured by real
property.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in the real estate market, it has many of the same risks as direct
ownership of real estate including the risk that the value of real estate could
decline due to a variety of factors affecting the real estate market. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws. Because the Fund invests in mortgage-backed securities, it is subject to
the risk that mortgage loans will be prepaid when interest rates decline,
forcing the Fund to reinvest in securities with lower interest rates. For this
and other reasons, mortgage-backed securities may have significantly greater
price and yield volatility than traditional debt securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR INCEPTION
CLASS A -23.59% 5.43%
CLASS B -23.85% 5.91%
CLASS C -21.52% 6.77%
S&P 500 INDEX 28.60% 31.37%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception dates are 10/1/96 for Class A, Class B and Class C
shares. Index return is from 10/31/96.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was -5.26%.
n/a n/a n/a n/a n/a n/a n/a n/a 22.98 -20.22
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 14.55%, 3RD QUARTER, 1997; AND WORST QUARTER WAS DOWN
- -12.33%, 3RD QUARTER, 1998.
13
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors seeking long-term capital appreciation a
range of alternative approaches to investing in foreign securities.
ALLIANCE NEW EUROPE FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION THROUGH
INVESTMENTS PRIMARILY IN THE EQUITY SECURITIES OF COMPANIES BASED IN EUROPE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of European companies. The Fund
diversifies its investments among a number of European countries and normally
invests in companies based in at least three of these countries, although it
may invest 25% or more of its assets in issuers in a single country. The Fund
may invest up to 35% of its total assets in high-quality U.S. Dollar or foreign
currency denominated fixed-income securities issued or guaranteed by European
governmental entities, European or multinational companies, or supranational
organizations. At December 31, 1998, the Fund had approximately 26% of its
assets invested in securities of United Kingdom issuers.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, the Fund's investments in U.S. Dollar or
foreign currency denominated fixed-income securities have interest rate and
credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR 5 YEARS INCEPTION
CLASS A 19.67% 15.92% 11.28%
CLASS B 20.12% 16.10% 11.43%
CLASS C 23.10% 16.11% 11.26%
MSCI EUROPE INDEX 28.91% 19.53% 15.40%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception date of Class A shares is 4/2/90. Index returns
are from month-end of applicable class inception date.
Performance information for periods prior to the inception of Class B shares
(3/5/91) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 13.28% and 17.74%, respectively. Index returns for
the comparable periods were 16.58% and 20.78%, respectively.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was 1.03%.
n/a n/a 3.30 -0.53 34.57 4.64 18.63 20.58 16.83 24.99
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 22.41%, 1ST QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -19.73%, 3RD QUARTER, 1998.
14
ALLIANCE WORLDWIDE PRIVATIZATION FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of companies that are
undergoing, or have undergone, privatization. The Fund also invests in
securities of companies that will benefit from privatizations. The Fund takes
advantage of investment opportunities, historically inaccessible to U.S.
individual investors, that result from the privatization of state enterprises
in both established and developing economies. Because privatizations are
integral to a country's economic restructuring, securities sold in initial
public offerings often are attractively priced to secure the issuer's
transition to private sector ownership. In addition, these enterprises often
dominate their local markets and have the potential for significant managerial
and operational efficiency gains.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in four, and usually considerably more, countries. The
Fund may invest up to 30% of its total assets in any one of France, Germany,
Great Britain, Italy, and Japan and may invest all of its assets in a single
world region. The Fund also may invest up to 35% of its total assets in debt
securities and convertible debt securities of privatized companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Investments in companies that are undergoing, or have
undergone, privatization could have more risk because they have no operating
history as a private company. In addition, the Fund's investments in U.S.
Dollar or foreign currency denominated fixed-income securities have interest
rate and credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR INCEPTION
CLASS A 4.25% 9.61%
CLASS B 4.55% 9.88%
CLASS C 7.22% 9.88%
MSCI WORLD INDEX (MINUS THE U.S.) 19.11% 8.72%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception date of Class A and Class B shares is 6/2/94.
Index returns are from month-end of applicable class inception date.
Performance information for periods prior to the inception of Class C shares
(2/8/95) is the performance of the Fund's Class A shares adjusted to reflect
the higher expense ratio of Class C shares. The average annual total return for
Class C since its actual inception date was 13.11%. Index return for the
comparable period was 11.60%.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was 16.54%.
n/a n/a n/a n/a n/a n/a 4.91 23.14 13.18 8.92
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 16.49%, 1ST QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -17.44%, 3RD QUARTER, 1998.
15
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL BY INVESTING
PREDOMINANTLY IN EQUITY SECURITIES OF A LIMITED NUMBER OF CAREFULLY SELECTED
NON-U.S. COMPANIES THAT ARE JUDGED LIKELY TO ACHIEVE SUPERIOR EARNINGS GROWTH.
CURRENT INCOME IS INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of comparatively large,
high-quality, non-U.S. companies. The Fund invests in at least four, and
usually considerably more, countries. Normally, the Fund invests no more than
15% of its total assets in issuers of any one foreign country, but may invest
up to 25% of its total assets in each of Canada, France, Germany, Italy, Japan,
The Netherlands, Switzerland and the United Kingdom. Unlike more typical
international equity funds, the Fund focuses on a relatively small number of
intensively researched companies. Alliance selects the Fund's investments from
a research universe of approximately 900 companies.
Normally, the Fund invests in about 40 companies, with the 30 most highly
regarded of these companies usually constituting approximately 70%, and often
more, of the Fund's net assets. The Fund invests in companies with market
values generally in excess of $10 billion. Alliance may take advantage of
market volatility to adjust the Fund's portfolio positions. To the extent
consistent with local market liquidity considerations, the Fund strives to
capitalize on apparently unwarranted price fluctuations, both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. The
Fund invests primarily in equity securities and also may invest in convertible
securities.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, since the Fund invests in a smaller number
of securities than many other international equity funds, changes in the value
of a single security may have a more significant effect, either negative or
positive, on the Fund's net asset value.
BAR CHART AND PERFORMANCE TABLE:
There is no bar chart or performance table for the Fund because it has not
completed a full calendar year of operations.
16
ALLIANCE GLOBAL SMALL CAP FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL THROUGH
INVESTMENT IN A GLOBAL PORTFOLIO OF EQUITY SECURITIES OF SELECTED COMPANIES
WITH RELATIVELY SMALL MARKET CAPITALIZATIONS.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of global companies, both
domestic and foreign, with relatively small market capitalizations. The Fund's
investments emphasize companies that are in the smallest 20% of the U.S. stock
market (or less than approximately $1.5 billion). Although these companies are
small by U.S. standards, they may be among the largest companies in their own
countries. The Fund may invest up to 35% of its total assets in securities of
companies whose market capitalizations exceed the Fund's size standard. The
Fund invests in at least three countries, including the U.S.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Investments in smaller companies tend to be more
volatile than investments in large-cap or mid-cap companies.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
CLASS A -0.85% 9.19% 7.59%
CLASS B -0.86% 9.37% 7.46%
CLASS C 1.86% 9.37% 7.30%
MSCI WORLD INDEX 24.80% 16.19% 11.21%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales charge
as well as conversion of Class B shares to Class A shares after the applicable
period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B shares
(9/17/90) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 8.99% and 10.97%, respectively. Index returns for
the comparable periods (which date from month-end following applicable class
inception date) were 15.35% and 15.52%, respectively.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was 11.16%.
24.60 -24.89 25.29 -4.89 20.04 -4.55 27.18 19.37 8.08 3.56
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 18.10%, 1ST QUARTER, 1991; AND WORST QUARTER WAS DOWN
- -26.77%, 3RD QUARTER, 1990.
17
ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN FROM LONG-TERM GROWTH OF
CAPITAL AND INCOME PRIMARILY THROUGH INVESTMENT IN A BROAD PORTFOLIO OF
MARKETABLE SECURITIES OF ESTABLISHED NON-U.S. COMPANIES, COMPANIES
PARTICIPATING IN FOREIGN ECONOMIES WITH PROSPECTS FOR GROWTH, INCLUDING U.S.
COMPANIES HAVING THEIR PRINCIPAL ACTIVITIES AND INTERESTS OUTSIDE THE U.S. AND
IN FOREIGN GOVERNMENT SECURITIES.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of established non-U.S.
companies, companies participating in foreign economies with prospects for
growth, including U.S. companies having their principal activities and
interests outside the U.S., and foreign government securities. The Fund
diversifies its investments broadly among countries and normally invests in
companies in at least three foreign countries, although it may invest a
substantial portion of its assets in companies in one or more foreign countries.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS
CLASS A 5.00% 5.84% 5.81%
CLASS B 4.90% 5.91% 5.60%
CLASS C 7.81% 5.88% 5.51%
MSCI EAFE INDEX 20.33% 9.50% 5.85%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Index returns are from 12/31/88.
Performance information for periods prior to the inception of Class B shares
(9/17/90) and Class C shares (5/3/93) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were 5.47% and 6.76%, respectively. Index returns for
the comparable periods (which date from month-end following applicable class
inception date) were 10.60% and 9.60%, respectively.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was 6.97%.
29.62 -20.95 7.72 -5.86 27.51 5.68 10.10 7.20 1.41 9.64
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 15.69%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -22.29%, 3RD QUARTER, 1990.
18
ALLIANCE GREATER CHINA '97 FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION THROUGH
INVESTMENT OF AT LEAST 80% OF ITS TOTAL ASSETS IN EQUITY SECURITIES OF GREATER
CHINA COMPANIES.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in equity securities of Greater China companies, which are
companies in China, Hong Kong, and Taiwan. Of these countries, the Fund expects
to invest a significant portion of its assets, which may be greater than 50%,
in Hong Kong companies and may invest all of its assets in Hong Kong companies
or companies of either of the other Greater China countries. The Fund also may
invest in convertible securities and equity-linked debt securities issued or
guaranteed by Greater China companies or Greater China Governments, their
agencies, or instrumentalities. As of December 31, 1998, the Fund had
approximately 75% of its assets invested in securities of Hong Kong companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Greater China companies, the
Fund's returns will be significantly more volatile and differ substantially
from U.S. markets generally. Your investment also has the risk that market
changes or other events affecting the Greater China countries, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. In addition, the Fund is
"non-diversified," meaning that it invests its assets in a smaller number of
companies than many other international funds. As a result, changes in the
value of a single security may have a more significant effect, either negative
or positive, on the Fund's net asset value. The Fund's investments in debt
securities have interest rate and credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR INCEPTION
CLASS A -11.98% -29.28%
CLASS B -12.36% -29.07%
CLASS C -9.89% -27.52%
MSCI CHINA FREE INDEX -43.83% -54.48%
MSCI HONG KONG INDEX -2.92% -25.58%
MSCI TAIWAN INDEX -20.64% -30.14%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales charge
as well as conversion of Class B shares to Class A shares after the applicable
period. Inception dates are 9/3/97 for Class A, Class B, and Class C shares.
Index returns are from 9/30/97.
BAR CHART
- -------------------------------------------------------------------------------
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 9/30/99, the year-to-date unannualized return for Class A
shares was 22.48%.
n/a n/a n/a n/a n/a n/a n/a n/a n/a -8.02
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 27.48%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -26.95%, 2ND QUARTER, 1998.
19
ALLIANCE ALL-ASIA INVESTMENT FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund primarily invests in securities of various types of companies based in
Asia. The Fund invests in equity securities, preferred stocks, and
equity-linked debt securities issued by Asian companies and may invest more
than 50% of its total assets in equity securities of Japanese issuers. The Fund
also may invest up to 35% of its total assets in debt securities issued or
guaranteed by Asian companies or by Asian governments, their agencies or
instrumentalities, and may invest up to 25% of its net assets in convertible
securities. At December 31, 1998, the Fund had approximately 60% of its total
assets invested in securities of Japanese companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Asian and Pacific region
countries and emerging markets, the Fund's returns will be significantly more
volatile and may differ substantially from the overall U.S. market generally.
Your investment has the risk that market changes or other factors affecting
Asian and Pacific region countries and other emerging markets, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. To the extent that the Fund
invests a substantial amount of its assets in Japanese companies, your
investment has the risk that market changes or other events affecting that
country may have a more significant effect on the Fund's net asset value. In
addition, the Fund's investments in debt securities have interest rate and
credit risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR INCEPTION
CLASS A -16.07% -10.73%
CLASS B -16.63% -10.41%
CLASS C -13.74% -10.34%
MSCI ALL COUNTRY ASIA PACIFIC INDEX 2.03% -8.49%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception dates are 11/28/94 for Class A, Class B, and Class
C shares. Index return is from 11/30/94.
BAR CHART
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 9/30/99, the year-to-date unannualized return for
Class A shares was 57.59%.
n/a n/a n/a n/a n/a n/a 10.21 4.58 -35.10 -12.34
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 13.67%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -18.81%, 4TH QUARTER, 1997.
20
ALLIANCE GLOBAL ENVIRONMENT FUND
- -------------------------------------------------------------------------------
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION THROUGH
INVESTMENT OF SUBSTANTIALLY ALL OF ITS ASSETS IN EQUITY SECURITIES OF COMPANIES
THAT ARE EXPECTED TO BENEFIT FROM ADVANCES OR IMPROVEMENTS IN PRODUCTS,
PROCESSES OR SERVICES INTENDED TO FOSTER THE PROTECTION OF THE ENVIRONMENT.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in environmental companies, which are companies
whose principal business involves the sale of environmental protection systems
or services. The Fund also invests in companies whose principal business lies
outside the environmental sector but who anticipate environmental regulations
or consumer preferences through the development of new products or services
that would contribute to a cleaner and healthier environment. The Fund will
invest substantially all of its assets in these two types of companies. The
Fund invests in securities of companies in at least three, and normally
considerably more, countries. At December 31, 1998, the Fund had approximately
82% invested in equity securities of U.S. companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in non-U.S. companies and in
specific types of companies that provide environmental services, the Fund's
returns will be more volatile and differ, sometimes substantially, from the
overall U.S. market generally. The Fund's investments also have the risk that
government regulations or other action could negatively affect the business of
environmental companies.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
- -------------------------------------------------------------------------------
SINCE
1 YEAR 5 YEARS INCEPTION
CLASS A -7.60% 11.03% 4.29%
CLASS B -6.16% 11.83% 4.46%
CLASS C -4.72% 11.83% 4.44%
S&P 500 INDEX 28.60% 24.05% 18.61%
Average annual total returns are for the periods ended December 31, 1998 and
reflect imposition of the maximum front-end or contingent deferred sales
charges as well as conversion of Class B shares to Class A shares after the
applicable period. Inception date of Class A shares is 6/1/90. Index returns
are from month-end of applicable class inception date.
Performance information for periods prior to the inception of Class B shares
(10/6/97) and Class C shares (11/5/97) is the performance of the Fund's Class A
shares adjusted to reflect the higher expense ratio of Class B and Class C
shares. The average annual total returns for Class B and Class C since their
actual inception dates were -7.39%, and -4.28%, respectively. Index returns for
the comparable periods were 30.76% and 28.23%, respectively.
BAR CHART
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 9/30/99, the year-to-date unannualized return for
Class A shares was 1.40%.
n/a n/a 5.99 -15.18 -0.44 -2.12 19.30 29.95 20.28 -3.49
- -----------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
Calendar Year Ended
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 13.50%, 2ND QUARTER, 1996; AND WORST QUARTER WAS DOWN
- -19.87%, 3RD QUARTER, 1998.
21
SUMMARY OF PRINCIPAL RISKS
The value of your investment in a Fund will change with changes in the values
of that Fund's investments. Many factors can affect those values. In this
Summary, we describe the principal risks that may affect a Fund's portfolio as
a whole. These risks and the Funds particularly subject to these risks appear
in a chart at the end of the section. All Funds could be subject to additional
principal risks because the types of investments made by each Fund can change
over time. This Prospectus has additional descriptions of the types of
investments that appear in bold type in the discussions under "Description of
Investment Practices" or "Additional Risk Considerations." These sections also
include more information about the Funds, their investments, and related risks.
MARKET RISK
This is the risk that the value of a Fund's investments will fluctuate as the
stock or bond markets fluctuate and that prices overall will decline over
short- or long-term periods. All of the Alliance Stock Funds are subject to
market risk.
SECTOR RISK
This is the risk of investments in a particular industry sector. Market or
economic factors affecting that industry sector could have a major effect on
the value of a Fund's investments. Funds particularly subject to this risk are
ALLIANCE HEALTH CARE FUND, ALLIANCE TECHNOLOGY FUND, ALLIANCE UTILITY INCOME
FUND, ALLIANCE REAL ESTATE INVESTMENT FUND, ALLIANCE WORLDWIDE PRIVATIZATION
FUND and ALLIANCE GLOBAL ENVIRONMENT FUND. This risk may be greater for
ALLIANCE TECHNOLOGY FUND because technology stocks, especially those of
smaller, less-seasoned companies, tend to be more volatile than the overall
market.
CAPITALIZATION RISK
This is the risk of investments in small- to mid-capitalization companies.
Investments in mid-cap companies may be more volatile than investments in
large-cap companies. ALLIANCE GROWTH FUND and THE ALLIANCE FUND are
particularly subject to this risk. Investments in small-cap companies tend to
be more volatile than investments in large-cap or mid-cap companies. A Fund's
investments in smaller capitalization stocks may have additional risks because
these companies often have limited product lines, markets, or financial
resources. ALLIANCE HEALTH CARE FUND, ALLIANCE QUASAR FUND and ALLIANCE GLOBAL
SMALL CAP FUND are particularly subject to this risk.
INTEREST RATE RISK
This is the risk that changes in interest rates will affect the value of a
Fund's investments in income-producing, fixed-income (i.e., debt) securities.
Increases in interest rates may cause the value of a Fund's investments to
decline and this decrease in value may not be offset by the higher interest
rate income. Interest rate risk is particularly applicable to Funds that invest
in fixed-income securities and is greater for those Alliance Stock Funds that
invest a substantial portion of their assets in fixed-income securities, such
as ALLIANCE GROWTH AND INCOME FUND, ALLIANCE BALANCED SHARES and ALLIANCE
UTILITY INCOME FUND. Interest rate risk is greater for those Funds that invest
in LOWER-RATED SECURITIES or comparable unrated securities ("junk bonds") such
as ALLIANCE UTILITY INCOME FUND. ALLIANCE REAL ESTATE INVESTMENT FUND also has
more exposure to interest rate risk because it invests in real estate industry
companies and in mortgage-backed securities.
CREDIT RISK
This is the risk that the issuer of a security or the other party to an
over-the-counter transaction will be unable or unwilling to make timely
payments of interest or principal, or to otherwise honor its obligations. The
degree of risk for a particular security may be reflected in its CREDIT RATING.
Credit risk is applicable to Funds that invest in fixed-income securities and
is greater for those Alliance Stock Funds that invest a substantial portion of
their assets in LOWER-RATED SECURITIES, such as ALLIANCE UTILITY INCOME FUND.
FOREIGN RISK
This is the risk of investments in issuers located in foreign countries. All
Alliance Stock Funds with FOREIGN SECURITIES are subject to this risk,
including, in particular, ALLIANCE HEALTH CARE FUND, ALLIANCE NEW EUROPE FUND,
ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL PREMIER GROWTH
FUND, ALLIANCE GLOBAL SMALL CAP FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE
GREATER CHINA '97 FUND, ALLIANCE ALL-ASIA INVESTMENT FUND and ALLIANCE GLOBAL
ENVIRONMENT FUND. Funds investing in foreign securities may experience more
rapid and extreme changes in value than Funds with investments solely in
securities of U.S. companies. This is because the securities markets of many
foreign countries are relatively small, with a limited number of companies
representing a small number of industries. Additionally, foreign securities
issuers are usually 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. Also,
nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments could adversely affect a Fund's
investments in a foreign country. In the event of nationalization,
expropriation, or other confiscation, a Fund could lose its entire investment.
COUNTRY OR GEOGRAPHIC RISK
This is the risk of investments in issuers located in a particular country or
geographic region. Market changes or other factors affecting that country or
region, including political instability and unpredictable economic conditions,
may have a particularly significant effect on a Fund's net asset value. The
Funds particularly subject to this risk are ALLIANCE NEW EUROPE FUND, ALLIANCE
WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE GREATER
CHINA '97 FUND and ALLIANCE ALL-ASIA INVESTMENT FUND.
22
CURRENCY RISK
This is the risk that fluctuations in the exchange rates between the U.S.
Dollar and foreign currencies may negatively affect the value of a Fund's
investments. Funds with FOREIGN SECURITIES are subject to this risk, including,
in particular, ALLIANCE HEALTH CARE FUND, ALLIANCE NEW EUROPE FUND, ALLIANCE
WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL PREMIER GROWTH FUND,
ALLIANCE GLOBAL SMALL CAP FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE GREATER
CHINA '97 FUND, ALLIANCE ALL-ASIA INVESTMENT FUND and ALLIANCE GLOBAL
ENVIRONMENT FUND.
MANAGEMENT RISK
Each Alliance Stock Fund is subject to management risk because it is an
actively managed investment portfolio. Alliance will apply its investment
techniques and risk analyses in making investment decisions for the Funds, but
there is no guarantee that its decisions will produce the intended result.
FOCUSED PORTFOLIO RISK
Funds, such as ALLIANCE PREMIER GROWTH FUND and ALLIANCE INTERNATIONAL PREMIER
GROWTH FUND, that invest in a limited number of companies, may have more risk
because changes in the value of a single security may have a more significant
effect, either negative or positive, on the Fund's net asset value. Similarly,
ALLIANCE GREATER CHINA '97 FUND may have more risk because it is
"non-diversified," meaning that it can invest more of its assets in a smaller
number of companies than many other international funds.
ALLOCATION RISK
ALLIANCE BALANCED SHARES has the risk that the allocation of its investments
between equity and debt securities may have a more significant effect on the
Fund's net asset value when one of these asset classes is performing more
poorly than the other.
PRINCIPAL RISKS BY FUND
- -------------------------------------------------------------------------------
The following chart summarizes the principal risks of each Fund. Risks not
marked for a particular Fund may, however, still apply to some extent to that
Fund at various times.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL- INTEREST COUNTRY OR FOCUSED
MARKET SECTOR IZATION RATE CREDIT FOREIGN GEOGRAPHIC CURRENCY MANAGE- PORTFOLIO ALLOCATION
FUND RISK RISK RISK RISK RISK RISK RISK RISK MENT RISK RISK RISK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE PREMIER
GROWTH FUND o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HEALTH
CARE FUND o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH FUND o o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE TECHNOLOGY FUND o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE QUASAR FUND o o o
- -----------------------------------------------------------------------------------------------------------------------------------
THE ALLIANCE FUND o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH AND
INCOME FUND o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE BALANCED SHARES o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE UTILITY INCOME FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE REAL ESTATE
INVESTMENT FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE NEW EUROPE FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE WORLDWIDE
PRIVATIZATION FUND o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL
SMALL CAP FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GREATER
CHINA '97 FUND o o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE ALL-ASIA
INVESTMENT FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL
ENVIRONMENT FUND o o o o o
- -----------------------------------------------------------------------------------------------------------------------------------
23
- -------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUNDS
- -------------------------------------------------------------------------------
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Funds.
SHAREHOLDER FEES (fees paid directly from your investment)
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25% None None
Maximum Deferred Sales Charge (Load) None 4.0%* 1.0%*
(as a percentage of original purchase
price or redemption proceeds,
whichever is lower)
Exchange Fee None None None
</TABLE>
* Class B shares automatically convert to Class A shares after 8 years. The
CDSC decreases over time. For Class B shares the CDSC DECREASES 1.00% ANNUALLY
TO 0% AFTER THE 4TH YEAR. For Class C shares the CDSC IS 0% after the first
year.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
and EXAMPLES
The Examples are to help you compare the cost of investing in the Funds with
the cost of investing in other funds. They assume that you invest $10,000 in
each Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. They also assume that your investment has a 5% return
each year, that the Fund's operating expenses stay the same and that all
dividends and distributions are reinvested. Your actual costs may be higher or
lower.
<TABLE>
<CAPTION>
OPERATING EXPENSES EXAMPLES
- -------------------------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE PREMIER
GROWTH FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- --------
Management fees 1.00% 1.00% 1.00% After 1 year $ 580 $ 631 $ 231 $ 331 $ 231
Distribution (12b-1) fees .33% 1.00% 1.00% After 3 years $ 906 $ 912 $ 712 $ 712 $ 712
Other expenses .26% .28% .28% After 5 years $1,254 $1,220 $1,220 $1,220 $1,220
---- ---- ---- After 10 years $2,234 $2,442(b) $2,442(b) $2,615 $2,615
Total fund
operating expenses 1.59% 2.28% 2.28%
==== ==== ====
ALLIANCE HEALTH CARE FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- --------
Management fees .95% .95% .95% After 1 year $ 667 $ 723 $ 323 $ 423 $ 323
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years(c) $1,199 $1,215 $1,015 $1,015 $1,015
Other expenses 1.40% 1.40% 1.40% After 5 years(c) $1,756 $1,731 $1,731 $1,731 $1,731
---- ---- ---- After 10 years(c) $3,271 $3,472(b) $3,472(b) $3,630 $3,630
Total fund
operating expenses 2.65% 3.35% 3.35%
==== ==== ====
Fee waiver and/or expense
reimbursement (a) (.15)% (.15)% (.15)%
Net expenses 2.50% 3.20% 3.20%
ALLIANCE GROWTH FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .70% .70% .70% After 1 year $ 544 $ 597 $ 197 $ 296 $ 196
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $ 796 $ 809 $ 609 $ 606 $ 606
Other expenses .22% .24% .23% After 5 years $1,067 $1,047 $1,047 $1,042 $1,042
---- ---- ---- After 10 years $1,840 $2,078(b) $2,078(b) $2,254 $2,254
Total fund
operating expenses 1.22% 1.94% 1.93%
==== ==== ====
ALLIANCE TECHNOLOGY FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.02% 1.02% 1.02% After 1 year $ 587 $ 642 $ 242 $ 343 $ 243
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $ 926 $ 945 $ 745 $ 748 $ 748
Other expenses .34% .37% .38% After 5 years $1,289 $1,275 $1,275 $1,280 $1,280
---- ---- ---- After 10 years $2,307 $2,545(b) $2,545(b) $2,736 $2,736
Total fund
operating expenses 1.66% 2.39% 2.40%
==== ==== ====
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 26.
24
<TABLE>
<CAPTION>
Operating Expenses Examples
- -------------------------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE QUASAR FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.04% 1.04% 1.04% After 1 year $ 582 $ 642 $ 242 $ 341 $ 241
Distribution (12b-1) fees .26% 1.00% 1.00% After 3 years $ 911 $ 945 $ 745 $ 742 $ 742
Other expenses .31% .35% .34% After 5 years $1,264 $1,275 $1,275 $1,270 $1,270
---- ---- ---- After 10 years $2,255 $2,533(b) $2,533(b) $2,716 $2,716
Total fund
operating expenses 1.61% 2.39% 2.38%
==== ==== ====
THE ALLIANCE FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .67% .67% .67% After 1 year $ 526 $ 587 $ 187 $ 287 $ 187
Distribution (12b-1) fees .20% 1.00% 1.00% After 3 years $ 739 $ 779 $ 579 $ 579 $ 579
Other expenses .16% .17% .17% After 5 years $ 969 $ 995 $ 995 $ 995 $ 995
---- ---- ---- After 10 years $1,631 $1,946(b) $1,946(b) $2,159 $2,159
Total fund
operating expenses 1.03% 1.84% 1.84%
==== ==== ====
ALLIANCE GROWTH AND
INCOME FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .48% .48% .48% After 1 year $ 516 $ 575 $ 175 $ 275 $ 175
Distribution (12b-1) fees .23% 1.00% 1.00% After 3 years $ 709 $ 742 $ 542 $ 542 $ 542
Other expenses .22% .24% .24% After 5 years $ 918 $ 933 $ 933 $ 933 $ 933
---- ---- ---- After 10 years $1,519 $1,821(b) $1,821(b) $2,030 $2,030
Total fund
operating expenses .93% 1.72% 1.72%
==== ==== ====
ALLIANCE BALANCED SHARES CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .59% .59% .59% After 1 year $ 544 $ 600 $ 200 $ 299 $ 199
Distribution (12b-1) fees .25% 1.00% 1.00% After 3 years $ 796 $ 818 $ 618 $ 615 $ 615
Other expenses .38% .38% .37% After 5 years $1,067 $1,062 $1,062 $1,057 $1,057
---- ---- ---- After 10 years $1,840 $2,102(b) $2,102(b) $2,285 $2,285
Total fund
operating expenses 1.22% 1.97% 1.96%
==== ==== ====
ALLIANCE UTILITY
INCOME FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .75% .75% .75% After 1 year $ 571 $ 623 $ 223 $ 323 $ 223
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years(c) $1,075 $1,095 $ 895 $ 897 $ 897
Other expenses 1.43% 1.46% 1.47% After 5 years(c) $1,605 $1,591 $1,591 $1,595 $1,595
---- ---- ---- After 10 years(c) $3,051 $3,275(b) $3,275(b) $3,452 $3,452
Total fund
operating expenses 2.48% 3.21% 3.22%
==== ==== ====
Waiver and/or expense
reimbursement (a) (.98)% (1.01)% (1.02)%
Net expenses 1.50% 2.20% 2.20%
==== ==== ====
ALLIANCE REAL ESTATE
INVESTMENT FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .90% .90% .90% After 1 year $ 579 $ 634 $ 234 $ 333 $ 233
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $ 903 $ 921 $ 721 $ 718 $ 718
Other expenses .38% .41% .40% After 5 years $1,249 $1,235 $1,235 $1,230 $1,230
---- ---- ---- After 10 years $2,223 $2,463(b) $2,463(b) $2,636 $2,636
Total fund
operating expenses 1.58% 2.31% 2.30%
==== ==== ====
ALLIANCE NEW EUROPE FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .95% .95% .95% After 1 year $ 600 $ 653 $ 253 $ 353 $ 253
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $ 967 $ 979 $ 779 $ 779 $ 779
Other expenses .55% .55% .55% After 5 years $1,358 $1,331 $1,331 $1,331 $1,331
---- ---- ---- After 10 years $2,451 $2,664(b) $2,664(b) $2,836 $2,836
Total fund
operating expenses 1.80% 2.50% 2.50%
==== ==== ====
ALLIANCE WORLDWIDE
PRIVATIZATION FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 612 $ 666 $ 266 $ 366 $ 266
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $1,002 $1,017 $ 817 $ 817 $ 817
Other expenses .62% .63% .63% After 5 years $1,418 $1,395 $1,395 $1,395 $1,395
---- ---- ---- After 10 years $2,573 $2,792(b) $2,792(b) $2,964 $2,964
Total fund
operating expenses 1.92% 2.63% 2.63%
==== ==== ====
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 26.
25
<TABLE>
<CAPTION>
Operating Expenses Examples
- -------------------------------------------------------- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 667 $ 723 $ 323 $ 423 $ 323
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years (c) $1,684 $1,759 $1,559 $1,532 $1,532
Other expenses 3.89% 4.14% 4.00% After 5 years (c) $2,697 $2,767 $2,767 $2,718 $2,718
---- ---- ---- After 10 years (c) $5,213 $5,501(b) $5,501(b) $5,579 $5,579
Total fund
operating expenses 5.19% 6.14% 6.00%
==== ==== ====
Waiver and/or expense
reimbursement (a) (2.69)% (2.94)% (2.80)%
Net expenses 2.50% 3.20% 3.20%
==== ==== ====
ALLIANCE GLOBAL
SMALL CAP FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 655 $ 717 $ 317 $ 418 $ 318
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $1,133 $1,169 $ 969 $ 971 $ 971
Other expenses 1.07% 1.14% 1.15% After 5 years $1,637 $1,645 $1,645 $1,649 $1,649
---- ---- ---- After 10 years $3,016 $3,271(b) $3,271(b) $3,457 $3,457
Total fund
operating expenses 2.37% 3.14% 3.15%
==== ==== ====
ALLIANCE INTERNATIONAL FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees .95% .95% .95% After 1 year $ 600 $ 664 $ 264 $ 364 $ 264
Distribution (12b-1) fees .23% 1.00% 1.00% After 3 years (c) $ 989 $1,037 $ 837 $ 839 $ 839
Other expenses .73% .79% .80% After 5 years (c) $1,402 $1,436 $1,436 $1,440 $1,440
---- ---- ---- After 10 years (c) $2,552 $2,858(b) $2,858(b) $3,066 $3,066
Total fund
operating expenses 1.91% 2.74% 2.75%
==== ==== ====
Waiver and/or expense
reimbursement (a) (.11)% (.13)% (.14)%
Net expenses 1.80% 2.61% 2.61%
==== ==== ====
ALLIANCE GREATER
CHINA '97 FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 669 $ 725 $ 325 $ 425 $ 325
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years (c) $3,430 $3,452 $3,252 $3,266 $3,266
Other expenses 18.38% 18.22% 18.41% After 5 years (c) $5,439 $5,355 $5,355 $5,371 $5,371
---- ---- ---- After 10 years (c) $8,386 $8,357(b) $8,357(b) $8,372 $8,372
Total fund
operating expenses 19.68% 20.22% 20.41%
Waiver and/or expense
reimbursement (a) (17.16)% (17.00)% (17.19)%
Net expenses 2.52% 3.22% 3.22%
==== ==== ====
ALLIANCE ALL-ASIA
INVESTMENT FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.00% 1.00% 1.00% After 1 year $ 715 $ 772 $ 372 $ 472 $ 372
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years (c) $1,623 $1,660 $1,460 $1,466 $1,466
Other expenses After 5 years (c) $2,537 $2,539 $2,539 $2,550 $2,550
Administration fees .15% .15% .15% After 10 years (c) $4,853 $5,059(b) $5,059(b) $5,221 $5,221
Other operating expenses 3.18% 3.24% 3.27%
Total other expenses 3.33% 3.39% 3.42%
Total fund
operating expenses 4.63% 5.39% 5.42%
Waiver and/or expense
reimbursement (a) (1.63)% (1.69)% (1.72)%
Net expenses 3.00% 3.70% 3.70%
==== ==== ====
ALLIANCE GLOBAL
ENVIRONMENT FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
------- ------- ------- ------- -------- --------- -------- ---------
Management fees 1.10% 1.10% 1.10% After 1 year $ 899 $ 974 $ 574 $ 661 $ 561
Distribution (12b-1) fees .30% 1.00% 1.00% After 3 years $1,848 $1,908 $1,708 $1,673 $1,673
Other expenses 3.55% 3.66% 3.53% After 5 years $2,798 $2,826 $2,826 $2,771 $2,771
---- ---- ---- After 10 years $5,176 $5,402(b) $5,402(b) $5,456 $5,456
Total fund
operating expenses 4.95% 5.76% 5.63%
==== ==== ====
</TABLE>
+ ASSUMES REDEMPTION AT END OF PERIOD.
++ ASSUMES NO REDEMPTION AT END OF PERIOD.
(A) REFLECTS ALLIANCE'S CONTRACTUAL WAIVER OF A PORTION OF ITS ADVISORY FEE
AND/OR REIMBURSEMENT OF A PORTION OF THE FUND'S OPERATING EXPENSES. THIS WAIVER
EXTENDS THROUGH THE FUND'S CURRENT FISCAL YEAR AND MAY BE EXTENDED BY ALLIANCE
FOR ADDITIONAL ONE-YEAR TERMS.
(B) ASSUMES CLASS B SHARES CONVERT TO CLASS A SHARES AFTER EIGHT YEARS.
(C) THESE EXAMPLES ASSUME THAT ALLIANCE'S AGREEMENT TO WAIVE MANAGEMENT FEES
AND/OR BEAR FUND EXPENSES IS NOT EXTENDED BEYOND ITS INITIAL PERIOD.
26
- -------------------------------------------------------------------------------
GLOSSARY
- -------------------------------------------------------------------------------
This Prospectus uses the following terms.
TYPES OF SECURITIES
CONVERTIBLE SECURITIES are fixed-income securities that are convertible into
common stock.
DEBT SECURITIES are bonds, debentures, notes, bills, loans, other direct debt
instruments, and other fixed, floating and variable rate debt obligations, but
do not include convertible securities.
DEPOSITARY RECEIPTS include American Depositary Receipts ("ADRS"), Global
Depositary Receipts ("GDRS") and other types of depositary receipts.
EQUITY SECURITIES include (i) common stocks, partnership interests, business
trust shares and other equity or ownership interests in business enterprises
and (ii) securities convertible into, and rights and warrants to subscribe for
the purchase of, such stocks, shares and interests.
FIXED-INCOME SECURITIES are debt securities and dividend-paying preferred
stocks, including floating rate and variable rate instruments.
FOREIGN GOVERNMENT SECURITIES are securities issued or guaranteed, as to
payment of principal and interest, by foreign governments, quasi-governmental
entities, governmental agencies or other governmental entities.
QUALIFYING BANK DEPOSITS are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks that have total assets of more than
$1 billion and are members of the Federal Deposit Insurance Corporation.
RULE 144A SECURITIES are securities that may be resold under Rule 144A of the
Securities Act.
U.S. GOVERNMENT SECURITIES are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
TYPES OF COMPANIES
ASIAN COMPANY is an entity that (i) is organized under the laws of an Asian
country and conducts business in an Asian country, (ii) derives 50% or more of
its total revenues from business in Asian countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in an Asian
country.
ASIAN COUNTRIES are Australia, the Democratic Socialist Republic of Sri Lanka,
the Hong Kong Special Administrative Region of the People's Republic of China
(Hong Kong), the Islamic Republic of Pakistan, Japan, the Kingdom of Thailand,
Malaysia, Negara Brunei Darussalam (Brunei), New Zealand, the People's Republic
of China, the People's Republic of Kampuchea (Cambodia), the Republic of China
(Taiwan), the Republic of India, the Republic of Indonesia, the Republic of
Korea (South Korea), the Republic of the Philippines, the Republic of
Singapore, the Socialist Republic of Vietnam and the Union of Myanmar.
BENEFICIARY COMPANIES are Eligible Companies whose principal businesses lie
outside the environmental sector but nevertheless anticipate environmental
regulations or consumer preferences through the development of new products,
processes or services that are intended to contribute to a cleaner and
healthier environment, such as companies that anticipate the demand for plastic
substitutes, aerosol substitutes, alternative fuels and processes that generate
less hazardous waste.
ELIGIBLE COMPANIES are companies expected to benefit from advances or
improvements in products, processes or services intended to foster the
protection of the environment.
ENVIRONMENTAL COMPANIES are Eligible Companies that have a principal business
involving the sale of systems or services intended to foster environmental
protection, such as waste treatment and disposal, remediation, air pollution
control and recycling.
EUROPEAN COMPANY is a company (i) organized under the laws of a European
country that issues equity or debt securities that are traded principally on a
European stock exchange, or (ii) a company that derives 50% or more of its
total revenues or profits from businesses in Europe.
GREATER CHINA COMPANY is an entity that (i) is organized under the laws of a
Greater China country and conducts business in a Greater China country, (ii)
derives 50% or more of its total revenues from businesses in Greater China
countries, or (iii) issues equity or debt securities that are traded
principally on a stock exchange in a Greater China country. A company of a
particular Greater China country is a company that meets any of these criteria
with respect to that country.
HEALTH CARE INDUSTRIES include the health care and health care-related
(including health sciences) industries. These industries are principally
engaged in the discovery, development, provision, production or distribution of
products and services that relate to the diagnosis, treatment and prevention of
diseases or other medical disorders. Companies in these fields include, but are
not limited to, pharmaceutical firms; companies that design, manufacture or
sell medical supplies, equipment and support services; companies that operate
hospitals and other health care facilities; and companies engaged in medical,
diagnostic, biochemical, biotechnological or other health sciences research and
development.
GREATER CHINA COUNTRIES are the People's Republic of China ("China"), the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong") and the Republic of China ("Taiwan").
NON-U.S. COMPANY is an entity that (i) is organized under the laws of a foreign
country and conducts business in a foreign country, (ii) derives 50% or more of
its total revenues from business in foreign countries, or (iii) issues equity
or debt
27
securities that are traded principally on a stock exchange in a foreign country.
RATING AGENCIES, RATED SECURITIES AND INDEXES
DUFF & PHELPS is Duff & Phelps Credit Rating Co.
EAFE INDEX is Morgan Stanley Capital International Europe, Australasia and Far
East ("EAFE") Index.
FITCH is Fitch IBCA, Inc.
INVESTMENT GRADE SECURITIES are fixed-income securities rated Baa and above by
Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by
Alliance to be of equivalent quality.
LOWER-RATED SECURITIES are fixed-income securities rated Ba or below by Moody's
or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be
of equivalent quality, and are commonly referred to as "JUNK BONDS."
MOODY'S is Moody's Investors Service, Inc.
PRIME COMMERCIAL PAPER is commercial paper rated Prime 1 by Moody's or A-1 or
higher by S&P or, if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
S&P is Standard & Poor's Ratings Services.
S&P 500 INDEX is S&P's 500 Composite Stock Price Index, a widely recognized
unmanaged index of market activity.
OTHER
1940 ACT is the Investment Company Act of 1940, as amended.
CODE is the Internal Revenue Code of 1986, as amended.
COMMISSION is the Securities and Exchange Commission.
EXCHANGE is the New York Stock Exchange.
SECURITIES ACT is the Securities Act of 1933, as amended.
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
This section of the Prospectus provides a more complete description of each
Fund's investment objectives, principal strategies and risks. Of course, there
can be no assurance that any Fund will achieve its investment objective.
Please note that:
. Additional discussion of the Funds' investments, including the risks of the
investments, can be found in the discussion under DESCRIPTION OF INVESTMENT
PRACTICES following this section.
. The description of the principal risks for a Fund may include risks
described in the SUMMARY OF PRINCIPAL RISKS above. Additional information about
the risks of investing in a Fund can be found in the discussion under
ADDITIONAL RISK CONSIDERATIONS.
. Additional descriptions of each Fund's strategies, investments and risks can
be found in the Fund's Statement of Additional Information or SAI.
. Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without a shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder vote.
INVESTMENT OBJECTIVES AND POLICIES
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range
of alternative approaches to investing in the U.S. equity markets.
ALLIANCE PREMIER GROWTH FUND
ALLIANCE PREMIER GROWTH FUND seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth. As a matter of fundamental policy, the Fund normally
invests at least 85% of its total assets in the equity securities of U.S.
companies. A U.S. company is a company that is organized under United States
law, has its principal office in the United States and issues equity securities
that are traded principally in the United States. Normally, about 40-60
companies will be represented in the Fund's portfolio, with the 25 most highly
regarded of these companies usually constituting approximately 70% of the
Fund's net assets. The Fund is thus atypical from most equity mutual funds in
its focus on a relatively small number of intensively researched companies. The
Fund is designed for those seeking to accumulate capital over time with less
volatility than that associated with investment in smaller companies.
Alliance's investment strategy for the Fund emphasizes stock selection and
investment in the securities of a limited number of issuers. Alliance relies
heavily upon the fundamental analysis and research of its large internal
research staff, which generally follows a primary research universe of more
than 500 companies that have strong management, superior industry positions,
excellent balance sheets and superior earnings growth prospects. An emphasis is
placed on identifying companies whose substantially above average prospective
earnings growth is not fully reflected in current market valuations.
In managing the Fund, Alliance seeks to utilize market volatility judiciously
(assuming no change in company fundamentals), striving to capitalize on
apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. The Fund
normally remains nearly fully invested and does not take significant cash
positions for market timing purposes. During market declines, while adding to
positions in favored stocks, the Fund becomes somewhat more aggressive,
gradually reducing the number of companies represented in its portfolio.
28
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund becomes somewhat more conservative, gradually increasing
the number of companies represented in its portfolio. Alliance thus seeks to
gain positive returns in good markets while providing some measure of
protection in poor markets.
Alliance expects the average market capitalization of companies represented in
the Fund's portfolio normally to be in the range, or in excess, of the average
market capitalization of companies included in the S&P 500 Index.
The Fund also may:
. invest up to 20% of its net assets in CONVERTIBLE SECURITIES;
. invest up to 5% of its net assets in RIGHTS OR WARRANTS;
. invest up to 15% of its total assets in FOREIGN SECURITIES;
. purchase and sell exchange-traded index OPTIONS and stock index FUTURES
CONTRACTS; and
. write covered exchange-traded call OPTIONS on its securities of up to 15% of
its total assets, and purchase and sell exchange-traded call and put options on
common stocks written by others of up to, for all options, 10% of its total
assets.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment has the risk that changes in the value of a
single security may have a more significant effect, either negative or
positive, on the Fund's net asset value.
ALLIANCE HEALTH CARE FUND
ALLIANCE HEALTH CARE FUND seeks capital appreciation and, secondarily, current
income. In seeking to achieve its investment objective, under normal
circumstances the Fund invests at least 65%, and normally substantially all, of
the value of its total assets in securities issued by companies principally
engaged in Health Care Industries.
The Fund seeks investments in both new, smaller and less seasoned companies and
well-known, larger and established companies. Whenever possible, investments in
new, smaller or less seasoned companies will be made with a view to benefiting
from the development and growth of new products and markets in Health Care
Industries. Investments in these companies may offer more reward but may also
entail more risk than is generally true of larger, established companies.
While the Fund anticipates that a substantial portion of its portfolio will be
invested in the securities of U.S. companies, the Fund is not limited to
investing in such securities. Many companies in the forefront of world medical
technology are located outside the United States, primarily in Japan and
Europe. Accordingly, the Fund may invest up to 40% of the value of its total
assets in foreign securities, including up to 25% in issuers located in any one
foreign country. However, no more than 5% of the value of the Fund's total net
assets may be invested in securities of issuers located in emerging market
countries. All percentage limitations are applied at the time of investment.
Although the payment of dividends will be a factor considered in the selection
of investments for the Fund, the Fund seeks primarily to take advantage of
capital appreciation opportunities identified by Alliance in emerging
technologies and services in Health Care Industries by investing in companies
that are expected to profit from the development of new products and services
for these industries. Examples of such emerging technologies and services
include:
. New methods for administering drugs to a patient, such as surgical implants
and skin patches that enhance the effectiveness of the drugs and may reduce
patient side effects by delivering the drugs in precise quantities over a
prolonged time period or by evading natural body defense mechanisms which delay
the effect of the drugs;
. Developments in medical imaging such as the application of computer
technology to the output of conventional x-ray systems that allow for
cross-sectional images of soft tissue and organs (CT scanning) and continuous
imaging (digital radiography) as well as more advanced nuclear medicine,
ultrasound and magnetic resonance imaging (MRI);
. Advances in minimally invasive surgical techniques, such as angioplasty and
related technologies for diseased blood vessels and laser beams for the eye,
general and cardiovascular surgery, which provide greater effectiveness, lower
cost and improved patient safety than more traditional surgical techniques;
. New therapeutic pharmaceutical compounds that control or alleviate disease,
including prescription and non-prescription drugs and treatment regimes for
conditions not controlled, alleviated or treatable by existing medications or
treatments and chemical or biological pharmaceuticals for use in diagnostic
testing;
. Advances in molecular biology such as signal transduction, cell adhesion and
cell to cell communication which have facilitated a rapid increase in new
classes of drugs. These have included monoclonal antibodies, bio-engineered
proteins and small molecules from novel synthesis and screening techniques;
. Genomics, which allows scientists to better understand the causes of human
diseases, and in some cases has led to the manufacture of proteins for use as
therapeutic drugs;
. Gene chips and other equipment that provides for the screening, diagnosis
and treatment of diseases;
. The introduction of large scale business efficiencies to the management of
nursing homes, acute and specialty hospitals as well as free-standing
outpatient facilities, surgical centers and rehabilitation centers;
. Adaptations of microprocessors for use by pharmaceutical manufacturers,
hospitals, doctors and others in Health Care Industries to increase
distribution efficiency;
29
. Health care delivery organizations that combine cost effectiveness with high
quality medical care and help address the rising cost of health care; and
. The sale of prescription drugs and other pharmaceuticals to consumers via
the Internet.
The Fund's portfolio may also include companies that provide traditional
products and services currently in use in Health Care Industries and that are
likely to benefit from any increases in the general demand for such products
and services. The following are examples of the products and services that may
be offered by companies in Health Care Industries:
. DRUGS OR PHARMACEUTICALS, including both ethical and proprietary drugs, drug
administration products and pharmaceutical components used in diagnostic
testing;
. MEDICAL EQUIPMENT AND SUPPLIES, including equipment and supplies used by
health service companies and individual practitioners, such as electronic
equipment used for diagnosis and treatment, surgical and medical instruments
and other products designed especially for Health Care Industries;
. HEALTH CARE SERVICES, including the services of clinical testing
laboratories, hospitals, nursing homes, clinics, centers for convalescence and
rehabilitation, and products and services for home health care; and
. MEDICAL RESEARCH, including scientific research to develop drugs, processes
or technologies with possible commercial application in Health Care Industries.
The Fund also may:
. purchase or sell FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS;
. enter into FORWARD COMMITMENTS for the purchase or sale of securities;
. make SECURED LOANS OF SECURITIES of up to 20% of its total assets; and
. enter into REPURCHASE AGREEMENTS.
ALLIANCE GROWTH FUND
ALLIANCE GROWTH FUND seeks long-term growth of capital. Current income is only
an incidental consideration. The Fund seeks to achieve its objective by
investing primarily in equity securities of companies with favorable earnings
outlooks and long-term growth rates that are expected to exceed that of the
U.S. economy over time. The Fund's investment objective is not fundamental.
The Fund also may invest up to 25% of its total assets in lower-rated
fixed-income securities and convertible bonds. The Fund generally will not
invest in securities rated at the time of purchase below Caa- by Moody's and
CCC- by S&P, Duff & Phelps or Fitch or in securities judged by Alliance to be
of comparable investment quality. From time to time, however, the Fund may
invest in securities rated in the lowest grades (i.e., C by Moody's or D or
equivalent by S&P, Duff & Phelps or Fitch) or securities of comparable
investment quality if there are prospects for an upgrade or a favorable
conversion into equity securities. If the credit rating of a security held by
the Fund falls below its rating at the time of purchase (or Alliance determines
that the credit quality of the security has deteriorated), the Fund may
continue to hold the security if such investment is considered appropriate
under the circumstances.
The Fund also may:
. invest in ZERO-COUPON and PAYMENT-IN-KIND BONDS;
. invest in FOREIGN SECURITIES although not generally in excess of 15% of its
total assets;
. buy or sell foreign currencies, OPTIONS ON FOREIGN CURRENCIES, and FOREIGN
CURRENCY FUTURES CONTRACTS (and related options) and deal in FORWARD FOREIGN
CURRENCY EXCHANGE CONTRACTS;
. enter into FORWARD COMMITMENTS;
. buy and sell stock index FUTURES CONTRACTS and OPTIONS ON FUTURES CONTRACTS
and on stock indices;
. purchase and sell FUTURES CONTRACTS and OPTIONS ON FUTURES CONTRACTS and
U.S. Treasury securities;
. write covered call and put OPTIONS;
. purchase and sell put and call OPTIONS;
. make LOANS OF PORTFOLIO SECURITIES of up to 25% of its total assets; and
. enter into REPURCHASE AGREEMENTS of up to 25% of its total assets.
ALLIANCE TECHNOLOGY FUND
ALLIANCE TECHNOLOGY FUND emphasizes growth of capital and invests for capital
appreciation. Current income is only an incidental consideration. The Fund may
seek income by writing listed call options. The Fund invests primarily in
securities of companies expected to benefit from technological advances and
improvements (i.e., companies that use technology extensively in the
development of new or improved products or processes). The Fund normally will
have at least 80% of its assets invested in the securities of these companies.
The Fund normally will have substantially all its assets invested in equity
securities, but it also invests in debt securities offering an opportunity for
price appreciation. The Fund will invest in listed and unlisted securities, in
U.S. securities and up to 10% of its total assets in foreign securities.
The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies.
The Fund also may:
. write covered call OPTIONS on its securities of up to 15% of its total
assets and purchase exchange-listed call and put options, including
exchange-traded index put options of up to, for all options, 10% of its total
assets;
. invest up to 10% of its total assets in WARRANTS; and
30
. make LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets.
Because the Fund invests primarily in technology companies, factors affecting
those types of companies could have a significant effect on the Fund's net
asset value. In addition, the Fund's investments in technology stocks,
especially those of smaller, less seasoned companies, tend to be more volatile
than the overall market. The Fund's investments in debt and foreign securities
have credit risk and foreign risk.
ALLIANCE QUASAR FUND
ALLIANCE QUASAR FUND seeks growth of capital by pursuing aggressive investment
policies. The Fund invests for capital appreciation and only incidentally for
current income. The Fund's practice of selecting securities based on the
possibility of appreciation cannot, of course, ensure against a loss in value.
Moreover, because the Fund's investment policies are aggressive, an investment
in the Fund is risky and investors who want assured income or preservation of
capital should not invest in the Fund.
The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities for
the Fund, Alliance considers the economic and political outlook, the values of
specific securities relative to other investments, trends in the determinants
of corporate profits and management capability and practices.
The Fund invests principally in equity securities, but it also invests to a
limited degree in non-convertible bonds and preferred stocks. The Fund invests
in listed and unlisted U.S. and foreign securities. The Fund can periodically
invest in the securities of companies that are expected to appreciate due to a
development particularly or uniquely applicable to that company regardless of
general business conditions or movements of the market as a whole.
The Fund also may:
. make SHORT SALES OF SECURITIES AGAINST THE BOX but not more than 15% of its
net assets may be deposited on short sales; and
. write covered call OPTIONS of up to 15% of its total assets and purchase and
sell put and call options written by others of up to, for all options, 10% of
its total assets.
Investments in smaller companies may have more risk because they tend to be
more volatile than the overall stock market. The Fund's investments in
non-convertible bonds, preferred stocks and foreign stocks may have credit risk
and foreign risk.
THE ALLIANCE FUND
THE ALLIANCE FUND seeks long-term growth of capital and income primarily
through investment in common stocks. The Fund normally invests substantially
all of its assets in common stocks that Alliance believes will appreciate in
value. The Fund also may invest in other types of securities such as
convertible securities, investment grade instruments, U.S. Government
securities and high quality, short-term obligations such as repurchase
agreements, bankers' acceptances and domestic certificates of deposit. The Fund
may invest without limit in foreign securities. The Fund generally does not
effect portfolio transactions in order to realize short-term trading profits or
exercise control.
The Fund also may:
. write exchange-traded covered call OPTIONS on up to 25% of its total assets;
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 25% of its total assets;
and
. enter into REPURCHASE AGREEMENTS of up to seven days' duration with
commercial banks, but only if those agreements together with any restricted
securities and any securities which do not have readily available market
quotations do not exceed 10% of its net assets.
While the diversification and generally high quality of the Fund's investments
cannot prevent fluctuations in market values, they tend to limit investment
risk and contribute to achieving the Fund's objective.
TOTAL RETURN FUNDS
The Total Return Funds provide a range of investment alternatives to investors
seeking both growth of capital and current income.
ALLIANCE GROWTH AND INCOME FUND
ALLIANCE GROWTH AND INCOME FUND seeks appreciation through investments
primarily in dividend-paying common stocks of good quality. The Fund also may
invest in fixed-income securities and convertible securities.
The Fund also may try to realize income by writing covered call options listed
on domestic securities exchanges. The Fund also invests in foreign securities.
Since the purchase of foreign securities entails certain political and economic
risks, the Fund restricts its investments in these securities to issues of high
quality. The Fund also may purchase and sell financial forward and futures
contracts and options on these securities for hedging purposes.
ALLIANCE BALANCED SHARES
ALLIANCE BALANCED SHARES seeks a high return through a combination of current
income and capital appreciation. Although the Fund's investment objective is
not fundamental, the Fund is a "balanced" fund as a matter of fundamental
policy. The Fund invests in equity securities of high-quality, financially
strong, dividend-paying companies. Normally, the Fund's investments will
consist of about 60% in stocks, but stocks may make up to 75% of its
investments. The Fund will not purchase a security if as a result less than 25%
of its total assets will be in fixed income senior securities. These
investments may include short- and long-term debt securities, preferred stocks,
convertible debt securities and convertible preferred stocks to the extent that
their values are attributable to their fixed-income characteristics. Other than
this restriction,
31
the percentage of the Fund's assets invested in each type of security will vary.
The Fund invests in U.S. Government securities, bonds, senior debt securities,
and preferred and common stocks in such proportions and of such type as
Alliance deems best adapted to the current economic and market outlooks. The
Fund may invest up to 15% of the value of its total assets in foreign equity
and fixed-income securities eligible for purchase by the Fund under its
investment policies described above.
The Fund also may:
. enter into contracts for the purchase or sale for future delivery of foreign
currencies;
. purchase and write put and call OPTIONS on foreign currencies and enter into
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS for hedging purposes; and
. subject to market conditions, write covered call OPTIONS listed on a
domestic exchange to realize income.
As a balanced fund, the Fund has the risk that the allocation of its
investments between equity and debt securities may have a more significant
effect on the Fund's net asset value when one of these asset classes is
performing more poorly than the other.
ALLIANCE UTILITY INCOME FUND
ALLIANCE UTILITY INCOME FUND seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. As a fundamental policy, the Fund normally invests at least
65% of its total assets in securities of companies in the utilities industry.
The Fund seeks to take advantage of the characteristics and historical
performance of securities of utility companies, many of which pay regular
dividends and increase their common stock dividends over time. The Fund
considers a company to be in the utilities industry if, during the most recent
twelve-month period, at least 50% of the company's gross revenues, on a
consolidated basis, were derived from its utilities activities.
The Fund may invest in securities of both U.S. and foreign issuers, although
the Fund will invest no more than 15% of its total assets in issuers in any one
foreign country. The Fund invests at least 65% of its total assets in
income-producing securities, but there is otherwise no limit on the allocation
of the Fund's investments between equity securities and fixed-income
securities. The Fund may maintain up to 35% of its net assets in lower-rated
securities. The Fund will not retain a security that is downgraded below B or
determined by Alliance to have undergone similar credit quality deterioration
following purchase.
The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other
than utility companies. These securities include U.S. Government securities and
repurchase agreements for those securities, foreign government securities,
corporate fixed-income securities of domestic issuers, corporate fixed-income
securities of foreign issuers denominated in foreign currencies or in U.S.
Dollars (in each case including fixed-income securities of an issuer in one
country denominated in the currency of another country), qualifying bank
deposits, and prime commercial paper.
The Fund also may:
. invest up to 30% of its net assets in CONVERTIBLE SECURITIES;
. invest up to 5% of its net assets in RIGHTS OR WARRANTS;
. invest in DEPOSITARY RECEIPTS, securities of supranational entities
denominated in the currency of any country, securities denominated in European
Currency Units, and "semi-governmental securities";
. write covered call and put OPTIONS, purchase call and put options on
securities of the types in which it is permitted to invest that are
exchange-traded and over-the-counter, and write uncovered call options for
cross-hedging purposes;
. purchase and sell exchange-traded OPTIONS on any securities index composed
of the types of securities in which it may invest;
. enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including an index of U.S. Government securities, foreign government
securities, corporate fixed-income securities, or common stock, and may
purchase and write options on futures contracts;
. purchase and write call and put OPTIONS on foreign currencies traded on U.S.
and foreign exchanges or over-the-counter for hedging purposes;
. purchase or sell FORWARD CONTRACTS;
. enter into INTEREST RATE SWAPS and purchase or sell INTEREST RATE CAPS and
FLOORS;
. enter into FORWARD COMMITMENTS;
. enter into STANDBY COMMITMENT AGREEMENTS;
. make SHORT SALES of securities or maintain a short position;
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 20% of its total assets;
and
. enter into REPURCHASE AGREEMENTS for U.S. Government securities.
The Fund's principal risks include those that arise from its investing
primarily in electric utility companies. Factors affecting that industry sector
can have a significant effect on the Fund's net asset value. The U.S. utilities
industry has experienced significant changes in recent years. Electric utility
companies in general have been favorably affected by lower fuel costs, the full
or near completion of major construction programs and lower financing costs. In
addition, many utility companies have generated cash flows in excess of current
operating expenses and construction expenditures, permitting some degree of
diversification into unregulated businesses. Regulatory changes, however, could
increase costs or impair the ability of nuclear and conventionally fueled
generating facilities to operate their
32
facilities and reduce their ability to make dividend payments on their
securities. Rates of return of utility companies generally are subject to
review and limitation by state public utilities commissions and tend to
fluctuate with marginal financing costs. Rate changes ordinarily lag behind
changes in financing costs and can favorably or unfavorably affect the earnings
or dividend pay-outs of utilities stocks depending upon whether the rates and
costs are declining or rising.
Utility companies historically have been subject to the risks of increases in
fuel and other operating costs, high interest costs, costs associated with
compliance with environmental and nuclear safety regulations, service
interruptions, economic slowdowns, surplus capacity, competition, and
regulatory changes. There also can be no assurance that regulatory policies or
accounting standards changes will not negatively affect utility companies'
earnings or dividends. Utility companies are subject to regulation by various
authorities and may be affected by the imposition of special tariffs and
changes in tax laws. To the extent that rates are established or reviewed by
governmental authorities, utility companies are subject to the risk that such
authorities will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more
susceptible than most other mutual funds to economic, political or regulatory
occurrences affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although the regulation may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their respective governments than utility companies located in the
U.S. As in the U.S., foreign utility companies generally are required to seek
government approval for rate increases. In addition, many foreign utility
companies use fuels that cause more pollution than those used in the U.S. and
may yet be required to invest in pollution control equipment. Foreign utility
regulatory systems vary from country to country and may evolve in ways
different from regulation in the U.S. The percentage of the Fund's assets
invested in issuers of particular countries will vary.
Increases in interest rates may cause the value of the Fund's investments to
decline and the decrease in value may not be offset by higher interest rate
income. The Fund's investments in lower-rated securities may be subject to more
credit risk than a fund that invests in higher-rated securities.
ALLIANCE REAL ESTATE INVESTMENT FUND
ALLIANCE REAL ESTATE INVESTMENT FUND seeks a total return from long-term growth
of capital and from income principally through investing in a portfolio of
equity securities of issuers that are primarily engaged in or related to the
real estate industry.
The Fund normally invests at least 65% of its total assets in equity securities
of real estate investment trusts, or REITs, and other real estate industry
companies. A "real estate industry company" is a company that derives at least
50% of its gross revenues or net profits from the ownership, development,
construction, financing, management, or sale of commercial, industrial, or
residential real estate or interests in these properties. The Fund invests in
equity securities that include common stock, shares of beneficial interest of
REITs, and securities with common stock characteristics, such as preferred
stock or convertible securities ("Real Estate Equity Securities").
The Fund may invest up to 35% of its total assets in (a) securities that
directly or indirectly represent participations in, or are collateralized by
and payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real estate mortgage
investment conduit certificates ("REMICs") and collateralized mortgage
obligations ("CMOs") and (b) short-term investments. These securities are
described below.
In selecting Real Estate Equity Securities, Alliance's analysis will focus on
determining the degree to which the company involved can achieve sustainable
growth in cash flow and dividend paying capability. Alliance believes that the
primary determinant of this capability is the economic viability of property
markets in which the company operates and that the secondary determinant of
this capability is the ability of management to add value through strategic
focus and operating expertise. The Fund will purchase Real Estate Equity
Securities when, in the judgment of Alliance, their market price does not
adequately reflect this potential. In making this determination, Alliance will
take into account fundamental trends in underlying property markets as
determined by proprietary models, site visits conducted by individuals
knowledgeable in local real estate markets, price-earnings ratios (as defined
for real estate companies), cash flow growth and stability, the relationship
between asset value and market price of the securities, dividend payment
history, and such other factors that Alliance may determine from time to time
to be relevant. Alliance will attempt to purchase for the Fund Real Estate
Equity Securities of companies whose underlying portfolios are diversified
geographically and by property type.
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles that 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 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.
The Fund's investment strategy with respect to Real Estate Equity Securities is
based on the premise that property market fundamentals are the primary
determinant of growth underlying the performance of Real Estate Equity
Securities. Value and
33
management further distinguishes the most attractive Real
Estate Equity Securities. The Fund's research and investment process is
designed to identify those companies with strong property fundamentals and
strong management teams. This process is comprised of real estate market
research, specific property inspection, and securities analysis. Alliance
believes that this process will result in a portfolio that will consist of Real
Estate Equity Securities of companies that own assets in the most desirable
markets across the country, diversified geographically and by property type.
To implement the Fund's research and investment process, Alliance has retained
the consulting services of CB Richard Ellis, Inc. ("CBRE"), a publicly held
company and the largest real estate services company in the United States.
CBRE's business includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory activities. The
universe of property-owning real estate industry firms consists of
approximately 142 companies of sufficient size and quality to merit
consideration for investment by the Fund. As consultant to Alliance, CBRE
provides access to its proprietary model, REIT-Score, which analyzes the
approximately 18,000 properties owned by these 142 companies. Using proprietary
databases and algorithms, CBRE analyzes local market rent, expenses, occupancy
trends, market specific transaction pricing, demographic and economic trends,
and leading indicators of real estate supply such as building permits. Over
1,000 asset-type specific geographic markets are analyzed and ranked on a
relative scale by CBRE in compiling its REIT-Score database. The relative
attractiveness of these real estate industry companies is similarly ranked
based on the composite rankings of the properties they own.
Once the universe of real estate industry companies has been distilled through
the market research process, CBRE's local market presence provides the
capability to perform site specific inspections of key properties. This
analysis examines specific location, condition, and sub-market trends. CBRE's
use of locally based real estate professionals provides Alliance with a window
on the operations of the portfolio companies as information can immediately be
put in the context of local market events. Only those companies whose specific
property portfolios reflect the promise of their general markets will be
considered for investment by the Fund.
Alliance further screens the universe of real estate industry companies by
using rigorous financial models and by engaging in regular contact with
management of targeted companies. Each management's strategic plan and ability
to execute the plan are determined and analyzed. Alliance makes extensive use
of CBRE's network of industry analysts in order to assess trends in tenant
industries. This information is then used to further evaluate management's
strategic plans. Financial ratio analysis is used to isolate those companies
with the ability to make value-added acquisitions. This information is combined
with property market trends and used to project future earnings potential.
The Fund may invest in short-term investments including: corporate commercial
paper and other short-term commercial obligations, in each case rated or issued
by companies with similar securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; obligations (including
certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.
The Fund may invest in debt securities rated BBB or higher by S&P or Baa or
higher by Moody's or, if not rated, of equivalent credit quality as determined
by Alliance. The Fund expects that it will not retain a debt security that is
downgraded below BBB or Baa or, if unrated, determined by Alliance to have
undergone similar credit quality deterioration, subsequent to purchase by the
Fund.
The Fund also may:
. invest up to 15% of its net assets in CONVERTIBLE SECURITIES;
. enter into FORWARD COMMITMENTS;
. enter into STANDBY COMMITMENT AGREEMENTS;
. make SHORT SALES of securities or maintain a short position but only if at
all times when a short position is open not more than 25% of the Fund's net
assets is held as collateral for such sales;
. invest up to 10% of its net assets in RIGHTS OR WARRANTS;
. make LOANS OF PORTFOLIO SECURITIES of up to 25% of its total assets; and
. enter into REPURCHASE AGREEMENTS of up to seven days' duration.
Because the Fund invests a substantial portion of its assets in the real estate
market, it is subject to many of the same risks involved in direct ownership of
real estate. For example, the value of real estate could decline due to a
variety of factors affecting the real estate market generally, such as
overbuilding, increases in interest rates, or declines in rental rates. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws.
The Fund's investments in mortgage-backed securities have prepayment risk,
which is the risk that mortgage loans will be prepaid when interest rates
decline and the Fund will have to reinvest in securities with lower interest
rates. This risk causes mortgage-backed securities to have significantly
greater price and yield volatility than traditional fixed-income securities.
The Fund's investments in REMICs, CMOs and other types of mortgage-backed
securities may be subject to special risks that are described under
"Description of Investment Practices."
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors the opportunity to participate in the
potential for long-term capital appreciation available from investment in
foreign securities.
34
ALLIANCE NEW EUROPE FUND
ALLIANCE NEW EUROPE FUND seeks long-term capital appreciation through
investment primarily in the equity securities of companies based in Europe. The
Fund intends to invest substantially all of its assets in the equity securities
of European companies and has a fundamental policy of normally investing at
least 65% of its total assets in these securities. The Fund may invest up to
35% of its total assets in high-quality U.S. Dollar or foreign currency
denominated fixed-income securities issued or guaranteed by European
governmental entities, or by European or multinational companies or
supranational organizations.
The Fund expects that it will invest primarily in the more established and
liquid markets in Europe. However, the Fund may also invest in the
lesser-developed markets in Europe including those countries in Southern and
Eastern Europe, as well as the former communist countries in the Soviet Union.
The Fund does not expect to invest more than 20% of its total assets in these
developing markets under normal circumstances or more than 10% of its total
assets in issuers based in any one of these developing countries.
In managing the Fund, Alliance utilizes a disciplined approach to invest on a
bottom-up basis in those companies exhibiting the best available combination of
sustainable fundamental growth at a reasonable price. Alliance's approach
emphasizes proprietary qualitative and quantitative inputs provided by its
in-house analysts. Internal analysis focuses primarily on large to upper-medium
capitalization stocks (those with a market value of $3 billion and above).
Country and industry exposures are by-products of the stock selection process.
Alliance does not actively manage currency exposures for this Fund but may
hedge underlying exposures back to US Dollars when conditions are perceived to
be extreme.
Stock selection focuses on companies in growth industries that exhibit
above-average growth based on a competitive or sustainable advantage based on
brand, technology, or market share. A stock is typically sold when its relative
fundamentals are no longer as attractive as other investment opportunities
available to the Fund. This may be a function of the stock having achieved its
fair market value, deterioration in fundamentals relative to Alliance's
expectations, or because the management team looses confidence in company
management.
The Fund diversifies its investments among a number of European countries and
normally invests in companies based in at least three of these countries. The
Fund's investment policies do not require that the Fund concentrate its
investments in any single country. However, these policies also do not prevent
the Fund from concentrating its investments in a single country and in recent
years the Fund has invested more than 25% of its total assets in the United
Kingdom. The Fund may invest without limit in any single European country.
During such times, the Fund would be subject to a correspondingly greater risk
of loss due to adverse political or regulatory developments, or an economic
downturn, within that country.
The Fund also may:
. invest up to 20% of its total assets in RIGHTS OR WARRANTS;
. invest in DEPOSITARY RECEIPTS or other securities convertible into
securities of companies based in European countries, debt securities of
supranational entities denominated in the Euro or the currency of any European
country, debt securities denominated in the Euro of an issuer in a European
country (including supranational issuers), and "semi-governmental securities";
. purchase and sell FORWARD CONTRACTS;
. write covered call or put OPTIONS and sell and purchase exchange-traded put
and call options, including exchange-traded index options;
. enter into financial FUTURES CONTRACTS, including contracts for the purchase
or sale for future delivery of foreign currencies and futures contracts based
on stock indices, and purchase and write options on futures contracts;
. purchase and write put options on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
. enter into FORWARD COMMITMENTS;
. enter into STANDBY COMMITMENT AGREEMENTS; and
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets.
The Fund's investments in non-U.S. countries and smaller countries may have
more risk because they tend to be more volatile than the overall stock market.
To the extent the Fund invests a substantial amount of its assets in a
particular European country, your investment is subject to the risk that market
changes or other events affecting that country may have a more significant
effect on the Fund's net asset value. The Fund's investments in U.S. Dollar- or
foreign currency-denominated fixed-income securities have interest rate and
credit risk.
ALLIANCE WORLDWIDE PRIVATIZATION FUND
ALLIANCE WORLDWIDE PRIVATIZATION FUND seeks long-term capital appreciation. As
a fundamental policy, the Fund invests at least 65% of its total assets in
equity securities issued by enterprises that are undergoing, or have undergone,
privatization (as described below), although normally significantly more of its
assets will be invested in such securities. The balance of its investments will
include securities of companies believed by Alliance to be beneficiaries of
privatizations. The Fund is designed for investors desiring to take advantage
of investment opportunities, historically inaccessible to U.S. individual
investors, that are created by privatizations of state enterprises in both
established and developing economies. These companies include those in Western
Europe and Scandinavia, Australia, New Zealand, Latin America, Asia, Eastern
and Central Europe and, to a lesser degree, Canada and the United States.
The Fund's investments in enterprises undergoing privatization may comprise
three distinct situations. First, the Fund may
35
invest in the initial offering of publicly traded equity securities (an
"initial equity offering") of a government- or state-owned or controlled
company or enterprise (a "state enterprise"). Secondly, the Fund may
purchase securities of a current or former state enterprise following its
initial equity offering. Finally, the Fund may make privately negotiated
purchases of stock or other equity interests in a state enterprise that has not
yet conducted an initial equity offering. Alliance believes that substantial
potential for capital appreciation exists as privatizing enterprises
rationalize their management structures, operations and business strategies in
order to compete efficiently in a market economy and the Fund will thus
emphasize investments in such enterprises.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany, and Italy, and those with developing economies,
including Argentina, Mexico, Chile, Indonesia, Malaysia, Poland, and Hungary,
are engaged in privatizations. The Fund will invest in any country believed to
present attractive investment opportunities.
A major premise of the Fund's approach is that the equity securities of
privatized companies offer opportunities for significant capital appreciation.
In particular, because privatizations are integral to a country's economic
restructuring, securities sold in initial equity offerings often are priced
attractively to secure the issuer's successful transition to private sector
ownership. Additionally, these enterprises often dominate their local markets
and typically have the potential for significant managerial and operational
efficiency gains.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in at least four, and usually considerably more,
countries. The Fund may invest up to 15% of its total assets in issuers in any
one foreign country, except that the Fund may invest up to 30% of its total
assets in issuers in any one of France, Germany, Great Britain, Italy and
Japan. The Fund may invest all of its assets within a single region of the
world.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities. The Fund may maintain no more than 5% of its net
assets in lower-rated securities. The Fund will not retain a non-convertible
security that is downgraded below C or determined by Alliance to have undergone
similar credit quality deterioration following purchase.
The Fund also may:
. invest up to 20% of its total assets in RIGHTS OR WARRANTS;
. write covered call and put OPTIONS, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for cross-hedging
purposes;
. enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, foreign government
securities, or common stock, and may purchase and write options on future
contracts;
. purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
. purchase or sell FORWARD CONTRACTS;
. enter into FORWARD COMMITMENTS;
. enter into STANDBY COMMITMENT AGREEMENTS;
. enter into CURRENCY SWAPS for hedging purposes;
. make SHORT SALES of securities or maintain a short position;
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets;
and
. enter into REPURCHASE AGREEMENTS for U.S. Government securities.
Investments in non-U.S. companies and smaller companies may have more risk
because they tend to be more volatile than the overall stock market. The Fund's
investments in debt securities and convertible securities have interest risk
and credit risk.
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND seeks long-term capital appreciation
by investing predominately in the equity securities of a limited number of
carefully selected non-U.S. companies that are judged likely to achieve
superior earnings growth. As a matter of fundamental policy, the Fund will
invest under normal circumstances at least 85% of its total assets in equity
securities. The Fund makes investments based upon their potential for capital
appreciation. Current income is incidental to that objective.
In the main, the Fund's investments will be in comparatively large,
high-quality companies. Normally, about 40 companies will be represented in the
Fund's portfolio, and the 30 most highly regarded of these companies usually
will constitute approximately 70%, and often more, of the Fund's net assets.
The Fund thus differs from more typical international equity mutual funds by
focusing on a relatively small number of intensively researched companies. The
Fund is designed for investors seeking to accumulate capital over time. Because
of market risks inherent in any investment, the selection of securities on the
basis of their appreciation possibilities cannot ensure against possible loss
in value. There is, of course, no assurance that the Fund's investment
objective will be met.
Alliance expects the market capitalization of the companies represented in the
Fund's portfolio will generally be in excess of $10 billion.
Within the investment framework of the Fund, Alliance's Large Cap Growth Group,
headed by Alfred Harrison, Alliance's Vice Chairman, has responsibility for
managing the Fund's portfolio. As discussed below, in selecting the Fund's
portfolio
36
investments Alliance's Large Cap Growth Group will follow a
structured, disciplined research and investment process that is
essentially similar to that which it employs in managing the PREMIER GROWTH
FUND.
In managing the Fund's assets, Alliance's investment strategy will emphasize
stock selection and investment in the securities of a limited number of
issuers. Alliance depends heavily upon the fundamental analysis and research of
its large global equity research team situated in numerous locations around the
world. Its global equity analysts follow a research universe of approximately
900 companies. As one of the largest multinational investment management firms,
Alliance has access to considerable information concerning the companies in its
research universe, an in-depth understanding of the products, services, markets
and competition of these companies, and a good knowledge of their management.
Research emphasis is placed on the identification of companies whose superior
prospective earnings growth is not fully reflected in current market valuations.
Alliance constantly adds to and deletes from this universe as fundamentals and
valuations change. Alliance's global equity analysts rate companies in three
categories. The performance of each analyst's ratings is an important
determinant of his or her incentive compensation. The equity securities of
"one-rated" companies are expected to significantly outperform the local market
in local currency terms. All equity securities purchased for the Fund's
portfolio will be selected from the universe of approximately 100 "one-rated"
companies. As noted above, the Fund usually invests approximately 70% of its
net assets in the approximately 30 of the most highly regarded of these
companies. The Fund's portfolio emphasis upon particular industries or sectors
will be a by-product of the stock selection process rather than the result of
assigned targets or ranges.
The Fund diversifies its investments among at least four, and usually
considerably more, countries. No more than 15% of the Fund's total assets will
be invested in issuers in any one foreign country, except that the Fund may
invest up to 25% of its total assets in issuers in each of Canada, France,
Germany, Italy, Japan, The Netherlands, Switzerland, and the United Kingdom.
Within these limits, geographic distribution of the Fund's investments among
countries or regions also will be a product of the stock selection process
rather than a predetermined allocation. To the extent that the Fund
concentrates its assets within one region, the Fund may be subject to any
special risks associated with that region. While the Fund may engage in
currency hedging programs in periods in which Alliance perceives extreme
exchange rate risk, the Fund normally will not make significant use of currency
hedging strategies.
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. To the extent
consistent with local market liquidity considerations, the Fund will strive to
capitalize on apparently unwarranted price fluctuations, both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. Under
normal circumstances, the Fund will remain substantially fully invested in
equity securities and will not take significant cash positions for market
timing purposes. Rather, through "buying into declines" and "selling into
strength," Alliance seeks superior relative returns over time.
The Fund also may:
. invest up to 20% of its total assets in CONVERTIBLE SECURITIES;
. invest up to 20% of its total assets in RIGHTS OR WARRANTS;
. write covered call and put OPTIONS, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for cross hedging
purposes;
. enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, foreign government
securities, or common stock and may purchase and write options on such future
contracts;
. purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
. purchase or sell FORWARD CONTRACTS;
. enter into STANDBY COMMITMENT AGREEMENTS;
. enter into FORWARD COMMITMENTS;
. enter into CURRENCY SWAPS for hedging purposes;
. make SHORT SALES of securities or maintain short positions of no more than
5% of its net assets as collateral for short sales;
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets;
and
. enter into REPURCHASE AGREEMENTS for U.S. Government securities.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment also has the risk that changes in the value of a
single security may have a more significant effect, either negative or
positive, on the Fund's net asset value.
ALLIANCE GLOBAL SMALL CAP FUND
ALLIANCE GLOBAL SMALL CAP FUND seeks long-term growth of capital through
investment in a global portfolio of the equity securities of selected companies
with relatively small market capitalization. The Fund's portfolio emphasizes
companies with market capitalizations that would have placed them (when
purchased) in about the smallest 20% by market capitalization of actively
traded U.S. companies, or market capitalizations of up to about $1.5 billion.
Because the Fund applies the U.S. size standard on a global basis, its foreign
investments might rank above the lowest 20%, and, in fact, might in some
countries rank among the largest, by market capitalization in local markets.
Normally, the Fund invests at least 65% of its assets in equity securities of
these smaller capitalization companies. These companies are located in at least
three countries, one of
37
which may be the U.S. The Fund may invest up to 35% of its total assets in
securities of companies whose market capitalizations exceed the Fund's size
standard. The Fund's portfolio securities may be listed on a U.S. or
foreign exchange or traded over-the-counter.
The Fund also may:
. invest up to 20% of its total assets in WARRANTS to purchase equity
securities;
. invest in DEPOSITARY RECEIPTS or other securities representing securities of
companies based in countries other than the U.S.;
. purchase or sell FORWARD FOREIGN CURRENCY CONTRACTS;
. write covered call OPTIONS on its securities of up to 15% of its total
assets, and purchase exchange-traded call and put options, including put
options on market indices of up to, for all options, 10% of its total assets;
and
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets.
One of the Fund's principal risks is its investments in smaller capitalization
companies. Alliance believes that smaller capitalization companies often have
sales and earnings growth rates exceeding those of larger companies and that
these growth rates tend to cause more rapid share price appreciation. Investing
in smaller capitalization stocks, however, involves greater risk than is
associated with larger, more established companies. For example, smaller
capitalization companies often have limited product lines, markets, or
financial resources. They may be dependent for management on one or a few key
persons and can be more susceptible to losses and risks of bankruptcy. Their
securities may be thinly traded (and therefore have to be sold at a discount
from current market prices or sold in small lots over an extended period of
time), may be followed by fewer investment research analysts, and may be
subject to wider price swings. For these reasons, the Fund's investments may
have a greater chance of loss than investments in securities of larger
capitalization companies. In addition, transaction costs in small
capitalization stocks may be higher than in those of larger capitalization
companies.
The Fund's investments in non-U.S. companies and in smaller companies will be
more volatile and may differ substantially from the overall U.S. market.
ALLIANCE INTERNATIONAL FUND
ALLIANCE INTERNATIONAL FUND seeks a total return on its assets from long-term
growth of capital and from income primarily through a broad portfolio of
marketable securities of established non-U.S. companies, companies
participating in foreign economies with prospects for growth, including U.S.
companies having their principal activities and interests outside the U.S., and
foreign government securities. Normally, the Fund will invest more than 80% of
its assets in these types of companies.
The Fund expects to invest primarily in common stocks of established non-U.S.
companies that Alliance believes have potential for capital appreciation or
income or both, but the Fund is not required to invest exclusively in common
stocks or other equity securities. The Fund may invest in any other type of
investment grade security, including convertible securities, as well as in
warrants, or obligations of the U.S. or foreign governments and their political
subdivisions.
The Fund intends to diversify its investments broadly among countries and
normally invests in at least three foreign countries, although it may invest a
substantial portion of its assets in one or more of these countries. The Fund
may invest in companies, wherever organized, that Alliance judges have their
principal activities and interests outside the U.S. These companies may be
located in developing countries, which involves exposure to economic structures
that are generally less diverse and mature, and to political systems that can
be expected to have less stability than those of developed countries. The Fund
currently does not intend to invest more than 10% of its total assets in
companies in, or governments of, developing countries.
The Fund also may:
. purchase or sell FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS;
. write covered call or put OPTIONS, sell and purchase U.S. or foreign
exchange-listed put and call options, including exchange-traded index options;
. enter into FINANCIAL FUTURES CONTRACTS, including contracts for the purchase
or sale for future delivery of foreign currencies and stock index futures, and
purchase and write put and call options on futures contracts traded on U.S. or
foreign exchanges or over-the-counter;
. purchase and write put OPTIONS on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
. make LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets; and
. enter into REPURCHASE AGREEMENTS of up to seven days' duration for up to 10%
of the Fund's total assets.
Investments in non-U.S. countries may have more risk because they tend to be
more volatile than the U.S. stock market. To the extent that the Fund invests a
substantial amount of its assets in a particular foreign country, an investment
in the Fund has the risk that market changes or other events affecting that
country may have a more significant effect, either negative or positive, on the
Fund's net asset value.
ALLIANCE GREATER CHINA '97 FUND
ALLIANCE GREATER CHINA '97 FUND is a non-diversified investment company that
seeks long-term capital appreciation through investment of at least 80% of its
total assets in equity securities issued by Greater China companies. The Fund
expects to invest a significant portion, which may be greater than 50%, of its
assets in equity securities of Hong Kong companies and may invest, from time to
time, all of its assets
38
in Hong Kong companies or companies of either of the other Greater China
countries.
In recent years, China, Hong Kong and Taiwan have each experienced a high
level of real economic growth, although growth is expected to slow in 1999.
This growth has resulted from advantageous economic conditions, including
favorable demographics, competitive wage rates, and rising per capita income
and consumer demand. Significantly, the growth has also been fueled by an
easing by both China and Taiwan of government restrictions and an increased
receptivity to foreign investment. This expanded, if not yet complete, openness
to foreign investment extends as well to the securities markets of both
countries. Hong Kong's free-market economy has historically included
securities markets completely open to foreign investments. All three
countries have regulated stock exchanges upon which shares of an increasing
number of Greater China companies are traded.
With its population estimated at more than 1.2 billion as a driving force, and
notwithstanding its continuing political rigidity, China's economic growth has
been coupled with significantly reduced government economic intervention and
basic economic structural change. Recent years have seen large increases in
industrial production with a significant decline in the state sector share of
industrial output, and increased involvement of local governmental units and
the private sector in establishing new business enterprises.
With China's growth has come an increasing direct and indirect economic
involvement of all three Greater China countries. For some time, Hong Kong, a
world financial and trade center in its own right, with a large stock exchange
and offices of many of the world's multinational companies, has been the
gateway to trade with and foreign investment in China. With the transfer on
July 1, 1997 of the sovereignty of Hong Kong from Great Britain to China, not
only the political but the economic ties between China and Hong Kong are
expected to continue to intensify, with the continuation of Hong Kong's
economic system as provided for in the law governing its sovereignty.
Notwithstanding the, at times considerable, political tension between the two
countries, it is generally recognized that substantially increased trade and
investment with China has been generated from Taiwan, in many cases through
Hong Kong. Along with this increased interaction with China, Taiwan is becoming
a regional technological and telecommunication center, while continuing the
process of opening its economy up to foreign investment. Although
geographically limited, Taiwan boasts an economy among the world's 20 largest
and its foreign exchange reserves are the third largest in the world measured
in U.S. dollars. As China's economy continues to expand, it is expected that
Taiwan's economic interaction with China will likewise increase.
Alliance believes that over the long term conditions are favorable for
continuing and expanding economic growth in all three Greater China countries.
It is this potential which the Fund hopes to take advantage of by investing
both in established and new and emerging companies. Appendix A has additional
information about the Greater China countries.
In addition to investing in equity securities of Greater China companies, the
Fund may invest up to 20% of its total assets in (i) debt securities issued or
guaranteed by Greater China companies or by Greater China governments, their
agencies or instrumentalities and (ii) equity or debt securities issued by
issuers other than Greater China companies. The Fund will invest only in
investment grade securities. The Fund will normally sell a security that is
downgraded below investment grade or is determined by Alliance to have
undergone a similar credit quality deterioration.
The Fund also may:
. invest up to 25% of its net assets in the CONVERTIBLE SECURITIES;
. invest up to 20% of its net assets in RIGHTS OR WARRANTS;
. invest in DEPOSITARY RECEIPTS, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
. invest up to 25% of its net assets in EQUITY-LINKED DEBT SECURITIES with the
objective of realizing capital appreciation;
. invest up to 20% of its net assets in LOANS AND OTHER DIRECT DEBT SECURITIES;
. write covered call and put OPTIONS, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
. enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, securities issued
by foreign government entities, or common stock, and may purchase and write
options on future contracts;
. purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
. purchase or sell FORWARD CONTRACTS;
. enter into INTEREST RATE SWAPS and purchase or sell INTEREST RATE CAPS and
FLOORS;
. enter into FORWARD COMMITMENTS;
. enter into STANDBY COMMITMENT AGREEMENTS;
. enter into CURRENCY SWAPS for hedging purposes;
. make SHORT SALES of securities or maintain a short position, in each case
only if AGAINST THE BOX;
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets;
and
. enter into REPURCHASE AGREEMENTS for U.S. Government securities.
All or some of the policies and practices listed above may not be available to
the Fund in the Greater China countries and the Fund will utilize these
policies only to the extent permissible.
39
The Fund's investments in Greater China companies will be significantly more
volatile and will differ from the overall U.S. market. Your investment also has
the risk that market changes or other events affecting the Greater China
countries may have a more significant effect on the Fund's net asset value. In
addition, the Fund is "non-diversified," meaning that it invests its assets in
a smaller number of companies than many other international funds. As a result,
changes in the value of a single security may have a more significant effect,
either negative or positive, on the Fund's net asset value.
ALLIANCE ALL-ASIA INVESTMENT FUND
ALLIANCE ALL-ASIA INVESTMENT FUND'S investment objective is long-term capital
appreciation. The Fund invests at least 65% of its total assets in equity
securities (for the purposes of this investment policy, rights, warrants, and
options to purchase common stocks are not deemed to be equity securities),
preferred stocks and equity-linked debt securities issued by Asian companies.
The Fund may invest up to 35% of its total assets in debt securities issued or
guaranteed by Asian companies or by Asian governments, their agencies or
instrumentalities. The Fund will invest at least 80% of its total assets in
Asian companies and Asian debt securities, but also may invest in securities
issued by non-Asian issuers. The Fund expects to invest, from time to time, a
significant portion, which may be in excess of 50%, of its assets in equity
securities of Japanese companies.
In the past decade, Asian countries generally have experienced a high level of
real economic growth due to political and economic changes, including foreign
investment and reduced government intervention in the economy. Alliance
believes that certain conditions exist in Asian countries that create the
potential for continued rapid economic growth. These conditions include
favorable demographics and competitive wage rates, increasing levels of foreign
direct investment, rising per capita incomes and consumer demand, a high
savings rate, and numerous privatization programs. Asian countries also are
becoming more industrialized and are increasing their intra-Asian exports while
reducing their dependence on Western export demand. Alliance believes that
these conditions are important to the long-term economic growth of Asian
countries.
As the economies of many Asian countries move through the "emerging market"
stage, thus increasing the supply of goods, services and capital available to
less developed Asian markets and helping to spur economic growth in those
markets, the potential is created for many Asian companies to experience rapid
growth. In addition, many Asian companies that have securities listed on
exchanges in more developed Asian countries will be participants in the rapid
economic growth of the less-developed countries. These companies generally
offer the advantages of more experienced management and more developed market
regulation.
As their economies have grown, the securities markets in Asian countries have
also expanded. New exchanges have been created and the number of listed
companies, annual trading volume, and overall market capitalization have
increased significantly. Additionally, new markets continue to open to foreign
investments. The Fund also offers investors the opportunity to access
relatively restricted markets. Alliance believes that investment opportunities
in Asian countries will continue to expand.
The Fund will invest in companies believed to possess rapid growth potential.
Thus, the Fund will invest in smaller, emerging companies, but will also invest
in larger, more established companies in such growing economic sectors as
capital goods, telecommunications, and consumer services.
The Fund will invest primarily in investment grade debt securities, but may
maintain not more than 5% of its net assets in lower-rated securities,
lower-rated loans, and other lower-rated direct debt instruments. The Fund will
not retain a security that is downgraded below C or determined by Alliance to
have undergone similar credit quality deterioration following purchase.
The Fund also may:
. invest up to 25% of its net assets in the CONVERTIBLE SECURITIES;
. invest up to 20% of its net assets in RIGHTS OR WARRANTS;
. invest in DEPOSITARY RECEIPTS, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
. invest up to 25% of its net assets in EQUITY-LINKED DEBT SECURITIES with the
objective of realizing capital appreciation;
. invest up to 25% of its net assets in LOANS AND OTHER DIRECT DEBT
INSTRUMENTS;
. write covered call and put OPTIONS, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
. enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, securities issued
by foreign government entities, or common stock and may purchase and write
options on future contracts;
. purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
. purchase or sell FORWARD CONTRACTS;
. enter into INTEREST RATE SWAPS and purchase or sell INTEREST RATE CAPS and
FLOORS;
. enter into FORWARD COMMITMENTS;
. enter into STANDBY COMMITMENT AGREEMENTS;
. enter into CURRENCY SWAPS for hedging purposes;
. make SHORT SALES of securities or maintain a short position, in each case
only if AGAINST THE BOX;
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets;
and
40
. enter into REPURCHASE AGREEMENTS for U.S. Government securities.
The Fund's investments in Asian and Pacific region countries will be
significantly more volatile and may differ significantly from the overall U.S.
market. To the extent the Fund invests a substantial amount of its assets in
Japanese companies, your investment has the risk that market changes or other
events affecting that country may have a more significant effect on the Fund's
net asset value. The Fund's investments in debt securities have interest rate
and credit risk.
ALLIANCE GLOBAL ENVIRONMENT FUND
ALLIANCE GLOBAL ENVIRONMENT FUND is a non-diversified investment company that
seeks long-term capital appreciation through investment in equity securities of
Eligible Companies. For purposes of the Fund's investment objective and
investment policies, "equity securities" are common stocks (but not preferred
stocks), rights or warrants to subscribe for or purchase common stocks, and
preferred stocks or debt securities that are convertible into common stocks
without the payment of any further consideration.
The Fund invests in two categories of Eligible Companies--Environmental
Companies and Beneficiary Companies. The Fund may invest in a company with a
broadly diversified business only a part of which provides such products,
processes, or services, when Alliance believes that these products, processes
or services will yield a competitive advantage that significantly enhances the
issuer's growth prospects. As a matter of fundamental policy, the Fund will,
under normal circumstances, invest substantially all of its total assets in
equity securities of Eligible Companies.
A major premise of the Fund's investment approach is that environmental
concerns will be a significant source of future growth opportunities, and that
Environmental Companies will see an increased demand for their systems and
services. Environmental Companies operate in the areas of pollution control,
clean energy, solid waste management, hazardous waste treatment and disposal,
pulp and paper recycling, waste-to-energy alternatives, biodegradable cartons,
packages, plastics and other products, remedial projects and emergency cleanup
efforts, manufacture of environmental supplies and equipment, the achievement
of purer air, groundwater and foods, and the detection, evaluation and
treatment of both existing and potential environmental problems including,
among others, air pollution and acid rain.
The environmental services industry generally is positively affected by
increasing governmental action intended to foster environmental protection. As
environmental regulations are developed and enforced, Environmental Companies
providing the means of compliance with such regulations are afforded
substantial opportunities for growth. Beneficiary Companies may also derive an
advantage to the extent that they have anticipated environmental regulation and
are therefore at a competitive advantage.
In the view of Alliance, increasing public and political awareness of
environmental concerns and resultant environmental regulations are long-term
phenomena that are driven by an emerging global consensus that environmental
protection is a vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other economically
developed countries will have increasing opportunities for earnings growth
resulting not only from an increased demand for their existing products or
services but also from innovative responses to changing regulations and
priorities and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also within many
economically developing countries, such as those of Eastern Europe and the
Pacific Rim. These countries lag well behind developed countries in the
conservation and efficient use of natural resources and in their implementation
of policies that protect the environment.
Alliance believes that global investing offers opportunities for superior
investment returns. The Fund spreads investment risk among the capital markets
of a number of countries and invests in equity securities of companies based in
at least three, and normally considerably more, such countries. The percentage
of the Fund's assets invested in securities of companies in a particular
country or denominated in a particular currency will vary in accordance with
Alliance's assessment of the appreciation potential of such securities and the
strength of that currency.
The Fund also may:
. invest up to 20% of its total assets in WARRANTS to purchase equity
securities;
. invest in DEPOSITARY RECEIPTS;
. purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
. enter into FORWARD FOREIGN CURRENCY TRANSACTIONS for hedging purposes;
. invest in CURRENCY FUTURES and options on such futures for hedging purposes;
and
. make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets.
The Fund's investments in non-U.S. companies and in specific types of companies
that provide environmental services will be more volatile and may differ
substantially from the overall U.S. market. The Fund's investments also have
the risk that government regulations or other action could negatively affect
the business of environmental companies.
DESCRIPTION OF INVESTMENT PRACTICES
This section describes the Funds' investment practices and associated risks.
Unless otherwise noted, a Fund's use of any of these practices was specified in
the previous section.
ASSET-BACKED SECURITIES. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables, and other payment obligations, both
secured and unsecured. These assets are generally held by a trust and payments
of principal
41
and interest or interest only are passed through monthly or quarterly to
certificate holders and may be guaranteed up to certain amounts by letters of
credit issued by a financial institution affiliated or unaffiliated with the
trustee or originator of the trust.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs of enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors.
CONVERTIBLE SECURITIES. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which
generally provide a stable stream of income with yields that are generally
higher than those of equity securities of the same or similar issuers. The
price of a convertible security will normally vary with changes in the price of
the underlying equity security, although the higher yield tends to make the
convertible security less volatile than the underlying equity security. As with
debt securities, the market value of convertible securities tends to decrease
as interest rates rise and increase as interest rates decline. While
convertible securities generally offer lower interest or dividend 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 Baa or lower by
Moody's or BBB or lower by S&P, Duff & Phelps or Fitch and comparable unrated
securities as determined by Alliance may share some or all of the risks of
non-convertible debt securities with those ratings.
CURRENCY SWAPS. Currency swaps involve the individually negotiated exchange by
a Fund with another party of a series of payments in specified currencies. A
currency swap may involve the delivery at the end of the exchange period of a
substantial amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a currency swap
is subject to the risk that the other party to the swap will default on its
contractual delivery obligations. A Fund will not enter into any currency swap
unless the credit quality of the unsecured senior debt or the claims-paying
ability of the counterparty is rated in the highest rating category of at least
one nationally recognized rating organization at the time of entering into the
transaction. If there is a default by the counterparty to the transaction, the
Fund will have contractual remedies under the transaction agreements.
DEPOSITARY RECEIPTS AND SECURITIES OF SUPRANATIONAL ENTITIES. Depositary
receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the
issuers of the stock of unsponsored depositary receipts are not obligated to
disclose material information in the United States and, therefore, there may
not be a correlation between such information and the market value of the
depositary receipts. ADRs are depositary receipts typically issued by an U.S.
bank or trust company that evidence ownership of underlying securities issued
by a foreign corporation. GDRs and other types of depositary receipts are
typically issued by foreign banks or trust companies and evidence ownership of
underlying securities issued by either a foreign or an U.S. company. Generally,
depositary receipts in registered form are designed for use in the U.S.
securities markets, and depositary receipts in bearer form are designed for use
in foreign securities markets. For purposes of determining the country of
issuance, investments in depositary receipts of either type are deemed to be
investments in the underlying securities, except with respect to ALLIANCE
GROWTH FUND, where investments in ADRs are deemed to be investments in
securities issued by U.S. issuers and those in GDRs and other types of
depositary receipts are deemed to be investments in the underlying securities.
A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include, among others, the
World Bank (International Bank for Reconstruction and Development) and the
European Investment Bank. A European Currency Unit is a basket of specified
amounts of the currencies of the member states of the European Economic
Community. "Semi-governmental securities" are securities issued by entities
owned by either a national, state or equivalent government or are obligations
of one of such government jurisdictions that are not backed by its full faith
and credit and general taxing powers.
EQUITY-LINKED DEBT SECURITIES. Equity-linked debt securities are securities on
which the issuer is obligated to pay interest and/or principal that is linked
to the performance of a specified index of equity securities. The interest or
principal payments may be significantly greater or less than payment
obligations for other types of debt securities. Adverse changes in equity
securities indices and other adverse changes in the securities markets may
reduce payments made under, and/or the principal of, equity-linked debt
securities held by a Fund. As with any debt securities, the values of
equity-linked debt securities will generally vary inversely with changes in
interest rates. A Fund's ability to dispose of equity-linked debt securities
will depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to be speculative.
FORWARD COMMITMENTS. Forward commitments for the purchase or sale of securities
may include purchases on a "when-issued" basis or purchases or sales on a
"delayed delivery" basis. In some cases, a forward commitment may be
conditioned upon the occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt restructuring (i.e.,
a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but a Fund may negotiate settlements beyond
42
two months. Securities purchased or sold under a forward commitment are subject
to market fluctuations and no interest or dividends accrue to the purchaser
prior to the settlement date.
The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling
prices. In periods of falling interest rates and rising bond prices, a Fund
might sell a security in its portfolio and purchase the same or a similar
security on a when-issued or forward commitment basis to obtain the benefit of
currently higher cash yields. If, however, Alliance were to forecast
incorrectly the direction of interest rate movements, a 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 a 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 a 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. No forward commitments will be made by ALLIANCE
HEALTH CARE FUND, ALLIANCE UTILITY INCOME FUND, ALLIANCE REAL ESTATE INVESTMENT
FUND, ALLIANCE NEW EUROPE FUND, ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE
INTERNATIONAL PREMIER GROWTH FUND, ALLIANCE GREATER CHINA '97 FUND or ALLIANCE
ALL-ASIA INVESTMENT FUND if, as a result, the Fund's aggregate commitments
under the transactions would be more than 30% of its total assets. In the event
the other party to a forward commitment transaction were to default, a Fund
might lose the opportunity to invest money at favorable rates or to dispose of
securities at favorable prices.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A Fund may purchase or sell
forward foreign currency exchange contracts to minimize the risk of adverse
changes in the relationship between the U.S. Dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific currency for
an agreed price at a future date, and is individually negotiated and privately
traded.
A Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. Dollar price of the security
("transaction hedge"). A Fund will not engage in transaction hedges with
respect to the currency of a particular country to an extent greater than the
aggregate amount of the Fund's transactions in that currency. When a Fund
believes that a foreign currency may suffer a substantial decline against the
U.S. Dollar, it may enter into a forward sale contract to sell an amount of
that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency, or when the Fund
believes that the U.S. Dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount ("position hedge"). A Fund will not
position hedge with respect to a particular currency to an extent greater than
the aggregate market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency. Instead of
entering into a position hedge, a Fund may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed U.S. dollar
amount where the Fund believes that the U.S. Dollar value of the currency to be
sold pursuant to the forward contract will fall whenever there is a decline in
the U.S. Dollar value of the currency in which portfolio securities of the Fund
are denominated ("cross-hedge"). Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had not entered
into such forward contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the
currency at a price above the devaluation level it anticipates. ALLIANCE NEW
EUROPE FUND, ALLIANCE GLOBAL SMALL CAP FUND and ALLIANCE INTERNATIONAL FUND
will not enter into a forward contract with a term of more than one year or if,
as a result, more than 50% of its total assets would be committed to such
contracts. ALLIANCE NEW EUROPE FUND'S, ALLIANCE GLOBAL SMALL CAP FUND'S and
ALLIANCE INTERNATIONAL FUND'S investments in forward contracts will be limited
to hedging involving either specific transactions or portfolio positions.
ALLIANCE GROWTH FUND also may purchase and sell foreign currency on a spot
basis.
ILLIQUID SECURITIES. The Funds will limit their investments in illiquid
securities to no more than 15% of their net assets, except that the limit is
10% for ALLIANCE HEALTH CARE FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE
TECHNOLOGY FUND, ALLIANCE QUASAR FUND, ALLIANCE NEW EUROPE FUND, and ALLIANCE
GLOBAL SMALL CAP FUND and 5% for THE ALLIANCE FUND and ALLIANCE GROWTH FUND.
Illiquid securities generally include: (i) direct placements or other
securities that are subject to legal or contractual restrictions on resale or
for which there is no readily available market (e.g., when trading in the
security is suspended or, in the case of unlisted securities, when market
makers do not exist or will not entertain bids or offers), including many
individually negotiated currency swaps and any assets used to cover currency
swaps and most privately negotiated investments in state enterprises that have
not yet conducted an initial equity offering, (ii) over-the-counter options and
assets used to cover over-the-counter options, and (iii) repurchase agreements
not terminable within seven days.
Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. Alliance will monitor the
liquidity of a Fund's investments in illiquid securities. Except with respect
to
43
ALLIANCE QUASAR FUND, Rule 144A securities will not be treated as "illiquid"
for purposes of this limit on investments.
A Fund that invests in securities for which there is no ready market may not be
able to readily sell such securities. Such securities are unlike securities
that are traded in the open market and can be expected to be sold immediately
if the market is adequate. The sale price of illiquid securities may be lower
or higher than Alliance's most recent estimate of their fair value. Generally,
less public information is available about the issuers of such securities than
about companies whose securities are traded on an exchange. To the extent that
these securities are foreign securities, there is no law in many of the
countries in which a Fund may invest similar to the Securities Act requiring an
issuer to register the sale of securities with a governmental agency or
imposing legal restrictions on resales of securities, either as to length of
time the securities may be held or manner of resale. However, there may be
contractual restrictions on resales of non-publicly traded foreign securities.
INTEREST RATE TRANSACTIONS (SWAPS, CAPS, AND FLOORS). Each Fund that may enter
into interest rate transactions expects to do so primarily to preserve a return
or spread on a particular investment or portion of its portfolio or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Funds do not intend to use these transactions in a
speculative manner.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of
floating rate payments for fixed rate payments). Interest rate swaps are
entered on a net basis (i.e., the two payment streams are netted out, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payments). With respect to ALLIANCE UTILITY INCOME FUND, ALLIANCE GREATER CHINA
'97 FUND and ALLIANCE ALL-ASIA INVESTMENT FUND, the exchange commitments can
involve payments in the same currency or in different currencies. The purchase
of an interest rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payments of interest on
a contractually-based principal amount from the party selling such interest
rate cap. The purchase of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined interest rate, to
receive payments of interest on an agreed principal amount from the party
selling the interest rate floor.
A Fund may enter into interest rate swaps, caps, and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities. A Fund will not enter into an interest rate swap, cap,
or floor transaction unless the unsecured senior debt or the claims-paying
ability of the other party is rated in the highest rating category of at least
one nationally recognized rating organization. Alliance will monitor the
creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they
are less liquid than swaps.
The use of interest rate transactions is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance were to incorrectly
forecast market values, interest rates and other applicable factors, the
investment performance of a Fund would be adversely affected by the use of
these investment techniques. Moreover, even if Alliance is correct in its
forecasts, there is a risk that the transaction position may correlate
imperfectly with the price of the asset or liability being hedged. There is no
limit on the amount of interest rate transactions that may be entered into by a
Fund that is permitted to enter into such transactions. These transactions do
not involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate transactions is
limited to the net amount of interest payments that a Fund is contractually
obligated to make. If the counterparty to an interest rate transaction
defaults, a Fund's risk of loss consists of the net amount of interest payments
that the Fund contractually is entitled to receive.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Loans and other direct debt
instruments are interests in amounts owed by a corporate, governmental or other
borrower to another party. They may represent amounts owed to lenders or
lending syndicates (loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other creditors. Direct
debt instruments involve the risk of loss in case of default or insolvency of
the borrower and may offer less legal protection to a Fund in the event of
fraud or misrepresentation than debt securities. In addition, loan
participations involve a risk of insolvency of the lending bank or other
financial intermediary. Direct debt instruments may also include standby
financing commitments that obligate a Fund to supply additional cash to the
borrower on demand. Loans and other direct debt instruments are generally
illiquid and may be transferred only through individually negotiated private
transactions.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally recognized
rating service. Failure to receive scheduled interest or principal payments on
these types of investments could adversely affect a Fund's net asset value and
yield. Loans that are fully secured offer a Fund more protection than unsecured
loans in the event of non-payment of scheduled interest or principal. However,
there is no assurance that the liquidation of collateral from a secured loan
would satisfy the borrower's obligation, or that the collateral can be
liquidated. Making loans to borrowers whose creditworthiness is poor may
involve substantial risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of government issuers will
44
also involve a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, a Fund could become part owner of any
collateral and would bear the costs and liabilities associated with owning and
disposing of the collateral. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary.
A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified on the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be
subject to the claims of the agent's general creditors, the Fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.
Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
a Fund to pay additional cash on demand. These commitments may have the effect
of requiring a Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid.
LOANS OF PORTFOLIO SECURITIES. The risk in lending portfolio securities, as
with other extensions of credit, consists of the possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income from the
securities. The Fund may invest any cash collateral in portfolio securities and
earn additional income or receive an agreed-upon amount of income from a
borrower who has delivered equivalent collateral. Each 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. A Fund may pay reasonable
finders', administrative, and custodial fees in connection with a loan.
MORTGAGE-BACKED SECURITIES AND ASSOCIATED RISKS. Interest and principal
payments (including prepayments) on the mortgages underlying mortgage-backed
securities are passed through to the holders of the securities. As a result of
the pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Prepayments occur when the
mortgagor on a mortgage prepays the remaining principal before the mortgage's
scheduled maturity date. Because the prepayment characteristics of the
underlying mortgages vary, it is impossible to predict accurately the realized
yield or average life of a particular issue of pass-through certificates.
Prepayments are important because of their effect on the yield and price of the
mortgage-backed securities. During periods of declining interest rates,
prepayments can be expected to accelerate and a Fund that invests in these
securities would be required to reinvest the proceeds at the lower interest
rates then available. Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturity of the securities,
subjecting them to a greater risk of decline in market value in response to
rising interest rates. In addition, prepayments of mortgages underlying
securities purchased at a premium could result in capital losses.
Mortgage-Backed Securities include mortgage pass-through certificates and
multiple-class pass-through securities, such as REMIC pass-through
certificates, CMOs and stripped mortgage-backed securities ("SMBS"), and other
types of Mortgage-Backed Securities that may be available in the future.
GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. ALLIANCE REAL ESTATE INVESTMENT
FUND may invest in guaranteed mortgage pass-through securities which represent
participation interests in pools of residential mortgage loans and are issued
by U.S. governmental or private lenders and guaranteed by the U.S. Government
or one of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for timely payment of
principal and interest on the certificates. Fannie Mae certificates are
guaranteed by Fannie Mae, a federally chartered and privately-owned
corporation, for full and timely payment of principal and interest on the
certificates. Freddie Mac certificates are guaranteed by Freddie Mac, a
corporate instrumentality of the United States Government, for timely payment
of interest and the ultimate collection of all principal of the related
mortgage loans.
MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS.
Mortgage-Backed Securities also include CMOs and REMIC pass-through or
participation certificates that may be issued by, among others, U.S. Government
agencies and instrumentalities as well as private lenders. CMOs and REMIC
certificates are issued in multiple classes and the principal of and interest
on the mortgage assets may be allocated among the several classes of CMOs or
REMIC certificates in various ways. Each class of CMOs or REMIC certificates,
often referred to as a "tranche," is issued at a specific adjustable or fixed
interest rate and must be fully retired no later than its final distribution
date. Generally, interest is paid or accrues on all classes of CMOs or REMIC
certificates on a monthly basis. ALLIANCE REAL ESTATE INVESTMENT FUND will not
invest in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac certificates
but also may be collateralized by other mortgage assets such as whole loans or
private mortgage pass-through securities. Debt service on CMOs is provided from
payments of
45
principal and interest on collateral of mortgaged assets and any reinvestment
income.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property
and other permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC trusts, although
ALLIANCE REAL ESTATE INVESTMENT FUND does not intend to invest in residual
interests.
OPTIONS ON SECURITIES. An option gives the purchaser of the option, upon
payment of a premium, the right to deliver to (in the case of a put) or receive
from (in the case of a call) the writer a specified amount of a security on or
before a fixed date at a predetermined price. A call option written by a 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 that of the call option it has written. A
put option written by a Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than that of
the put option it has written.
A call option is for cross-hedging purposes if a Fund does not own the
underlying security, and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire. A
Fund would write a call option for cross-hedging purposes, instead of writing a
covered call option, when the premium to be received from the cross-hedge
transaction would exceed that which would be received from writing a covered
call option, while at the same time achieving the desired hedge.
In purchasing an option, a Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in
the case of a call) or decreased (in the case of a put) by an amount in excess
of the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then be purchased
or sold by the Fund at a disadvantageous price. Entering into a closing
transaction (i.e., by disposing of the option prior to its exercise) could
reduce these risks. A Fund retains the premium received from writing a put or
call option whether or not the option is exercised. The writing of covered call
options could result in increases in a Fund's portfolio turnover rate,
especially during periods when market prices of the underlying securities
appreciate.
ALLIANCE TECHNOLOGY FUND and ALLIANCE GLOBAL SMALL CAP FUND will not write a
call option if the premium to be received by the Fund would not produce an
annualized return of at least 15% of the then current market value of the
securities subject to the option (without giving effect to commissions, stock
transfer taxes and other expenses that are deducted from premium receipts).
Options purchased or written by a Fund in negotiated transactions are illiquid
and it may not be possible for the Fund to effect a closing transaction at an
advantageous time.
OPTIONS ON SECURITIES INDICES. An option on a securities index is similar to an
option on a security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount
of cash if the closing level of the chosen index is greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
OPTIONS ON FOREIGN CURRENCIES. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and a Fund could be required to purchase
or sell foreign currencies at disadvantageous exchange rates and incur losses.
The purchase of an option on a foreign currency may constitute an effective
hedge against fluctuations in exchange rates although, in the event of rate
movements adverse to a Fund's position, it may forfeit the entire amount of the
premium plus related transaction costs. For Funds that may invest in options on
foreign currencies, see the Fund's SAI for further discussion of the use,
risks, and costs of options on foreign currencies.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price on a specified date. A "purchase" of a futures contract
means the incurring of an obligation to acquire the securities, foreign
currencies or other commodity called for by the contract at a specified price
on a specified date. The purchaser of a futures contract on an index agrees to
take or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract ("current contract value") and the price at which the contract was
originally struck. No physical delivery of the securities underlying the index
is made.
A Fund may purchase options on futures contracts written or purchased by a
Fund that are traded on U.S. or foreign exchanges or over-the-counter. These
investment techniques will be used only to hedge against anticipated future
changes in market conditions and interest or exchange rates which otherwise
might either adversely affect the value of the Fund's portfolio securities or
adversely affect the prices of securities which the Fund intends to purchase at
a later date.
No Fund will 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 its total assets,
or in the case of ALLIANCE INTERNATIONAL PREMIER GROWTH FUND 100% of its total
assets. ALLIANCE PREMIER GROWTH FUND and ALLIANCE GROWTH AND
46
INCOME FUND may not purchase or sell a stock index future if immediately
thereafter more than 30% of its total assets would be hedged by stock index
futures. ALLIANCE PREMIER GROWTH FUND and ALLIANCE GROWTH AND INCOME FUND may
not purchase or sell a stock index future if, immediately thereafter, the sum
of the amount of margin deposits on the Fund's existing futures positions would
exceed 5% of the market value of the Fund's total assets.
REPURCHASE AGREEMENTS. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit a Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. If a vendor defaults on its
repurchase obligation, a Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price.
If a vendor goes bankrupt, a Fund might be delayed in, or prevented from,
selling the collateral for its benefit. Alliance monitors the creditworthiness
of the vendors with which the Fund enters into repurchase agreements.
RIGHTS AND WARRANTS. A Fund will invest in rights or warrants only if Alliance
deems the underlying equity securities themselves appropriate for inclusion in
the Fund's portfolio. Rights and warrants entitle the holder to buy equity
securities at a specific price for a specific period of time. Rights are
similar to warrants except that they have a substantially shorter duration.
Rights and warrants may be considered more speculative than certain other types
of investments in that they do not entitle a holder to dividends or voting
rights with respect to the underlying securities nor do they represent any
rights in the assets of the issuing company. The value of a right or warrant
does not necessarily change with the value of the underlying security, although
the value of a right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in perception as to
the potential of the underlying security, or any combination of these factors.
If the market price of the underlying security is below the exercise price of
the warrant on the expiration date, the warrant will expire worthless.
Moreover, a right or warrant ceases to have value if it is not exercised prior
to the expiration date.
SHORT SALES. A short sale is effected by selling a security that a 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
a Fund contemporaneously owns or has the right to obtain securities identical
to those sold short without payment. ALLIANCE UTILITY INCOME FUND, ALLIANCE
WORLDWIDE PRIVATIZATION FUND, ALLIANCE GREATER CHINA '97 FUND and ALLIANCE
ALL-ASIA INVESTMENT FUND, each may make short sales of securities or maintain
short positions only for the purpose of deferring realization of gain or loss
for U.S. federal income tax purposes, provided that at all times when a short
position is open the Fund owns an equal amount of securities of the same issue
as, and equal in amount to, the securities sold short. In addition, each of
those Funds may not make a short sale if as a result more than 10% of the
Fund's net assets would be held as collateral for short sales, except that
ALLIANCE REAL ESTATE INVESTMENT FUND, ALLIANCE GREATER CHINA '97 FUND and
ALLIANCE ALL-ASIA INVESTMENT FUND may not make a short sale if as a result more
than 25% of the Fund's net assets would be held as collateral for short sales.
If the price of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
STANDBY COMMITMENT AGREEMENTS. Standby commitment agreements commit a Fund, for
a stated period of time, to purchase a stated amount of a security that may be
issued and sold to the Fund at the option of the issuer. The price and coupon
of the security are fixed at the time of the commitment. At the time of
entering into the agreement, the Fund is paid a commitment fee, regardless of
whether the security ultimately is issued, typically equal to approximately
0.5% of the aggregate purchase price of the security the Fund has committed to
purchase. A Fund will enter into such agreements only for the purpose of
investing in the security underlying the commitment at a yield and price
considered advantageous to the Fund and unavailable on a firm commitment basis.
Investments in standby commitments will be limited so that the aggregate
purchase price of the securities subject to the commitments will not exceed 25%
with respect to ALLIANCE REAL ESTATE INVESTMENT FUND and ALLIANCE NEW EUROPE
FUND, 50% with respect to ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE
INTERNATIONAL PREMIER GROWTH FUND, ALLIANCE GREATER CHINA '97 FUND and ALLIANCE
ALL-ASIA INVESTMENT FUND and 20% with respect to ALLIANCE UTILITY INCOME FUND,
of the Fund's assets at the time of making the commitment.
There is no guarantee that a security 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, a 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.
ZERO-COUPON AND PAYMENT-IN-KIND BONDS. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate cash to
meet current interest payments. These bonds may involve greater credit risks
than bonds paying interest currently. Although these bonds do not pay current
interest in cash, a Fund is nonetheless required to accrue interest income on
such
47
investments and to distribute such amounts at least annually to shareholders.
Thus, a Fund could be required at times to liquidate other investments in order
to satisfy its dividend requirements.
FUTURE DEVELOPMENTS. A Fund may, following written notice to its shareholders,
take advantage of other investment practices that are not currently
contemplated for use by the Fund, or are not available but may yet be
developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.
GENERAL. The successful use of the investment practices described above draws
upon Alliance's special skills and experience and usually depends on Alliance's
ability to forecast price movements, interest rates, or currency exchange rate
movements correctly. Should interest rates, prices or exchange rates move
unexpectedly, a Fund may not achieve the anticipated benefits of the
transactions or may realize losses and thus be in a worse position than if such
strategies had not been used. Unlike many exchange-traded futures contracts and
options on futures contracts, there are no daily price fluctuation limits for
certain options and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time. In addition,
the correlation between movements in the prices of futures contracts, options
and forward contracts and movements in the prices of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.
A Fund's ability to dispose of its position in futures contracts, options, and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types
of securities and currencies are relatively new and still developing, and there
is no public market for forward contracts. It is impossible to predict the
amount of trading interest that may exist in various types of futures
contracts, options, and forward contracts. If a secondary market does not exist
for an option purchased or written by a Fund, it might not be possible to
effect a closing transaction in the option (i.e., dispose of the option), with
the result that (i) an option purchased by the Fund would have to be exercised
in order for the Fund to realize any profit and (ii) the Fund may not be able
to sell currencies or portfolio securities covering an option written by the
Fund until the option expires or it delivers the underlying security, futures
contract or currency upon exercise. Therefore, no assurance can be given that
the Funds will be able to utilize these instruments effectively. In addition, a
Fund's ability to engage in options and futures transactions may be limited by
tax considerations and the use of certain hedging techniques may adversely
impact the characterization of income to a Fund for U.S. federal income tax
purposes.
PORTFOLIO TURNOVER. The portfolio turnover rate for each Fund is included in
the FINANCIAL HIGHLIGHTS section. The Funds are actively managed and, in some
cases in response to market conditions, a Fund's portfolio turnover may exceed
100%. A higher rate of portfolio turnover increases brokerage and other
expenses, which must be borne by the Fund and its shareholders. High portfolio
turnover also may result in the realization of substantial net short-term
capital gains, which, when distributed, are taxable to shareholders.
TEMPORARY DEFENSIVE POSITION. For temporary defensive purposes, each Fund may
reduce its position in equity securities and invest in, without limit, certain
types of short-term, liquid, high grade or high quality (depending on the Fund)
debt securities. These securities may include U.S. Government securities,
qualifying bank deposits, money market instruments, prime commercial paper and
other types of short-term debt securities including notes and bonds. For Funds
that may invest in foreign countries, such securities also may include
short-term, foreign-currency denominated securities of the type mentioned above
issued by foreign governmental entities, companies, and supranational
organizations. While the Funds are investing for temporary defensive purposes,
they may not meet their investment objectives.
ADDITIONAL RISK CONSIDERATIONS
Investment in certain of the Funds involves the special risk considerations
described below. Certain of these risks may be heightened when investing in
emerging markets.
CURRENCY CONSIDERATIONS. Substantially all of the assets of ALLIANCE NEW EUROPE
FUND, ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL PREMIER
GROWTH FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE GREATER CHINA '97 FUND and
ALLIANCE ALL-ASIA INVESTMENT FUND, and a substantial portion of the assets of
ALLIANCE GLOBAL SMALL CAP FUND and ALLIANCE GLOBAL ENVIRONMENT FUND are
invested in securities denominated in foreign currencies. The Funds receive a
corresponding portion of their revenues in foreign currencies. Therefore, the
dollar equivalent of their net assets, distributions, and income will be
adversely affected by reductions in the value of certain foreign currencies
relative to the U.S. Dollar. If the value of the foreign currencies in which a
Fund receives its income falls relative to the U.S. Dollar between receipt of
the income and the making of Fund distributions, the Fund may be required to
liquidate securities in order to make distributions if it has insufficient cash
in U.S. Dollars to meet distribution requirements that the Fund must satisfy to
qualify as a regulated investment company for federal income tax purposes.
Similarly, if an exchange rate declines between the time a Fund incurs expenses
in U.S. Dollars and the time cash expenses are paid, the amount of the currency
required to be converted into U.S. Dollars in order to pay expenses in U.S.
Dollars could be greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these risks, a Fund may
engage in currency hedging transactions, as described above, which involve
certain special risks.
FOREIGN SECURITIES. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, a Fund whose investment portfolio
48
includes foreign securities may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in equity
securities of U.S. companies. These markets may be subject to greater influence
by adverse events generally affecting the market, and by large investors
trading significant blocks of securities, than is usual in the United States.
Securities settlements may in some instances be subject to delays and related
administrative uncertainties.
Certain foreign countries require governmental approval prior to investments by
foreign persons or limit investment by foreign persons to only a specified
percentage of an issuer's outstanding securities or a specific class of
securities that may have less advantageous terms (including price) than
securities of the company available for purchase by nationals. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of a Fund. In addition, the
repatriation of investment income, capital, or the proceeds of sales of
securities from certain countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority.
If a deterioration occurs in a country's balance of payments, the country could
impose temporary restrictions on foreign capital remittances.
A Fund also could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application of other restrictions on investment. Investing in local markets may
require a Fund to adopt special procedures that may involve additional costs to
a Fund. These factors may affect the liquidity of a Fund's investments in any
country and Alliance will monitor the effect of any such factor or factors on a
Fund's investments. Furthermore, transaction costs including brokerage
commissions for transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects and less information
may be available to investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available about certain
non-U.S. issuers than is available about U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability, or diplomatic
developments could affect adversely the economy of a foreign country and the
Fund's investments. In the event of expropriation, nationalization or other
confiscation, a Fund could lose its entire investment in the country involved.
In addition, laws in foreign countries governing business organizations,
bankruptcy and insolvency may provide less protection to security holders such
as the Fund than that provided by U.S. laws.
ALLIANCE INTERNATIONAL FUND, ALLIANCE NEW EUROPE FUND, ALLIANCE GREATER CHINA
'97 FUND and ALLIANCE ALL-ASIA INVESTMENT FUND may invest substantial amounts
of their assets in United Kingdom issuers, Japanese issuers, and/or Greater
China issuers. Please refer to Appendix A for a discussion of risks associated
with investments in these countries.
INVESTMENT IN PRIVATIZED ENTERPRISES BY ALLIANCE WORLDWIDE PRIVATIZATION FUND.
In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or
terms on which the Fund may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance that governments
that have embarked on privatization programs will continue to divest their
ownership of state enterprises, that proposed privatizations will be successful
or that governments will not re-nationalize enterprises that have been
privatized. Furthermore, in the case of certain of the enterprises in which the
Fund may invest, large blocks of the stock of those enterprises may be held by
a small group of stockholders, even after the initial equity offerings by those
enterprises. The sale of some portion or all of those blocks could have an
adverse effect on the price of the stock of any such enterprise.
Most state enterprises or former state enterprises go through an internal
reorganization of management prior to conducting an initial equity offering in
an attempt to better enable these enterprises to compete in the private sector.
However, certain reorganizations could result in a management team that does
not function as well as the enterprise's prior management and may have a
negative effect on such enterprise. After making an initial equity offering,
enterprises that may have enjoyed preferential treatment from the respective
state or government that owned or controlled them may no longer receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition. In addition, the privatization of an
enterprise by its government may occur over a number of years, with the
government continuing to hold a controlling position in the enterprise even
after the initial equity offering for the enterprise.
INVESTMENT IN SMALLER, EMERGING COMPANIES. The Funds may invest in smaller,
emerging companies. ALLIANCE NEW EUROPE FUND and ALLIANCE GLOBAL SMALL CAP FUND
will emphasize investment in, and ALLIANCE ALL-ASIA INVESTMENT FUND, ALLIANCE
GREATER CHINA '97 FUND and ALLIANCE GLOBAL ENVIRONMENT FUND may emphasize
investment in, smaller, emerging companies. Investment in such companies
involves greater risks than is customarily associated with securities of more
established
49
companies. Companies in the earlier stages of their development often
have products and management personnel which have not been thoroughly
tested by time or the marketplace; their financial resources may not
be as substantial as those of more established companies. The securities of
smaller companies may have relatively limited marketability and may be subject
to more abrupt or erratic market movements than securities of larger companies
or broad market indices. The revenue flow of such companies may be erratic and
their results of operations may fluctuate widely and may also contribute to
stock price volatility.
EXTREME GOVERNMENTAL ACTION; LESS PROTECTIVE LAWS. In contrast to investing in
the U.S., foreign investment may involve in certain situations greater risk of
nationalization, expropriation, confiscatory taxation, currency blockage or
other extreme governmental action which could adversely impact a Fund's
investments. In the event of certain such actions, a Fund could lose its entire
investment in the country involved. In addition, laws in various foreign
countries, including in certain respects each of the Greater China countries,
governing, among other subjects, business organization and practices,
securities and securities trading, bankruptcy and insolvency may provide less
protection to investors such as the Fund than provided under United States laws.
INVESTMENTS IN ENVIRONMENTAL COMPANIES BY ALLIANCE GLOBAL ENVIRONMENT FUND.
Governmental regulations or other action can inhibit an Environmental Company's
performance, and it may take years to translate environmental legislation into
sales and profits. Environmental Companies generally face competition in fields
often characterized by relatively short product cycles and competitive pricing
policies. Losses may result from large product development or expansion costs,
unprotected marketing or distribution systems, erratic revenue flows and low
profit margins. Additional risks that Environmental Companies may face include
difficulty in financing the high cost of technological development,
uncertainties due to changing governmental regulation or rapid technological
advances, potential liabilities associated with hazardous components and
operations, and difficulty in finding experienced employees.
THE REAL ESTATE INDUSTRY. Although ALLIANCE REAL ESTATE INVESTMENT FUND does
not invest directly in real estate, it invests primarily in Real Estate Equity
Securities and has a policy of concentration of its investments in the real
estate industry. Therefore, an investment in the Fund is subject to certain
risks associated with the direct ownership of real estate and with the real
estate industry in general. These risks include, among others: possible
declines in the value of real estate; risks related to general and local
economic conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in competition,
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties for damages resulting
from, environmental problems; casualty or condemnation losses; uninsured
damages from floods, earthquakes or other natural disasters; limitations on and
variations in rents; and changes in interest rates. To the extent that assets
underlying the Fund's investments are concentrated geographically, by property
type or in certain other respects, the Fund may be subject to certain of the
foregoing risks to a greater extent.
In addition, if ALLIANCE REAL ESTATE INVESTMENT FUND receives rental income or
income from the disposition of real property acquired as a result of a default
on securities the Fund owns, the receipt of such income may adversely affect
the Fund's ability to retain its tax status as a regulated investment company.
Investments by the Fund in securities of companies providing mortgage servicing
will be subject to the risks associated with refinancings and their impact on
servicing rights.
REITS. 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. REITs are also 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.
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 been more volatile in price than the
larger capitalization stocks included in the S&P 500 Index.
MORTGAGE-BACKED SECURITIES. Investing in Mortgage-Backed Securities involves
certain unique risks in addition to those risks associated with investment in
the real estate industry in general. These risks include the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. When interest rates decline, the
value of an investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of an 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 investments in
such loans will gradually align themselves to
50
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.
Further, the yield characteristics of Mortgage-Backed Securities, such as those
in which ALLIANCE REAL ESTATE INVESTMENT FUND may invest, differ from those of
traditional fixed-income securities. The major differences typically include
more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social, and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Early payment
associated with Mortgage-Backed Securities causes these securities to
experience significantly greater price and yield volatility than that
experienced by traditional fixed-income securities. Under certain interest rate
and prepayment rate scenarios, the Fund may fail to recoup fully its investment
in Mortgage-Backed Securities notwithstanding any direct or indirect
governmental or agency guarantee. When the Fund reinvests amounts representing
payments and unscheduled prepayments of principal, it may receive a rate of
interest that is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and adjustable rate
mortgage pass-through securities in particular, may be less effective than
other types of U.S. Government securities as a means of "locking in" interest
rates.
U.S. AND FOREIGN TAXES. A Fund's investment in foreign securities may be
subject to taxes withheld at the source on dividend or interest payments.
Foreign taxes paid by a Fund may be creditable or deductible by U.S.
shareholders for U.S. income tax purposes. No assurance can be given that
applicable tax laws and interpretations will not change in the future.
Moreover, non-U.S. investors may not be able to credit or deduct such foreign
taxes.
FIXED-INCOME SECURITIES. The value of each Fund's shares will fluctuate with
the value of its investments. The value of each Fund's investments in
fixed-income securities will change as the general level of interest rates
fluctuates. During periods of falling interest rates, the values of
fixed-income securities generally rise. Conversely, during periods of rising
interest rates, the values of fixed-income securities generally decline.
Under normal market conditions, the average dollar-weighted maturity of a
Fund's portfolio of debt or other fixed-income securities is expected to vary
between five and 30 years in the case of ALLIANCE ALL-ASIA INVESTMENT FUND,
between five and 25 years in the case of ALLIANCE UTILITY INCOME FUND, and
between one year or less and 30 years in the case of all other Funds that
invest in such securities. In periods of increasing interest rates, each of the
Funds may, to the extent it holds mortgage-backed securities, be subject to the
risk that the average dollar-weighted maturity of the Fund's portfolio of debt
or other fixed-income securities may be extended as a result of lower than
anticipated prepayment rates.
INVESTMENT IN LOWER-RATED FIXED-INCOME SECURITIES. Lower-rated securities,
i.e., those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps
or Fitch, are subject to greater credit risk or loss of principal and interest
than higher-rated securities. They also are generally considered to be subject
to greater market risk than higher-rated securities. The capacity of issuers of
lower-rated securities to pay interest and repay principal is more likely to
weaken than is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In addition,
lower-rated securities may be more susceptible to real or perceived adverse
economic conditions than investment grade securities.
The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, a Fund may experience difficulty
in valuing the securities for the purpose of computing a Fund's net asset
value. In addition, adverse publicity and investor perceptions about
lower-rated securities, whether or not factual, may tend to impair their market
value and liquidity.
Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will not occur.
Since the risk of default is higher for lower-rated securities, Alliance's
research and credit analysis are a correspondingly more important aspect of its
program for managing a Fund's securities than would be the case if a Fund did
not invest in lower-rated securities.
In seeking to achieve a Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization
of capital losses on securities in a Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated securities of
comparable quality may be subject to wider fluctuations in yield and market
values than higher-rated securities under certain market conditions. Such
fluctuations after a security is acquired do not affect the cash income
received from that security but are reflected in the net asset value of a Fund.
Certain lower-rated securities may contain call or buy-back features that
permit the issuers thereof to call or repurchase such securities. Such
securities may present risks based on prepayment expectations. If an issuer
exercises such a provision, a Fund may have to replace the called security with
a lower-yielding security, resulting in a decreased rate of return to the Fund.
YEAR 2000. Many computer systems and applications that process transactions use
two-digit date fields for the year of a transaction, rather than the full four
digits. If these systems are not modified or replaced, transactions occurring
after 1999
51
could be processed as the year "1900," which could result in processing
inaccuracies and inoperability at or after the year 2000. The Funds and their
major service providers, including Alliance, utilize a number of computer
systems and applications that have been either developed internally or licensed
from third party suppliers. In addition, the Funds and their major service
providers, including Alliance, are dependent on third party suppliers for
certain systems applications and for electronic receipt of information critical
to their business. Should any of the computer systems employed by the Funds or
their major service providers, including Alliance, fail to process Year 2000
related information properly, that could have a significant negative impact on
the Funds' operations and the services that are provided to the Funds'
shareholders. To the extent that the operations of issuers of securities held
by the Funds are impaired by the Year 2000 problem, the value of the Fund's
shares may be materially affected. In addition, for the Funds' investments in
foreign markets, it is possible that foreign companies and markets will not be
as prepared for Year 2000 as domestic companies and markets.
The Year 2000 issue is a high priority for the Funds and Alliance. During 1997,
Alliance began a formal Year 2000 initiative which established a structured and
coordinated process to deal with the Year 2000 issue. As part of its
initiative, Alliance established a Year 2000 project office to manage the Year
2000 initiative, focusing on both information technology and non-information
technology systems. The Year 2000 project office meets periodically with the
audit committee of the board of directors of Alliance Capital Management
Corporation, Alliance's general partner, and with Alliance's executive
management to review the status of the Year 2000 efforts. Alliance has also
retained the services of a number of consulting firms which have expertise in
advising and assisting with regard to Year 2000 issues. Alliance reports that
by June 30, 1998 it had completed its inventory and assessment of its domestic
and international computer systems and applications, identified mission
critical systems (those systems where loss of their function would result in
immediate stoppage or significant impairment to core business units) and
nonmission critical systems and determined which of these systems were not Year
2000 compliant. All third party suppliers of mission critical computer systems
and applications and nonmission critical systems have been contacted to verify
whether their systems and applications will be Year 2000 compliant and their
responses are being evaluated. Substantially all of those contacted have
responded and approximately 90% have informed Alliance that their systems and
applications are or will be Year 2000 compliant. All mission critical and
nonmission critical systems supplied by third parties have been tested with the
exception of those third parties not able to comply with Alliance's testing
schedule. Alliance reports that it expects that all testing will be completed
before the end of 1999.
Alliance has remediated, replaced or retired all of its non-compliant mission
critical systems and applications that can affect the Funds. All nonmission
critical systems have been remediated. After each system has been remediated,
it is tested with 19XX dates to determine if it still performs its intended
business function correctly. Next, each system undergoes a simulation test
using dates occurring after December 31, 1999. Inclusive of the replacement and
retirement of some of its systems, Alliance has completed these testing phases
for approximately 98% of mission critical systems and 100% of nonmission
critical systems. Integrated systems tests were conducted to verify that the
systems would continue to work together. Full integration testing of all
mission critical and nonmission critical systems is complete. Testing of
interfaces with third-party suppliers has begun and will continue throughout
1999. Alliance reports that it has completed an inventory of its facilities and
related technology applications and has begun to evaluate and test these
systems. Alliance reports that it anticipates that these systems will be fully
operable in the year 2000. Alliance has deferred certain other planned
information technology projects until after the Year 2000 initiative is
completed. Such delay is not expected to have a material adverse effect on
Alliance's financial condition or results of operations. Alliance, with the
assistance of a consulting firm, is developing Year 2000 specific contingency
plans with emphasis on mission critical functions. These plans seek to provide
alternative methods of processing in the event of a failure that is outside
Alliance's control.
The estimated current cost to Alliance of the Year 2000 initiative ranges from
approximately $40 million to $45 million. These costs consist principally of
modification and testing and costs to develop formal Year 2000 specific
contingency plans. These costs, which will generally be expensed as incurred,
will be funded from Alliance's operations and the issuance of debt. Through
June 30, 1999, Alliance had incurred approximately $36.0 million of costs
related to the Year 2000 initiative. At this time, management of Alliance
believes that the costs associated with resolving the Year 2000 issue will not
have a material adverse effect on Alliance's results of operations, liquidity
or capital resources.
There are many risks associated with Year 2000 issues, including the risks that
the computer systems and applications used by the Funds and their major service
providers will not operate as intended and that the systems and applications of
third-party providers to the Funds and their service providers will not be Year
2000 compliant. Likewise there can be no assurance the compliance schedules
outlined above will be met or that the actual cost incurred will not exceed
current cost estimates. Should the significant computer systems and
applications used by the Funds or their major service providers, or the systems
of their important third-party suppliers, be unable to process date-sensitive
information accurately after 1999, the Funds and their service providers may be
unable to conduct their normal business operations and to provide shareholders
with required services. In addition, the Funds and their service providers may
incur unanticipated expenses, regulatory actions and legal liabilities. The
Funds and Alliance cannot determine which risks, if any, are most reasonably
likely to occur or the effects of any particular failure to be Year 2000
compliant. Certain statements provided by Alliance in this section entitled
"Year 2000", as such statements relate to Alliance, are "forward-looking
statements" within the meaning
52
of the Private Securities Litigation Reform Act of 1995. To the fullest extent
permitted by law, the foregoing Year 2000 discussion is a "Year 2000 Readiness
Disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act, 15 U.S.C. Sec. 1 (1998).
- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT ADVISER
Each Fund's Adviser is Alliance Capital Management, L.P., 1345 Avenue of the
Americas, New York, NY 10105. Alliance is a leading international investment
adviser supervising client accounts with assets as of September 30, 1999
totaling more than $317 billion (of which more than $143 billion represented
assets of investment companies). As of September 30, 1999, Alliance managed
retirement assets for many of the largest public and private employee benefit
plans (including 28 of the nation's FORTUNE 100 companies), for public employee
retirement funds in 31 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 52 registered
investment companies managed by Alliance, comprising 118 separate investment
portfolios, currently have more than 4.8 million shareholder accounts.
Alliance provides investment advisory services and order placement facilities
for the Funds. For these advisory services, the Funds paid Alliance as a
percentage of average daily net assets:
FEE AS A PERCENTAGE OF FISCAL
FUND AVERAGE DAILY NET ASSETS* YEAR ENDING
Alliance Premier Growth Fund 1.00% 11/30/98
Alliance Health Care Fund .95** 6/30/00
Alliance Growth Fund .70 10/31/98
Alliance Technology Fund 1.02 11/30/98
Alliance Quasar Fund 1.04 9/30/98
The Alliance Fund .67 11/30/98
Alliance Growth and Income Fund .48 10/31/98
Alliance Balanced Shares Fund .586 7/31/99
Alliance Utility Income Fund -0- 11/30/98
Alliance Real Estate Investment Fund .90 8/31/99
Alliance New Europe Fund .95 7/31/99
Alliance Worldwide Privatization Fund 1.00 6/30/99
Alliance International Premier Growth Fund -0- 11/30/98
Alliance Global Small Cap Fund 1.00 7/31/99
Alliance International Fund .81 6/30/99
Alliance Greater China '97 Fund -0- 7/31/99
Alliance All-Asia Investment Fund .24 10/31/98
Alliance Global Environment Fund 1.10 10/31/98
* FEES ARE STATED NET OF ANY WAIVERS AND/OR REIMBURSEMENTS. SEE THE "FEE
TABLE" AT THE BEGINNING OF THE PROSPECTUS FOR MORE INFORMATION ABOUT FEE
WAIVERS.
** PRIOR TO ANY WAIVER BY ALLIANCE. SEE "FEE TABLE" AT THE BEGINNING OF THE
PROSPECTUS.
In connection with providing advisory services to ALLIANCE GREATER CHINA '97
FUND, Alliance has, at its expense, retained as a consultant New Alliance, a
joint venture company headquartered in Hong Kong, which was formed in 1997 by
Alliance and Sun Hung Kai Properties Limited. New Alliance provides Alliance
with ongoing, current, and comprehensive information and analysis of conditions
and developments in Greater China countries.
In connection with investments in real estate securities, Alliance has, at its
expense, retained as a consultant CB Richard Ellis, Inc. ("CBRE"). CBRE is a
publicly held company and the largest real estate services company in the
United States, comprised of real estate brokerage, property and facilities
management, real estate finance, and investment advisory services.
PORTFOLIO MANAGERS
The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time that
each person has been primarily responsible for the Fund, and each person's
principal occupation during the past five years.
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*]
- -------------------------------------------------------------------------------
Alliance Premier Alfred Harrison; since Associated with
Growth Fund inception--Vice Chairman Alliance
of Alliance Capital
Management Corporation
(ACMC)**
Alliance Health Care Norman Fidel; since inception Associated with
Fund --Senior Vice President Alliance
of ACMC
Alliance Growth Tyler Smith; since inception Associated with
Fund --Senior Vice President Alliance
of ACMC
Alliance Technology Peter Anastos; since 1992 Associated with
Fund --Senior Vice President Alliance
of ACMC
Gerald T. Malone; since 1992 Associated with
--Senior Vice President Alliance
of ACMC
Alliance Quasar Alden M. Stewart; since 1994 Associated with
Fund --Executive Vice President Alliance
of ACMC
53
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*
- -------------------------------------------------------------------------------
Randall E. Haase; since 1994 Associated with
--Senior Vice President Alliance
of ACMC
The Alliance Fund Alden M. Stewart; since 1997 (see above)
--(see above)
Randall E. Haase; since 1997 (see above)
--(see above)
Alliance Growth and Paul Rissman; since 1994 Associated with
Income Fund --Senior Vice President Alliance
of ACMC
Alliance Balanced Paul Rissman; since 1997 (see above)
Shares --(see above)
Alliance Utility Paul Rissman; since 1996 (see above)
Income Fund --(see above)
Alliance Real Estate Daniel G. Pine; since 1996 Associated with
Investment Fund --Senior Vice President Alliance since 1996;
of ACMC prior thereto; Senior
Vice President of
Desai Capital
Management
David Kruth; since 1997 Associated with
--Vice President of ACMC Alliance since 1997;
prior thereto; Senior
Vice President of
Yarmouth Group
Alliance New Steven Beinhacker; since 1997 Associated with
Europe Fund --Senior Vice President Alliance
of ACMC
Alliance Worldwide Mark H. Breedon; since Associated with
Privatization Fund inception Vice Alliance
President of ACMC and
Director and Senior Vice
President of Alliance Capital
Limited***
Alliance International Alfred Harrison; since 1998 (see above)
Premier Growth --(see above)
Fund
Thomas Kamp; since 1998 Associated with
--Senior Vice President Alliance
of ACMC
Alliance Global Alden M. Stewart; since 1994 (see above)
Small Cap Fund --(see above)
Randall E. Haase; since 1994 (see above)
--(see above)
Mark H. Breedon; since 1998 (see above)
--(see above)
Alliance Nicholas D.P. Carn; Associated with
International Fund since 1998 Alliance since 1995:
--Senior Vice President prior thereto; Chief
of ACMC Investment Officer of
Draycott Partners, Ltd.
Alliance Greater Matthew W.S. Lee; since 1997 Associated with
China '97 Fund --Vice President of ACMC Alliance since 1997;
prior thereto;
associated with
National Mutual Funds
Management (Asia) and
James Capel and Co.
since prior to 1994
Alliance All-Asia Hiroshi Motoki; since 1998 Associated with
Investment Fund --Senior Vice President Alliance since 1994;
of ACMC and director of prior thereto;
Japanese/Asian Equity associated with
research Ford Motor Company
Alliance Global Linda Bolton Weiser; Associated with
Environment Fund since 1998--Vice President Alliance
of ACMC
* UNLESS INDICATED OTHERWISE, PERSONS ASSOCIATED WITH ALLIANCE HAVE BEEN
EMPLOYED IN A PORTFOLIO MANAGEMENT, RESEARCH OR INVESTMENT CAPACITY.
** THE SOLE GENERAL PARTNER OF ALLIANCE.
*** AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF ALLIANCE.
PERFORMANCE OF SIMILARLY MANAGED PORTFOLIOS. In addition to managing the assets
of ALLIANCE PREMIER GROWTH FUND, Mr. Harrison has ultimate responsibility for
the management of discretionary tax-exempt accounts of institutional clients
managed as described below without significant client-imposed restrictions
("Historical Portfolios"). These accounts have substantially the same
investment objectives and policies and are managed in accordance with
essentially the same investment strategies and techniques as those for ALLIANCE
PREMIER GROWTH FUND, except for the ability of ALLIANCE PREMIER GROWTH FUND to
use futures and options as hedging tools and to invest in warrants. The
Historical Portfolios also are not subject to certain limitations,
diversification requirements and other restrictions imposed under the 1940 Act
and the Code to which ALLIANCE PREMIER GROWTH FUND, as a registered investment
company, is subject and which, if applicable to the Historical Portfolios, may
have adversely affected the performance results of the Historical Portfolios.
Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the twenty full calendar years during which
Mr. Harrison has managed the Historical Portfolios as an employee of Alliance
and cumulatively through September 30, 1999. As of September 30, 1999, the
assets in the Historical Portfolios totaled approximately $14.3 billion and the
average size of an institutional account in the Historical Portfolio was $492
million. Each Historical Portfolio has a nearly identical composition of
investment holdings and related percentage weightings.
The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be payable by ALLIANCE
PREMIER GROWTH FUND, which are higher than the fees imposed on the Historical
Portfolio and will result in a higher expense ratio and lower returns for
ALLIANCE PREMIER GROWTH FUND. Expenses associated with the distribution of
Class A, Class B, and Class C shares of ALLIANCE PREMIER GROWTH FUND in
accordance with the plan adopted by ALLIANCE PREMIER GROWTH FUND's Board of
Directors under Commission Rule 12b-1 are also excluded. The performance
data has also not been adjusted for corporate or individual taxes,
if any, payable by the account owners.
54
Alliance has calculated the investment performance of the Historical Portfolios
on a trade-date basis. Dividends have been accrued at the end of the month and
cash flows weighted daily. Composite investment performance for all portfolios
has been determined on an asset weighted basis. New accounts are included in
the composite investment performance computations at the beginning of the
quarter following the initial contribution. The total returns set forth below
are calculated using a method that links the monthly return amounts for the
disclosed periods, resulting in a time-weighted rate of return.
As reflected below, the Historical Portfolios have over time performed
favorably when compared with the performance of recognized performance indices.
The S&P 500 Index is a widely recognized, unmanaged index of market activity
based upon the aggregate performance of a selected portfolio of publicly traded
common stocks, including monthly adjustments to reflect the reinvestment of
dividends and other distributions. The S&P 500 Index reflects the total return
of securities comprising the Index, including changes in market prices as well
as accrued investment income, which is presumed to be reinvested. The Russell
1000 universe of securities is compiled by Frank Russell Company and is
segmented into two style indices, based on the capitalization-weighted median
book-to-price ratio of each of the securities. At each reconstitution, the
Russell 1000 constituents are ranked by their book-to-price ratio. Once so
ranked, the breakpoint for the two styles is determined by the median market
capitalization of the Russell 1000. Thus, those securities falling within the
top fifty percent of the cumulative market capitalization (as ranked by
descending book-to-price) become members of the Russell Price-Driven Indices.
The Russell 1000 Growth Index is, accordingly, designed to include those
Russell 1000 securities with a greater-than-average growth orientation. In
contrast with the securities in the Russell Price-Driven Indices, companies in
the Growth Index tend to exhibit higher price-to-book and price-earnings
ratios, lower dividend yield and higher forecasted growth values.
To the extent ALLIANCE PREMIER GROWTH FUND does not invest in U.S. common
stocks or utilizes investment techniques such as futures or options, the S&P
500 Index and Russell 1000 Growth Index may not be substantially comparable to
ALLIANCE PREMIER GROWTH FUND. The S&P 500 Index and Russell 1000 Growth Index
are included to illustrate material economic and market factors that existed
during the time period shown. The S&P 500 Index and Russell 1000 Growth Index
do not reflect the deduction of any fees. If ALLIANCE PREMIER GROWTH FUND were
to purchase a portfolio of securities substantially identical to the securities
comprising the S&P 500 Index or the Russell 1000 Growth Index, ALLIANCE PREMIER
GROWTH FUND's performance relative to the index would be reduced by ALLIANCE
PREMIER GROWTH FUND's expenses, including brokerage commissions, advisory fees,
distribution fees, custodial fees, transfer agency costs and other
administrative expenses, as well as by the impact on ALLIANCE PREMIER GROWTH
FUND's shareholders of sales charges and income taxes.
The Lipper Large Cap Growth Fund Index is prepared by Lipper, Inc. and
represents a composite index of the investment performance for the 30 largest
large capitalization growth mutual funds. The composite investment performance
of the Lipper Large Cap Growth Fund Index reflects investment management and
administrative fees and other operating expenses paid by these mutual funds and
reinvested income dividends and capital gain distributions, but excludes the
impact of any income taxes and sales charges.
The following performance data is provided solely to illustrate Mr. Harrison's
performance in managing the Historical Portfolios and the ALLIANCE PREMIER
GROWTH FUND as measured against certain broad based market indices and against
the composite performance of other open-end growth mutual funds. Investors
should not rely on the following performance data of the Historical Portfolios
as an indication of future performance of ALLIANCE PREMIER GROWTH FUND. The
composite investment performance for the periods presented may not be
indicative of future rates of return. Other methods of computing investment
performance may produce different results, and the results for different
periods may vary.
SCHEDULE OF COMPOSITE INVESTMENT PERFORMANCE--HISTORICAL PORTFOLIOS*
<TABLE>
<CAPTION>
LIPPER
RUSSELL LARGE CAP
PREMIER HISTORICAL S&P 500 1000 GROWTH
GROWTH PORTFOLIOS INDEX GROWTH INDEX FUND INDEX
FUND TOTAL RETURN** TOTAL RETURN TOTAL RETURN TOTAL RETURN
<S> <C> <C> <C> <C> <C>
1/1/99-
9/30/99*** 2.53% 7.35% 5.37% 6.40% 7.39%
Year ended December:
1998*** 42.97 52.16 28.60 38.71 36.47
1997*** 27.05 34.64 33.36 30.49 27.59
1996*** 18.84 22.06 22.96 23.12 20.56
1995*** 40.66 39.83 37.58 37.19 34.92
1994 (9.78) (4.82) 1.32 2.66 (0.82)
1993 5.35 10.54 10.08 2.90 10.66
1992 -- 12.18 7.62 5.00 6.89
1991 -- 38.91 30.47 41.16 37.34
1990 -- (1.57) (3.10) (0.26) (1.82)
1989 -- 38.80 31.69 35.92 32.30
1988 -- 10.88 16.61 11.27 10.84
1987 -- 8.49 5.25 5.31 3.33
1986 -- 27.40 18.67 15.36 16.75
1985 -- 37.41 31.73 32.85 32.85
1984 -- (3.31) 6.27 (.95) (4.25)
1983 -- 20.80 22.56 15.98 22.63
1982 -- 28.02 21.55 20.46 28.91
1981 -- (1.09) (4.92) (11.31) (0.06)
1980 -- 50.73 32.50 39.57 47.73
1979 -- 30.76 18.61 23.91 29.90
Cumulative total
return for
the period
January 1, 1979 to
September 30,
1999 -- 5061% 2665% 2532% 3182%
</TABLE>
* TOTAL RETURN IS A MEASURE OF INVESTMENT PERFORMANCE THAT IS BASED UPON THE
CHANGE IN VALUE OF AN INVESTMENT FROM THE BEGINNING TO THE END OF A SPECIFIED
PERIOD AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS. THE
BASIS OF PREPARATION OF THIS DATA IS DESCRIBED IN THE PRECEDING DISCUSSION.
TOTAL RETURNS FOR ALLIANCE PREMIER GROWTH FUND ARE FOR CLASS A SHARES, WITH
IMPOSITION OF THE MAXIMUM 4.25% SALES CHARGE.
** ASSUMES IMPOSITION OF THE MAXIMUM ADVISORY FEE CHARGED BY ALLIANCE FOR
ANY HISTORICAL PORTFOLIO FOR THE PERIOD INVOLVED.
55
*** DURING THIS PERIOD, THE HISTORICAL PORTFOLIOS DIFFERED FROM ALLIANCE
PREMIER GROWTH FUND IN THAT ALLIANCE PREMIER GROWTH FUND INVESTED A PORTION OF
ITS NET ASSETS IN WARRANTS ON EQUITY SECURITIES IN WHICH THE HISTORICAL
PORTFOLIOS WERE UNABLE, BY THEIR INVESTMENT RESTRICTIONS, TO PURCHASE. IN LIEU
OF WARRANTS, THE HISTORICAL PORTFOLIOS ACQUIRED THE COMMON STOCK UPON WHICH THE
WARRANTS WERE BASED.
The average annual total returns presented below are based upon the cumulative
total return as of September 30, 1999 and, for more than one year, assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.
AVERAGE ANNUAL TOTAL RETURNS
LIPPER
RUSSELL
LARGE CAP
PREMIER HISTORICAL S&P 500 1000
GROWTH
GROWTH PORTFOLIOS INDEX GROWTH INDEX
FUND INDEX
One year 34.34% 41.47% 27.79% 34.85%
35.60%
Three years 31.81 35.08 25.09 26.87
25.27
Five years 29.25 29.85 25.03 26.79
24.80
Ten years 22.71+ 19.80 16.80 17.96
16.98
Since January 1,
1979 -- 20.93 17.35 17.07
18.32
+ SINCE INCEPTION ON 9/28/92
PERFORMANCE OF A SIMILARLY MANAGED FUND. Alliance is the investment adviser of
an investment company organized and operated under the laws of the Grand Duchy
of Luxembourg, ACM International Health Care Fund (the "ACM Fund"), that has
substantially the same investment objective and policies as those of ALLIANCE
HEALTH CARE FUND. The ACM Fund has been managed in accordance with
substantially the same investment strategies and techniques as are employed
with respect to the ALLIANCE HEALTH CARE FUND.
Norman Fidel, the portfolio manager of ALLIANCE HEALTH CARE FUND, is also the
person who has been primarily responsible for the day-to-day management of the
ACM Fund since 1988. Mr. Fidel manages approximately $1.1 billion of Health
Care Industries assets, including approximately $320 million of assets in the
ACM Fund as of September 30, 1999.
The ACM Fund is not subject to certain limitations, diversification
requirements and other restrictions imposed under the 1940 Act and the Code to
which ALLIANCE HEALTH CARE FUND, as a registered investment company, is subject
and which, if applicable to the ACM Fund, may have adversely affected the
performance results of the ACM Fund.
Set forth below are performance data provided by Alliance relating to the Class
AX shares of the ACM Fund since 1988, when Mr. Fidel began managing that fund.
Performance data are shown annually and cumulatively through September 30, 1999.
The performance data are net of all fees imposed by the ACM Fund. The
performance data have not been adjusted to reflect the fees that are payable by
ALLIANCE HEALTH CARE FUND, which, at comparable asset levels, may be lower than
the fees imposed on the ACM Fund and may result in a lower expense ratio for
ALLIANCE HEALTH CARE FUND. Expenses associated with the distribution of Class
A, Class B and Class C shares of ALLIANCE HEALTH CARE FUND in accordance with
the plan adopted by ALLIANCE HEALTH CARE FUND'S Board of Directors under
Commission to Rule 12b-1 also are not reflected in the data below relating to
the ACM Fund. See "Fees and Expenses of the Funds." The performance data have
also not been adjusted for corporate or individual taxes, if any, payable by
the ACM Fund shareholders.
The following performance data are provided solely to illustrate Mr. Fidel's
performance in managing the ACM Fund. Investors should not rely on the
following performance data of the ACM Fund as an indication of future
performance of the ALLIANCE HEALTH CARE FUND. The investment performance for
the periods presented may not be indicative of future rates of return.
ACM INTERNATIONAL HEALTH CARE FUND
TOTAL RETURNS
1988 21.82%
1989 46.75%
1990 25.96%
1991 83.07%
1992 -10.46%
1993 -1.38%
1994 13.84%
1995 46.49%
1996 2.18%
1997 23.07%
1998 24.29%
1999* -11.82%
AVERAGE ANNUAL TOTAL RETURN
(FOR PERIODS ENDED 9/30/99)
One year 2.69%
Five years 15.38%
Ten years 16.92%
Cumulative Total Return of the ACM Fund from
12/31/87 to 9/30/99: 736.69%
* THROUGH SEPTEMBER 30, 1999 (UNANNUALIZED)
The Funds' SAIs have more detailed information about Alliance and other Fund
service providers.
- -------------------------------------------------------------------------------
PURCHASE AND SALE OF SHARES
- -------------------------------------------------------------------------------
HOW THE FUNDS VALUE THEIR SHARES
The Funds' net asset value or NAV is calculated at 4 p.m. Eastern time each day
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. The Funds value their securities
at their current market value determined on the basis of market quotations, or,
if such quotations are not readily available, such other methods as the
Funds' directors believe accurately reflect fair market value.
56
Your order for purchase, sale, or exchange of shares is priced at the next NAV
calculated after your order is received in proper form by the Fund. Your
purchase of Fund shares may be subject to an initial sales charge. Sales of
Fund shares may be subject to a contingent deferred sales charge or CDSC. See
the next section of this Prospectus, Distribution Arrangements, for details.
HOW TO BUY SHARES
You may purchase a Fund's shares through broker-dealers, banks, or other
financial intermediaries. You also may purchase shares directly from the Funds'
principal underwriter, Alliance Fund Distributors, Inc., or AFD.
Minimum investment amounts are:
- --Initial: $250
- --Subsequent: $ 50
- --Automatic Investment Program: $ 25
If you are an existing Fund shareholder, you may purchase shares by electronic
funds transfer in amounts not exceeding $500,000 if you have completed the
appropriate section of the Shareholder Application. Call 800-221-5672 to
arrange a transfer from your bank account.
A Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number. To avoid this, you
must provide your correct Tax Identification Number (Social Security Number for
most investors) on your account application.
A Fund may refuse any order to purchase shares. In particular, the Funds
reserve the right to restrict purchases of shares (including through exchanges)
when they appear to evidence a pattern of frequent purchases and sales made in
response to short-term considerations.
HOW TO EXCHANGE SHARES
You may exchange your Fund shares for shares of the same class of other
Alliance Mutual Funds (including AFD Exchange Reserves, a money market fund
managed by Alliance). Exchanges of shares are made at the next determined NAV,
without sales or service charges. You may request an exchange by mail or
telephone. You must call by 4:00 p.m. Eastern time to receive that day's NAV.
The Funds may change, suspend, or terminate the exchange service on 60 days'
written notice.
HOW TO SELL SHARES
You may "redeem" your shares (i.e., sell your shares to a Fund) on any day the
Exchange is open, either directly or through your financial intermediary. Your
sales price will be the next-determined NAV, less any applicable CDSC, after
the Fund receives your sales request in proper form. Normally, proceeds will be
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).
. SELLING SHARES THROUGH YOUR BROKER
Your broker must receive your sales request by 4:00 p.m., Eastern time, and
submit it to the Fund by 5:00 p.m., Eastern time, for you to receive that day's
NAV, less any applicable CDSC. Your broker is responsible for submitting all
necessary documentation to the Fund and may charge you for this service.
. SELLING SHARES DIRECTLY TO THE FUND
BY MAIL:
- -- Send a signed letter of instruction or stock power, along with certificates,
to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07906-1520
800-221-5672
- -- For your protection, a bank, a member firm of a national stock exchange, or
other eligible guarantor institution, must guarantee signatures. Stock power
forms are available from your financial intermediary, AFS, and many commercial
banks. Additional documentation is required for the sale of shares by
corporations, intermediaries, fiduciaries, and surviving joint owners. If you
have any questions about these procedures, contact AFS.
BY TELEPHONE:
- -- You may redeem your shares for which no stock certificates have been issued
by telephone request. Call AFS at 800-221-5672 with instructions on how you
wish to receive your sale proceeds.
- -- A telephone redemption request must be received by 4:00 p.m. Eastern time
for you to receive that day's NAV, less any applicable CDSC.
- -- If you have selected electronic funds transfer in your Shareholder
Application, the redemption proceeds will be sent directly to your bank.
Otherwise, the proceeds will be mailed to you.
- -- Redemption requests by electronic funds transfer may not exceed $100,000 per
day and redemption requests by check cannot exceed $50,000 per day.
- -- Telephone redemption is not available for shares held in nominee or "street
name" accounts, retirement plan accounts, or shares held by a shareholder who
has changed his or her address of record within the previous 30 calendar days.
57
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- -------------------------------------------------------------------------------
Each Fund's income dividends and capital gains distributions, if any, declared
by a Fund on its outstanding shares will, at the election of each shareholder,
be paid in cash or in additional shares of the same class of shares of that
Fund. If paid in additional shares, the shares will have an aggregate net asset
value as of the close of business on the day following the declaration date of
the dividend or distribution equal to the cash amount of the dividend or
distribution. You may make an election to receive dividends and distributions
in cash or in shares at the time you purchase shares. Your 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. Cash dividends may be paid in check, or at your election,
electronically via the ACH network. There is no sales or other charge on the
reinvestment of Fund dividends and distributions.
If you receive an income dividend or capital gains distribution in cash you
may, within 120 days following the date of its payment, reinvest the dividend
or distribution in additional shares of that Fund without charge by returning
to Alliance, with appropriate instructions, the check representing the dividend
or distribution. Thereafter, unless you otherwise specify, you will be deemed
to have elected to reinvest all subsequent dividends and distributions in
shares of that Fund.
For federal income tax purposes, the Fund's dividend distributions of net
income (or short-term taxable gains) will be taxable to you as ordinary income.
Distributions of long-term capital gains generally will be taxable to you as
long-term capital gains. A Fund's distributions also may be subject to certain
state and local taxes.
While it is the intention of each Fund 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 a Fund will
pay any dividends or realize any capital gains. Since REITs pay distributions
based on cash flow, without regard to depreciation and amortization, it is
likely that a portion of the distributions paid to ALLIANCE REAL ESTATE
INVESTMENT FUND and subsequently distributed to shareholders may be a
nontaxable return of capital. The final determination of the amount of a Fund's
return of capital distributions for the period will be made after the end of
each calendar year.
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such foreign taxes), but
there can be no assurance that any Fund will be able to do so. Furthermore, a
shareholder's ability to claim a foreign tax credit or deduction for foreign
taxes paid by a Fund may be subject to certain limitations imposed by the Code,
as a result of which a shareholder may not be permitted to claim a credit or
deduction for all or a portion of the amount of such taxes.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of a Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant), any further returns of capital will be taxable as capital gain.
See the Fund's SAI for a further explanation of these tax issues.
If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes.
Each year shortly after December 31, the Funds will send you tax information
stating the amount and type of all its distributions for the year. Consult your
tax adviser about the federal, state, and local tax consequences in your
particular circumstances.
- -------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
- -------------------------------------------------------------------------------
SHARE CLASSES. The Funds offer three classes of shares.
CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE
You can purchase Class A shares at NAV with an initial sales charge as follows:
INITIAL SALES CHARGE
AS % OF AS % OF COMMISSION
NET AMOUNT OFFERING TO DEALER/
INVESTED PRICE AGENT AS
% OF
OFFERING
AMOUNT PURCHASED PRICE
Up to $100,000 4.44% 4.25% 4.00%
$100,000 up to $250,000 3.36 3.25 3.00
$250,000 up to $500,000 2.30 2.25 2.00
$500,000 up to $1,000,000 1.78 1.75 1.50
You pay no initial sales charge on purchases of Class A Shares in the amount of
$1,000,000 or more, but may pay a 1% CDSC if you redeem your shares within 1
year. Alliance may pay the dealer or agent a fee of up to 1% of the dollar
amount purchased. Certain purchases of Class A shares may qualify for reduced
or eliminated sales charges under a Fund's Combined Purchase Privilege,
Cumulative Quantity Discount, Statement of Intention, Privilege for Certain
Retirement Plans, Reinstatement
58
Privilege and Sales at Net Asset Value Programs. Consult the Subscription
Application and a Fund's SAI for additional information about these options.
CLASS B SHARES--DEFERRED SALES CHARGE ALTERNATIVE
You can purchase Class B Shares at NAV without an initial sales charge. A Fund
will thus receive the full amount of your purchase. Your investment, however,
will be subject to a CDSC if you redeem shares within 4 years of purchase. The
CDSC varies depending on the number of years you hold the shares. The CDSC
amounts are:
YEARS SINCE PURCHASE CDSC
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None
If you exchange your shares for the Class B shares of another Alliance Mutual
Fund, the CDSC also will apply to those Class B shares. The CDSC period begins
with the date of your original purchase, not the date of exchange for the other
Class B shares.
The Fund's Class B shares purchased for cash automatically convert to Class A
shares eight years after the end of the month of your purchase. If you purchase
shares by exchange for the Class B shares of another Alliance Mutual Fund, the
conversion period runs from the date of your original purchase.
CLASS C SHARES--ASSET-BASED SALES CHARGE ALTERNATIVE
You can purchase shares at NAV without an initial sales charge. A Fund will
thus receive the full amount of your purchase. Your investment, however, will
be subject to a 1% CDSC if you redeem your shares within 1 year. If you
exchange your shares for the Class C shares of another Alliance Mutual Fund,
the 1% CDSC also will apply to those Class C shares. The 1-year period for the
CDSC begins with the date of your original purchase, not the date of the
exchange for the other Class C shares.
Class C shares do not convert to any other class of shares of the Fund.
ASSET-BASED SALES CHARGE OR RULE 12B-1 FEES. Each Fund has adopted a plan under
Commission Rule 12b-1 that allows the Fund to pay asset-based sales charges or
distribution and service fees for the distribution and sale of its shares. The
amount of these fees for each class of the Fund's shares is:
RULE 12B-1 FEE (AS A PERCENTAGE OF
AGGREGATE AVERAGE DAILY NET ASSETS)
Class A .30%*
Class B 1.00%
Class C 1.00%
* THE FEE UNDER THE RULE 12B-1 PLAN FOR THE CLASS A SHARES OF ALLIANCE
GROWTH FUND AND ALLIANCE PREMIER GROWTH FUND IS .50% OF THE AGGREGATE AVERAGE
DAILY NET ASSETS. THE DIRECTORS OF ALLIANCE GROWTH FUND CURRENTLY LIMIT THE
PAYMENTS TO .30%. THE DIRECTORS OF ALLIANCE PREMIER GROWTH FUND LIMIT PAYMENTS
FOR CLASS A SHARES PURCHASED AFTER NOVEMBER 1993 TO .30% OF AGGREGATE AVERAGE
DAILY NET ASSETS.
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. Class B and Class C shares are subject
to higher distribution fees than Class A shares (Class B shares are subject to
these higher fees for a period of eight years, after which they convert to
Class A shares). The higher fees mean a higher expense ratio, so Class B and
Class C shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares.
CHOOSING A CLASS OF SHARES. The decision as to which class of shares is more
beneficial to you depends on the amount and intended length of your investment.
If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider purchasing Class A shares. If you are making a
smaller investment, you might consider purchasing Class B shares because 100%
of your purchase is invested immediately. If you are unsure of the length of
your investment, you might consider Class C shares because there is no initial
sales charge and no CDSC as long as the shares are held for one year or more.
Dealers and agents may receive differing compensation for selling Class A,
Class B, or Class C shares. There is no size limit on purchases of Class A
shares. The maximum purchase of Class B shares is $250,000. The maximum
purchase of Class C shares is $1,000,000.
You should consult your financial agent to assist in choosing a class of Fund
shares.
APPLICATION OF THE CDSC. The CDSC is applied to the lesser of the original cost
of shares being redeemed or NAV at the time of redemption (or, as to Fund
shares acquired through an exchange, the cost of the Alliance Mutual Fund
shares originally purchased for cash). Shares obtained from dividend or
distribution reinvestment are not subject to the CDSC. The Fund may waive the
CDSC on redemptions of shares following the death or disability of a
shareholder, to meet the requirements of certain qualified retirement plans, or
under a monthly, bimonthly, or quarterly systematic withdrawal plan. See the
Fund's SAI for further information about CDSC waivers.
OTHER. A transaction, service, administrative or other similar fee may be
charged by your broker-dealer, agent, financial intermediary, or other
financial representative with respect to the purchase, sale, or exchange of
Class A, Class B, or Class C shares made through your financial representative.
The financial intermediaries also may impose requirements on the purchase,
sale, or exchange of shares that are different from, or in addition to, those
imposed by a Fund, including requirements as to the minimum initial and
subsequent investment amounts.
- -------------------------------------------------------------------------------
GENERAL INFORMATION
- -------------------------------------------------------------------------------
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or
59
longer, as permitted by federal securities law. The Funds reserve the right to
close an account that through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the account value
before the account is closed.
During drastic economic or market developments, you might have difficulty in
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephone requests to
purchase, sell, or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephone requests. The telephone
service may be suspended or terminated at any time without notice.
SHAREHOLDER SERVICES. AFS offers a variety of shareholder services. For more
information about these services or your account, call AFS's toll-free number,
800-221-5672. Some services are described in the attached Subscription
Application. You also may request a shareholder's manual explaining all
available services by calling 800-227-4618.
EMPLOYEE BENEFIT PLANS. Certain employee benefit plans, including
employer-sponsored tax-qualified 401(k) plans and other defined contribution
retirement plans ("Employee Benefit Plans"), may establish requirements as to
the purchase, sale or exchange of shares, including maximum and minimum initial
investment requirements, that are different from those described in this
Prospectus. Employee Benefit Plans also may not offer all classes of shares of
the Funds. In order to enable participants investing through Employee Benefit
Plans to purchase shares of the Funds, the maximum and minimum investment
amounts may be different for shares purchased through Employee Benefit Plans
from those described in this Prospectus. In addition, the Class A, Class B, and
Class C CDSC may be waived for investments made through Employee Benefit Plans.
60
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The financial highlights table is intended to help you understand each Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations). 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 has been audited by PricewaterhouseCoopers LLP, the
independent accountants for THE ALLIANCE FUND, ALLIANCE GROWTH FUND, ALLIANCE
PREMIER GROWTH FUND, ALLIANCE INTERNATIONAL PREMIER GROWTH FUND, ALLIANCE
BALANCED SHARES, ALLIANCE UTILITY INCOME FUND, ALLIANCE WORLDWIDE PRIVATIZATION
FUND, and ALLIANCE GROWTH AND INCOME FUND, and by Ernst & Young LLP, the
independent accountants for ALLIANCE ALL-ASIA INVESTMENT FUND, ALLIANCE
TECHNOLOGY FUND, ALLIANCE QUASAR FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE
NEW EUROPE FUND, ALLIANCE GLOBAL SMALL CAP FUND, ALLIANCE GLOBAL ENVIRONMENT
FUND, ALLIANCE GREATER CHINA '97 FUND and ALLIANCE REAL ESTATE INVESTMENT FUND,
whose reports, along with each Fund's financial statements, are included in the
SAI, which is available upon request.
61
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------ ---------------------------------------
NET GAINS
NET ASSET OR LOSSES ON DIVIDENDS DISTRIBUTIONS
VALUE, SECURITIES TOTAL FROM FROM NET IN EXCESS OF DISTRIBUTIONS
BEGINNING NET INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT NET INVESTMENT FROM
FISCAL YEAR OR PERIOD OF PERIOD INCOME (LOSS) AND UNREALIZED) OPERATIONS INCOME INCOME CAPITAL GAINS
- --------------------- --------- -------------- -------------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE PREMIER
GROWTH FUND
CLASS A
12/1/98 to 5/31/99+++ $27.50 $ (.13)(b) $ 4.57 $ 4.44 $0.00 $0.00 $ (.61)
Year ended 11/30/98 22.00 (.15)(b) 7.11 6.96 0.00 0.00 (1.46)
Year ended 11/30/97 17.98 (.10)(b) 5.20 5.10 0.00 0.00 (1.08)
Year ended 11/30/96 16.09 (.04)(b) 3.20 3.16 0.00 0.00 (1.27)
Year ended 11/30/95 11.41 (.03) 5.38 5.35 0.00 0.00 (.67)
Year ended 11/30/94 11.78 (.09) (.28) (.37) 0.00 0.00 0.00
CLASS B
12/1/98 to 5/31/99+++ $26.33 $ (.22)(b) $ 4.38 $ 4.16 $0.00 $0.00 $ (.61)
Year ended 11/30/98 21.26 (.30)(b) 6.83 6.53 0.00 0.00 (1.46)
Year ended 11/30/97 17.52 (.23)(b) 5.05 4.82 0.00 0.00 (1.08)
Year ended 11/30/96 15.81 (.14)(b) 3.12 2.98 0.00 0.00 (1.27)
Year ended 11/30/95 11.29 (.11) 5.30 5.19 0.00 0.00 (.67)
Year ended 11/30/94 11.72 (.15) (.28) (.43) 0.00 0.00 0.00
CLASS C
12/1/98 to 5/31/99+++ $26.36 $ (.22)(b) $ 4.39 $ 4.17 $0.00 $0.00 $ (.61)
Year ended 11/30/98 21.29 (.31)(b) 6.84 6.53 0.00 0.00 (1.46)
Year ended 11/30/97 17.54 (.24)(b) 5.07 4.83 0.00 0.00 (1.08)
Year ended 11/30/96 15.82 (.14)(b) 3.13 2.99 0.00 0.00 (1.27)
Year ended 11/30/95 11.30 (.08) 5.27 5.19 0.00 0.00 (.67)
Year ended 11/30/94 11.72 (.09) (.33) (.42) 0.00 0.00 0.00
ALLIANCE GROWTH FUND
CLASS A
11/1/98 to 4/30/99+++ $47.17 $ (.06)(b) $ 10.80 $ 10.74 $0.00 $0.00 $ (3.71)
Year ended 10/31/98 43.95 (.05)(b) 6.18 6.13 0.00 0.00 (2.91)
Year ended 10/31/97 34.91 (.10)(b) 10.17 10.07 0.00 0.00 (1.03)
Year ended 10/31/96 29.48 .05 6.20 6.25 (.19) 0.00 (.63)
Year ended 10/31/95 25.08 .12 4.80 4.92 (.11) 0.00 (.41)
5/1/94 to 10/31/94** 23.89 .09 1.10 1.19 0.00 0.00 0.00
Year ended 4/30/94 22.67 (.01)(c) 3.55 3.54 0.00 0.00 (2.32)
CLASS B
11/1/98 to 4/30/99+++ $38.15 $ (.20)(b) $ 8.63 $ 8.43 $0.00 $0.00 $ (3.71)
Year ended 10/31/98 36.31 (.31)(b) 5.06 4.75 0.00 0.00 (2.91)
Year ended 10/31/97 29.21 (.31)(b) 8.44 8.13 0.00 0.00 (1.03)
Year ended 10/31/96 24.78 (.12) 5.18 5.06 0.00 0.00 (.63)
Year ended 10/31/95 21.21 (.02) 4.01 3.99 (.01) 0.00 (.41)
5/1/94 to 10/31/94** 20.27 .01 .93 .94 0.00 0.00 0.00
Year ended 4/30/94 19.68 (.07)(c) 2.98 2.91 0.00 0.00 (2.32)
CLASS C
11/1/98 to 4/30/99+++ $38.17 $ (.20)(b) $ 8.64 $ 8.44 $0.00 $0.00 $ (3.71)
Year ended 10/31/98 36.33 (.31)(b) 5.06 4.75 0.00 0.00 (2.91)
Year ended 10/31/97 29.22 (.31)(b) 8.45 8.14 0.00 0.00 (1.03)
Year ended 10/31/96 24.79 (.12) 5.18 5.06 0.00 0.00 (.63)
Year ended 10/31/95 21.22 (.03) 4.02 3.99 (.01) 0.00 (.41)
5/1/94 to 10/31/94** 20.28 .01 .93 .94 0.00 0.00 0.00
8/2/93++ to 4/30/94 21.47 (.02)(c) 1.15 1.13 0.00 0.00 (2.32)
ALLIANCE TECHNOLOGY FUND
CLASS A
12/1/98 to 5/31/99+++ $68.60 $ (.37)(b) $ 18.72 $ 18.35 $0.00 $0.00 $ (5.17)
Year ended 11/30/98 54.44 (.68)(b) 15.42 14.74 0.00 0.00 (.58)
Year ended 11/30/97 51.15 (.51)(b) 4.22 3.71 0.00 0.00 (.42)
Year ended 11/30/96 46.64 (.39)(b) 7.28 6.89 0.00 0.00 (2.38)
Year ended 11/30/95 31.98 (.30)(b) 18.13 17.83 0.00 0.00 (3.17)
1/1/94 to 11/30/94** 26.12 (.32) 6.18 5.86 0.00 0.00 0.00
CLASS B
12/1/98 to 5/31/99+++ $65.75 $ (.63)(b) $ 17.90 $ 17.27 $0.00 $0.00 $ (5.17)
Year ended 11/30/98 52.58 (1.08)(b) 14.83 13.75 0.00 0.00 (.58)
Year ended 11/30/97 49.76 (.88)(b) 4.12 3.24 0.00 0.00 (.42)
Year ended 11/30/96 45.76 (.70)(b) 7.08 6.38 0.00 0.00 (2.38)
Year ended 11/30/95 31.61 (.60)(b) 17.92 17.32 0.00 0.00 (3.17)
1/1/94 to 11/30/94** 25.98 (.23) 5.86 5.63 0.00 0.00 0.00
CLASS C
12/1/98 to 5/31/99+++ $65.74 $ (.62)(b) $ 17.88 $ 17.26 $0.00 $0.00 $ (5.17)
Year ended 11/30/98 52.57 (1.08)(b) 14.83 13.75 0.00 0.00 (.58)
Year ended 11/30/97 49.76 (.88)(b) 4.11 3.23 0.00 0.00 (.42)
Year ended 11/30/96 45.77 (.70)(b) 7.07 6.37 0.00 0.00 (2.38)
Year ended 11/30/95 31.61 (.58)(b) 17.91 17.33 0.00 0.00 (3.17)
1/1/94 to 11/30/94** 25.98 (.24) 5.87 5.63 0.00 0.00 0.00
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 72.
62
<TABLE>
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
---------------- ---------------------------------------------------------
TOTAL NET ASSET RATIO OF RATIO OF NET
DIVIDENDS VALUE, NET ASSETS, EXPENSES INCOME (LOSS)
AND END OF TOTAL END OF PERIOD TO AVERAGE TO AVERAGE PORTFOLIO
FISCAL YEAR OR PERIOD DISTRIBUTIONS PERIOD RETURN(A) (000'S OMITTED) NET ASSETS NET ASSETS TURNOVER RATE
- --------------------- ------------- ------------- -------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE PREMIER
GROWTH FUND
CLASS A
12/1/98 to 5/31/99+++ $ (.61) $31.33 16.44% $2,900,593 1.48%* (.79)%* 39%
Year ended 11/30/98 (1.46) 27.50 33.94 1,418,262 1.59(f) (.59) 82
Year ended 11/30/97 (1.08) 22.00 30.46 373,099 1.57 (.52) 76
Year ended 11/30/96 (1.27) 17.98 21.52 172,870 1.65 (.27) 95
Year ended 11/30/95 (.67) 16.09 49.95 72,366 1.75 (.28) 114
Year ended 11/30/94 0.00 11.41 (3.14) 35,146 1.96 (.67) 98
CLASS B
12/1/98 to 5/31/99+++ $ (.61) $29.88 16.10% $5,737,435 2.16%* (1.47)%* 39%
Year ended 11/30/98 (1.46) 26.33 33.04 2,799,288 2.28(f) (1.27) 82
Year ended 11/30/97 (1.08) 21.26 29.62 858,449 2.25 (1.20) 76
Year ended 11/30/96 (1.27) 17.52 20.70 404,137 2.32 (.94) 95
Year ended 11/30/95 (.67) 15.81 49.01 238,088 2.43 (.95) 114
Year ended 11/30/94 0.00 11.29 (3.67) 139,988 2.47 (1.19) 98
CLASS C
12/1/98 to 5/31/99+++ $ (.61) $29.92 16.12% $2,061,862 2.16%* (1.47)%* 39%
Year ended 11/30/98 (1.46) 26.36 32.99 862,193 2.28(f) (1.30) 82
Year ended 11/30/97 (1.08) 21.29 29.64 177,923 2.24 (1.22) 76
Year ended 11/30/96 (1.27) 17.54 20.76 60,194 2.32 (.94) 95
Year ended 11/30/95 (.67) 15.82 48.96 20,679 2.42 (.97) 114
Year ended 11/30/94 0.00 11.30 (3.58) 7,332 2.47 (1.16) 98
ALLIANCE GROWTH FUND
CLASS A
11/1/98 to 4/30/99+++ $ (3.71) $54.20 23.84% $1,284,500 1.18%* (.24)%* 35%
Year ended 10/31/98 (2.91) 47.17 14.56 1,008,093 1.22(f) (.11) 61
Year ended 10/31/97 (1.03) 43.95 29.54 783,110 1.26(f) (.25) 48
Year ended 10/31/96 (.82) 34.91 21.65 499,459 1.30 .15 46
Year ended 10/31/95 (.52) 29.48 20.18 285,161 1.35 .56 61
5/1/94 to 10/31/94** 0.00 25.08 4.98 167,800 1.35* .86* 24
Year ended 4/30/94 (2.32) 23.89 15.66 102,406 1.40(d) .32 87
CLASS B
11/1/98 to 4/30/99+++ $ (3.71) $42.87 23.39% $5,158,813 1.90%* (.97)%* 35%
Year ended 10/31/98 (2.91) 38.15 13.78 4,230,756 1.94(f) (.83) 61
Year ended 10/31/97 (1.03) 36.31 28.64 3,578,806 1.96(f) (.94) 48
Year ended 10/31/96 (.63) 29.21 20.82 2,498,097 1.99 (.54) 46
Year ended 10/31/95 (.42) 24.78 19.33 1,052,020 2.05 (.15) 61
5/1/94 to 10/31/94** 0.00 21.21 4.64 751,521 2.05* .16* 24
Year ended 4/30/94 (2.32) 20.27 14.79 394,227 2.10(d) (.36) 87
CLASS C
11/1/98 to 4/30/99+++ $ (3.71) $42.90 23.41% $ 880,100 1.89%* (.96)%* 35%
Year ended 10/31/98 (2.91) 38.17 13.76 718,688 1.93(f) (.83) 61
Year ended 10/31/97 (1.03) 36.33 28.66 599,449 1.97(f) (.95) 48
Year ended 10/31/96 (.63) 29.22 20.81 403,478 2.00 (.55) 46
Year ended 10/31/95 (.42) 24.79 19.32 226,662 2.05 (.15) 61
5/1/94 to 10/31/94** 0.00 21.22 4.64 114,455 2.05* .16* 24
8/2/93++ to 4/30/94 (2.32) 20.28 5.27 64,030 2.10*(d) (.31)* 87
ALLIANCE TECHNOLOGY FUND
CLASS A
12/1/98 to 5/31/99+++ $ (5.17) $81.78 28.16% $1,307,309 1.57%* (.90)%* 27%
Year ended 11/30/98 (.58) 68.60 27.36 824,636 1.66(f) (1.13) 67
Year ended 11/30/97 (.42) 54.44 7.32 624,716 1.67(f) (.97) 51
Year ended 11/30/96 (2.38) 51.15 16.05 594,861 1.74 (.87) 30
Year ended 11/30/95 (3.17) 46.64 61.93 398,262 1.75 (.77) 55
1/1/94 to 11/30/94** 0.00 31.98 22.43 202,929 1.66* (1.22)* 55
CLASS B
12/1/98 to 5/31/99+++ $ (5.17) $77.85 27.70% $2,377,311 2.29%* (1.62)%* 27%
Year ended 11/30/98 (.58) 65.75 26.44 1,490,578 2.39(f) (1.86) 67
Year ended 11/30/97 (.42) 52.58 6.57 1,053,436 2.38(f) (1.70) 51
Year ended 11/30/96 (2.38) 49.76 15.20 660,921 2.44 (1.61) 30
Year ended 11/30/95 (3.17) 45.76 60.95 277,111 2.48 (1.47) 55
1/1/94 to 11/30/94** 0.00 31.61 21.67 18,397 2.43* (1.95)* 55
CLASS C
12/1/98 to 5/31/99+++ $ (5.17) $77.83 27.69% $ 521,911 2.28%* (1.61)%* 27%
Year ended 11/30/98 (.58) 65.74 26.44 271,320 2.40(f) (1.87) 67
Year ended 11/30/97 (.42) 52.57 6.55 184,194 2.38(f) (1.70) 51
Year ended 11/30/96 (2.38) 49.76 15.17 108,488 2.44 (1.60) 30
Year ended 11/30/95 (3.17) 45.77 60.98 43,161 2.48 (1.47) 55
1/1/94 to 11/30/94** 0.00 31.61 21.67 7,470 2.41* (1.94)* 55
</TABLE>
63
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------ ---------------------------------------
NET GAINS
NET ASSET OR LOSSES ON DIVIDENDS DISTRIBUTIONS
VALUE, SECURITIES TOTAL FROM FROM NET IN EXCESS OF DISTRIBUTIONS
BEGINNING NET INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT NET INVESTMENT FROM
FISCAL YEAR OR PERIOD OF PERIOD INCOME (LOSS) AND UNREALIZED) OPERATIONS INCOME INCOME CAPITAL GAINS
- --------------------- --------- -------------- -------------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE QUASAR FUND
CLASS A
10/1/98 to 3/31/99+++ $22.27 $(.08)(b) $ 2.06 $ 1.98 $0.00 $0.00 $ (1.01)
Year ended 9/30/98 30.37 (.17)(b) (6.70) (6.87) 0.00 0.00 (1.23)
Year ended 9/30/97 27.92 (.24)(b) 6.80 6.56 0.00 0.00 (4.11)
Year ended 9/30/96 24.16 (.25) 8.82 8.57 0.00 0.00 (4.81)
Year ended 9/30/95 22.65 (.22)(b) 5.59 5.37 0.00 0.00 (3.86)
Year ended 9/30/94 24.43 (.60) (.36) (.96) 0.00 0.00 (.82)
CLASS B
10/1/98 to 3/31/99+++ $20.17 $(.15)(b) $ 1.86 $ 1.71 $0.00 $0.00 $ (1.01)
Year ended 9/30/98 27.83 (.36)(b) (6.07) (6.43) 0.00 0.00 (1.23)
Year ended 9/30/97 26.13 (.42)(b) 6.23 5.81 0.00 0.00 (4.11)
Year ended 9/30/96 23.03 (.20) 8.11 7.91 0.00 0.00 (4.81)
Year ended 9/30/95 21.92 (.37)(b) 5.34 4.97 0.00 0.00 (3.86)
Year ended 9/30/94 23.88 (.53) (.61) (1.14) 0.00 0.00 (.82)
CLASS C
10/1/98 to 3/31/99+++ $20.18 $(.15)(b) $ 1.87 $ 1.72 $0.00 $0.00 $ (1.01)
Year ended 9/30/98 27.85 (.35)(b) (6.09) (6.44) 0.00 0.00 (1.23)
Year ended 9/30/97 26.14 (.42)(b) 6.24 5.82 0.00 0.00 (4.11)
Year ended 9/30/96 23.05 (.20) 8.10 7.90 0.00 0.00 (4.81)
Year ended 9/30/95 21.92 (.37)(b) 5.36 4.99 0.00 0.00 (3.86)
Year ended 9/30/94 23.88 (.36) (.78) (1.14) 0.00 0.00 (.82)
THE ALLIANCE FUND
CLASS A
12/1/98 to 5/31/99+++ $ 5.97 $(.01)(b) $ 1.40 $ 1.39 $0.00 $0.00 $ (.39)
Year ended 11/30/98 8.70 (.02)(b) (.54) (.56) 0.00 0.00 (2.17)
Year ended 11/30/97 7.71 (.02)(b) 2.09 2.07 (.02) 0.00 (1.06)
Year ended 11/30/96 7.72 .02 1.06 1.08 (.02) 0.00 (1.07)
Year ended 11/30/95 6.63 .02(b) 2.08 2.10 (.01) 0.00 (1.00)
1/1/94 to 11/30/94** 6.85 .01 (.23) (.22) 0.00 0.00 0.00
CLASS B
12/1/98 to 5/31/99+++ $ 5.51 $(.04)(b) $ 1.29 $ 1.25 $0.00 $0.00 $ (.39)
Year ended 11/30/98 8.25 (.07)(b) (.50) (.57) 0.00 0.00 (2.17)
Year ended 11/30/97 7.40 (.08)(b) 1.99 1.91 0.00 0.00 (1.06)
Year ended 11/30/96 7.49 (.01) .99 .98 0.00 0.00 (1.07)
Year ended 11/30/95 6.50 (.03)b) 2.02 1.99 0.00 0.00 (1.00)
1/1/94 to 11/30/94** 6.76 (.03) (.23) (.26) 0.00 0.00 0.00
CLASS C
12/1/98 to 5/31/99+++ $ 5.50 $(.03)(b) $ 1.28 $ 1.25 $0.00 $0.00 $ (.39)
Year ended 11/30/98 8.26 (.07)(b) (.52) (.59) 0.00 0.00 (2.17)
Year ended 11/30/97 7.41 (.08)(b) 1.99 1.91 0.00 0.00 (1.06)
Year ended 11/30/96 7.50 (.02) 1.00 .98 0.00 0.00 (1.07)
Year ended 11/30/95 6.50 (.03)(b) 2.03 2.00 0.00 0.00 (1.00)
1/1/94 to 11/30/94** 6.77 (.03) (.24) (.27) 0.00 0.00 0.00
5/3/93++ to 12/31/93 6.67 (.02) .88 .86 0.00 0.00 (.76)
ALLIANCE GROWTH AND
INCOME FUND
CLASS A
11/1/98 to 4/30/99+++ $ 3.44 $ .02(b) $ .71 $ .73 $ (.02) $0.00 $ (.35)
Year ended 10/31/98 3.48 .03(b) .43 .46 (.04) 0.00 (.46)
Year ended 10/31/97 3.00 .04(b) .87 .91 (.05) 0.00 (.38)
Year ended 10/31/96 2.71 .05 .50 .55 (.05) 0.00 (.21)
Year ended 10/31/95 2.35 .02 .52 .54 (.06) 0.00 (.12)
Year ended 10/31/94 2.61 .06 (.08) (.02) (.06) 0.00 (.18)
CLASS B
11/1/98 to 4/30/99+++ $ 3.41 $ .00(b) $ .71 $ .71 $ (.01) $0.00 $ (.35)
Year ended 10/31/98 3.45 .01(b) .43 .44 (.02) 0.00 (.46)
Year ended 10/31/97 2.99 .02(b) .85 .87 (.03) 0.00 (.38)
Year ended 10/31/96 2.69 .03 .51 .54 (.03) 0.00 (.21)
Year ended 10/31/95 2.34 .01 .49 .50 (.03) 0.00 (.12)
Year ended 10/31/94 2.60 .04 (.08) (.04) (.04) 0.00 (.18)
CLASS C
11/1/98 to 4/30/99+++ $ 3.41 $ .00(b) $ .71 $ .71 $ (.01) $0.00 $ (.35)
Year ended 10/31/98 3.45 .01(b) .43 .44 (.02) 0.00 (.46)
Year ended 10/31/97 2.99 .02(b) .85 .87 (.03) 0.00 (.38)
Year ended 10/31/96 2.70 .03 .50 .53 (.03) 0.00 (.21)
Year ended 10/31/95 2.34 .01 .50 .51 (.03) 0.00 (.12)
Year ended 10/31/94 2.60 .04 (.08) (.04) (.04) 0.00 (.18)
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 72.
64
<TABLE>
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
---------------- ---------------------------------------------------------
TOTAL NET ASSET RATIO OF RATIO OF NET
DIVIDENDS VALUE, NET ASSETS, EXPENSES INCOME (LOSS)
AND END OF TOTAL END OF PERIOD TO AVERAGE TO AVERAGE PORTFOLIO
FISCAL YEAR OR PERIOD DISTRIBUTIONS PERIOD RETURN(A) (000'S OMITTED) NET ASSETS NET ASSETS TURNOVER RATE
- --------------------- ------------- ------------- -------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE QUASAR FUND
CLASS A
10/1/98 to 3/31/99+++ $(1.01) $ 23.24 9.07% $ 540,632 1.67%* (.69)%* 49%
Year ended 9/30/98 (1.23) 22.27 (23.45) 495,070 1.61(f) (.59) 109
Year ended 9/30/97 (4.11) 30.37 27.81 402,081 1.67 (.91) 135
Year ended 9/30/96 (4.81) 27.92 42.42 229,798 1.79 (1.11) 168
Year ended 9/30/95 (3.86) 24.16 30.73 146,663 1.83 (1.06) 160
Year ended 9/30/94 (.82) 22.65 (4.05) 155,470 1.67 (1.15) 110
CLASS B
10/1/98 to 3/31/99+++ $(1.01) $ 20.87 8.67% $ 629,718 2.44%* (1.47)%* 49%
Year ended 9/30/98 (1.23) 20.17 (24.03) 625,147 2.39(f) (1.36) 109
Year ended 9/30/97 (4.11) 27.83 26.70 503,037 2.51 (1.73) 135
Year ended 9/30/96 (4.81) 26.13 41.48 112,490 2.62 (1.96) 168
Year ended 9/30/95 (3.86) 23.03 29.78 16,604 2.65 (1.88) 160
Year ended 9/30/94 (.82) 21.92 (4.92) 13,901 2.50 (1.98) 110
CLASS C
10/1/98 to 3/31/99+++ $(1.01) $ 20.89 8.71% $ 185,632 2.43%* (1.45)%* 49%
Year ended 9/30/98 (1.23) 20.18 (24.05) 182,110 2.38(f) (1.35) 109
Year ended 9/30/97 (4.11) 27.85 26.74 145,494 2.50 (1.72) 135
Year ended 9/30/96 (4.81) 26.14 41.46 28,541 2.61 (1.94) 168
Year ended 9/30/95 (3.86) 23.05 29.87 1,611 2.64 (1.76) 160
Year ended 9/30/94 (.82) 21.92 (4.92) 1,220 2.48 (1.96) 110
THE ALLIANCE FUND
CLASS A
12/1/98 to 5/31/99+++ $ (.39) $ 6.97 24.97% $1,075,099 1.08%* (.40)%* 53%
Year ended 11/30/98 (2.17) 5.97 (8.48) 953,181 1.03 (.36) 106
Year ended 11/30/97 (1.08) 8.70 31.82 1,201,435 1.03 (.29) 158
Year ended 11/30/96 (1.09) 7.71 16.49 999,067 1.04 .30 80
Year ended 11/30/95 (1.01) 7.72 37.87 945,309 1.08 .31 81
1/1/94 to 11/30/94** 0.00 6.63 (3.21) 760,679 1.05* .21* 63
CLASS B
12/1/98 to 5/31/99+++ $ (.39) $ 6.37 24.47% $ 94,466 1.90%* (1.22)%* 53%
Year ended 11/30/98 (2.17) 5.51 (9.27) 85,456 1.84 (1.17) 106
Year ended 11/30/97 (1.06) 8.25 30.74 70,461 1.85 (1.12) 158
Year ended 11/30/96 (1.07) 7.40 15.47 44,450 1.87 (.53) 80
Year ended 11/30/95 (1.00) 7.49 36.61 31,738 1.90 (.53) 81
1/1/94 to 11/30/94** 0.00 6.50 (3.85) 18,138 1.89* (.60)* 63
CLASS C
12/1/98 to 5/31/99+++ $ (.39) $ 6.36 24.52% $ 31,427 1.87%* (1.21)%* 53%
Year ended 11/30/98 (2.17) 5.50 (9.58) 21,231 1.84 (1.18) 106
Year ended 11/30/97 (1.06) 8.26 30.72 18,871 1.83 (1.10) 158
Year ended 11/30/96 (1.07) 7.41 15.48 13,899 1.86 (.51) 80
Year ended 11/30/95 (1.00) 7.50 36.79 10,078 1.89 (.51) 81
1/1/94 to 11/30/94** 0.00 6.50 (3.99) 6,230 1.87* (.59)* 63
5/3/93++ to 12/31/93 (.76) 6.77 13.95 4,006 1.94* (.74)* 66
ALLIANCE GROWTH AND
INCOME FUND
CLASS A
11/1/98 to 4/30/99+++ $ (.37) $ 3.80 23.08% $1,283,362 .95%* .91%* 29%
Year ended 10/31/98 (.50) 3.44 14.70 988,965 .93(f) .96 89
Year ended 10/31/97 (.43) 3.48 33.28 787,566 .92(f) 1.39 88
Year ended 10/31/96 (.26) 3.00 21.51 553,151 .97 1.73 88
Year ended 10/31/95 (.18) 2.71 24.21 458,158 1.05 1.88 142
Year ended 10/31/94 (.24) 2.35 (.67) 414,386 1.03 2.36 68
CLASS B
11/1/98 to 4/30/99+++ $ (.36) $ 3.76 22.56% $1,231,085 1.73%* .14%* 29%
Year ended 10/31/98 (.48) 3.41 14.07 787,730 1.72(f) .17 89
Year ended 10/31/97 (.41) 3.45 31.83 456,399 1.72(f) .56 88
Year ended 10/31/96 (.24) 2.99 21.20 235,263 1.78 .91 88
Year ended 10/31/95 (.15) 2.69 22.84 136,758 1.86 1.05 142
Year ended 10/31/94 (.22) 2.34 (1.50) 102,546 1.85 1.56 68
CLASS C
11/1/98 to 4/30/99+++ $ (.36) $ 3.76 22.56% $ 299,123 1.71%* .16%* 29%
Year ended 10/31/98 (.48) 3.41 14.07 179,487 1.72(f) .18 89
Year ended 10/31/97 (.41) 3.45 31.83 106,526 1.71(f) .58 88
Year ended 10/31/96 (.24) 2.99 20.72 61,356 1.76 .93 88
Year ended 10/31/95 (.15) 2.70 23.30 35,835 1.84 1.04 142
Year ended 10/31/94 (.22) 2.34 (1.50) 19,395 1.84 1.61 68
</TABLE>
65
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------ ---------------------------------------
NET GAINS
NET ASSET OR LOSSES ON DIVIDENDS DISTRIBUTIONS
VALUE, SECURITIES TOTAL FROM FROM NET IN EXCESS OF DISTRIBUTIONS
BEGINNING NET INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT NET INVESTMENT FROM
FISCAL YEAR OR PERIOD OF PERIOD INCOME (LOSS) AND UNREALIZED) OPERATIONS INCOME INCOME CAPITAL GAINS
- --------------------- --------- -------------- -------------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE BALANCED SHARES
CLASS A
Year ended 7/31/99 $15.97 $ .36(b) $ 1.29 $ 1.65 $ (.34) $0.00 $(1.65)
Year ended 7/31/98 16.17 .33(b) 1.86 2.19 (.32) 0.00 (2.07)
Year ended 7/31/97 14.01 .31(b) 3.97 4.28 (.32) 0.00 (1.80)
Year ended 7/31/96 15.08 .37 .45 .82 (.41) 0.00 (1.48)
Year ended 7/31/95 13.38 .46 1.62 2.08 (.36) 0.00 (.02)
CLASS B
Year ended 7/31/99 $15.54 $ .23(b) $ 1.25 $ 1.48 $ (.26) $0.00 $(1.65)
Year ended 7/31/98 15.83 .21(b) 1.81 2.02 (.24) 0.00 (2.07)
Year ended 7/31/97 13.79 .19(b) 3.89 4.08 (.24) 0.00 (1.80)
Year ended 7/31/96 14.88 .28 .42 .70 (.31) 0.00 (1.48)
Year ended 7/31/95 13.23 .30 1.65 1.95 (.28) 0.00 (.02)
CLASS C
Year ended 7/31/99 $15.57 $ .24(b) $ 1.25 $ 1.49 $ (.26) $0.00 $(1.65)
Year ended 7/31/98 15.86 .21(b) 1.81 2.02 (.24) 0.00 (2.07)
Year ended 7/31/97 13.81 .20(b) 3.89 4.09 (.24) 0.00 (1.80)
Year ended 7/31/96 14.89 .26 .45 .71 (.31) 0.00 (1.48)
Year ended 7/31/95 13.24 .30 1.65 1.95 (.28) 0.00 (.02)
ALLIANCE UTILITY INCOME FUND
CLASS A
12/1/98 to 5/31/99+++ $14.68 $ .17(b)(c) $ 2.37 $ 2.54 $ (.16) $0.00 $ (.34)
Year ended 11/30/98 12.48 .30(b)(c) 2.69 2.99 (.32) 0.00 (.47)
Year ended 11/30/97 10.59 .32(b)(c) 2.04 2.36 (.34) 0.00 (.13)
Year ended 11/30/96 10.22 .18(b)(c) .65 .83 (.46) 0.00 0.00
Year ended 11/30/95 8.97 .27(c) 1.43 1.70 (.45) 0.00 0.00
Year ended 11/30/94 9.92 .42(c) (.89) (.47) (.48) 0.00 0.00
CLASS B
12/1/98 to 5/31/99+++ $14.62 $ .12(b)(c) $ 2.36 $ 2.48 $ (.12) $0.00 $ (.34)
Year ended 11/30/98 12.46 .21(b)(c) 2.67 2.88 (.25) 0.00 (.47)
Year ended 11/30/97 10.57 .25(b)(c) 2.04 2.29 (.27) 0.00 (.13)
Year ended 11/30/96 10.20 .10(b)(c) .67 .77 (.40) 0.00 0.00
Year ended 11/30/95 8.96 .18(c) 1.45 1.63 (.39) 0.00 0.00
Year ended 11/30/94 9.91 .37(c) (.91) (.54) (.41) 0.00 0.00
CLASS C
12/1/98 to 5/31/99+++ $14.65 $ .12(b)(c) $ 2.35 $ 2.47 $ (.12) $0.00 $ (.34)
Year ended 11/30/98 12.47 .21(b)(c) 2.69 2.90 (.25) 0.00 (.47)
Year ended 11/30/97 10.59 .25(b)(c) 2.03 2.28 (.27) 0.00 (.13)
Year ended 11/30/96 10.22 .11(b)(c) .66 .77 (.40) 0.00 0.00
Year ended 11/30/95 8.97 .18(c) 1.46 1.64 (.39) 0.00 0.00
Year ended 11/30/94 9.92 .39(c) (.93) (.54) (.41) 0.00 0.00
ALLIANCE REAL ESTATE
INVESTMENT FUND
CLASS A
Year ended 8/31/99 $10.47 $ .46(b) $ (.06) $ .40 $ (.48)(g) $ .10 $ (.10)
Year ended 8/31/98 12.80 .52(b) (2.33) (1.81) (.51) 0.00 (.01)
10/1/96+ to 8/31/97 10.00 .30(b) 2.88 3.18 (.38)(g) 0.00 0.00
CLASS B
Year ended 8/31/99 $10.44 $ .38(b) $ (.05) $ .33 $ (.40)(g) $ .10 $ (.10)
Year ended 8/31/98 12.79 .42(b) (2.33) (1.91) (.43) 0.00 (.01)
10/1/96+ to 8/31/97 10.00 .23(b) 2.89 3.12 (.33)(g) 0.00 0.00
CLASS C
Year ended 8/31/99 $10.44 $ .38(b) $ (.05) $ .33 $ (.40)(g) $ .10 $ (.10)
Year ended 8/31/98 12.79 .42(b) (2.33) (1.91) (.43) 0.00 (.01)
10/1/96+ to 8/31/97 10.00 .23(b) 2.89 3.12 (.33)(g) 0.00 0.00
ALLIANCE NEW EUROPE FUND
CLASS A
Year ended 7/31/99 $21.85 $ .07(b) $ (.79) $ (.72) $0.00 $0.00 $(2.56)
Year ended 7/31/98 18.61 .05(b) 5.28 5.33 0.00 (.04) (2.05)
Year ended 7/31/97 15.84 .07(b) 4.20 4.27 (.15) (.03) (1.32)
Year ended 7/31/96 15.11 .18 1.02 1.20 0.00 0.00 (.47)
Year ended 7/31/95 12.66 .04 2.50 2.54 (.09) 0.00 0.00
CLASS B
Year ended 7/31/99 $20.76 $(.06)(b) $ (.75) $ (.81) $0.00 $0.00 $(2.56)
Year ended 7/31/98 17.87 (.08)(b) 5.02 4.94 0.00 0.00 (2.05)
Year ended 7/31/97 15.31 (.04)(b) 4.02 3.98 0.00 (.10) (1.32)
Year ended 7/31/96 14.71 .08 .99 1.07 0.00 0.00 (.47)
Year ended 7/31/95 12.41 (.05) 2.44 2.39 (.09) 0.00 0.00
CLASS C
Year ended 7/31/99 $20.77 $(.05)(b) $ (.75) $ (.80) $0.00 $0.00 $(2.56)
Year ended 7/31/98 17.89 (.08)(b) 5.01 4.93 0.00 0.00 (2.05)
Year ended 7/31/97 15.33 (.04)(b) 4.02 3.98 0.00 (.10) (1.32)
Year ended 7/31/96 14.72 .08 1.00 1.08 0.00 0.00 (.47)
Year ended 7/31/95 12.42 (.07) 2.46 2.39 (.09) 0.00 0.00
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 72.
66
<TABLE>
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
---------------- ---------------------------------------------------------
TOTAL NET ASSET RATIO OF RATIO OF NET
DIVIDENDS VALUE, NET ASSETS, EXPENSES INCOME (LOSS)
AND END OF TOTAL END OF PERIOD TO AVERAGE TO AVERAGE PORTFOLIO
FISCAL YEAR OR PERIOD DISTRIBUTIONS PERIOD RETURN(A) (000'S OMITTED) NET ASSETS NET ASSETS TURNOVER RATE
- --------------------- ------------- ------------- -------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE BALANCED SHARES
CLASS A
Year ended 7/31/99 $(1.99) $15.63 11.44% $ 189,953 1.22%(f) 2.31% 105%
Year ended 7/31/98 (2.39) 15.97 14.99 123,623 1.30(f) 2.07 145
Year ended 7/31/97 (2.12) 16.17 33.46 115,500 1.47(f) 2.11 207
Year ended 7/31/96 (1.89) 14.01 5.23 102,567 1.38 2.41 227
Year ended 7/31/95 (.38) 15.08 15.99 122,033 1.32 3.12 179
CLASS B
Year ended 7/31/99 $(1.91) $15.11 10.56% $ 136,384 1.97%(f) 1.56% 105%
Year ended 7/31/98 (2.31) 15.54 14.13 47,728 2.06(f) 1.34 145
Year ended 7/31/97 (2.04) 15.83 32.34 24,192 2.25(f) 1.32 207
Year ended 7/31/96 (1.79) 13.79 4.45 18,393 2.16 1.61 227
Year ended 7/31/95 (.30) 14.88 15.07 15,080 2.11 2.30 179
CLASS C
Year ended 7/31/99 $(1.91) $15.15 10.60% $ 63,517 1.96%(f) 1.57% 105%
Year ended 7/31/98 (2.31) 15.57 14.09 10,855 2.05(f) 1.36 145
Year ended 7/31/97 (2.04) 15.86 32.37 5,510 2.23(f) 1.37 207
Year ended 7/31/96 (1.79) 13.81 4.52 6,096 2.15 1.63 227
Year ended 7/31/95 (.30) 14.89 15.06 5,108 2.09 2.32 179
ALLIANCE UTILITY INCOME FUND
CLASS A
12/1/98 to 5/31/99+++ $ (.50) $16.72 17.77% $ 17,414 1.51%* 2.23%* 4%
Year ended 11/30/98 (.79) 14.68 24.99 9,793 1.50(d) 2.23 16
Year ended 11/30/97 (.47) 12.48 23.10 4,117 1.50(d) 2.89 37
Year ended 11/30/96 (.46) 10.59 8.47 3,294 1.50(d) 1.67 98
Year ended 11/30/95 (.45) 10.22 19.58 2,748 1.50(d) 2.48 162
Year ended 11/30/94 (.48) 8.97 (4.86) 1,068 1.50(d) 4.13 30
CLASS B
12/1/98 to 5/31/99+++ $ (.46) $16.64 17.42% $ 59,339 2.21%* 1.53%* 4%
Year ended 11/30/98 (.72) 14.62 24.02 35,550 2.20(d) 1.56 16
Year ended 11/30/97 (.40) 12.46 22.35 14,782 2.20(d) 2.27 37
Year ended 11/30/96 (.40) 10.57 7.82 13,561 2.20(d) .95 98
Year ended 11/30/95 (.39) 10.20 18.66 10,988 2.20(d) 1.60 162
Year ended 11/30/94 (.41) 8.96 (5.59) 2,353 2.20(d) 3.53 30
CLASS C
12/1/98 to 5/31/99+++ $ (.46) $16.66 17.32% $ 13,631 2.21%* 1.55%* 4%
Year ended 11/30/98 (.72) 14.65 24.16 7,298 2.20(d) 1.54 16
Year ended 11/30/97 (.40) 12.47 22.21 3,413 2.20(d) 2.27 37
Year ended 11/30/96 (.40) 10.59 7.81 3,376 2.20(d) .94 98
Year ended 11/30/95 (.39) 10.22 18.76 3,500 2.20(d) 1.88 162
Year ended 11/30/94 (.41) 8.97 (5.58) 2,651 2.20(d) 3.60 30
ALLIANCE REAL ESTATE
INVESTMENT FUND
CLASS A
Year ended 8/31/99 $ (.68) $10.19 3.86% $ 35,299 1.58% 4.57% 29%
Year ended 8/31/98 (.52) 10.47 (14.90) 51,214 1.55 3.87 23
10/1/96+ to 8/31/97 (.38) 12.80 32.24 37,638 1.77*(f) 2.73* 20
CLASS B
Year ended 8/31/99 $ (.60) $10.17 3.20% $ 168,741 2.31% 3.82% 29%
Year ended 8/31/98 (.44) 10.44 (15.56) 268,856 2.26 3.16 23
10/1/96+ to 8/31/97 (.33) 12.79 31.49 186,802 2.44*(f) 2.08* 20
CLASS C
Year ended 8/31/99 $ (.60) $10.17 3.20% $ 44,739 2.30% 3.77% 29%
Year ended 8/31/98 (.44) 10.44 (15.56) 69,575 2.26 3.15 23
10/1/96+ to 8/31/97 (.33) 12.79 31.49 42,719 2.43*(f) 2.06* 20
ALLIANCE NEW EUROPE FUND
CLASS A
Year ended 7/31/99 $(2.56) $18.57 (2.87)% $ 125,729 1.80%(f) .39% 89%
Year ended 7/31/98 (2.09) 21.85 32.21 130,777 1.85(f) .25 99
Year ended 7/31/97 (1.50) 18.61 28.78 78,578 2.05(f) .40 89
Year ended 7/31/96 (.47) 15.84 8.20 74,026 2.14 1.10 69
Year ended 7/31/95 (.09) 15.11 20.22 86,112 2.09 .37 74
CLASS B
Year ended 7/31/99 $(2.56) $17.39 (3.52)% $ 144,570 2.50%(f) (.34)% 89%
Year ended 7/31/98 (2.05) 20.76 31.22 137,425 2.56(f) (.40) 99
Year ended 7/31/97 (1.42) 17.87 27.76 66,032 2.75(f) (.23) 89
Year ended 7/31/96 (.47) 15.31 7.53 42,662 2.86 .59 69
Year ended 7/31/95 (.09) 14.71 19.42 34,527 2.79 (.33) 74
CLASS C
Year ended 7/31/99 $(2.56) $17.41 (3.46)% $ 45,845 2.50%(f) (.28)% 89%
Year ended 7/31/98 (2.05) 20.77 31.13 39,618 2.56(f) (.41) 99
Year ended 7/31/97 (1.42) 17.89 27.73 16,907 2.74(f) (.23) 89
Year ended 7/31/96 (.47) 15.33 7.59 10,141 2.87 .58 69
Year ended 7/31/95 (.09) 14.72 19.40 7,802 2.78 (.33) 74
</TABLE>
67
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------ ---------------------------------------
NET GAINS
NET ASSET OR LOSSES ON DIVIDENDS DISTRIBUTIONS
VALUE, SECURITIES TOTAL FROM FROM NET IN EXCESS OF DISTRIBUTIONS
BEGINNING NET INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT NET INVESTMENT FROM
FISCAL YEAR OR PERIOD OF PERIOD INCOME (LOSS) AND UNREALIZED) OPERATIONS INCOME INCOME CAPITAL GAINS
- --------------------- --------- -------------- -------------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE WORLDWIDE
PRIVATIZATION FUND
CLASS A
Year ended 6/30/99 $12.67 $ .00 (b) $ .93 $ .93 $ (.12) $0.00 $(1.64)
Year ended 6/30/98 13.26 .10 (b) .85 .95 (.18) 0.00 (1.36)
Year ended 6/30/97 12.13 .15 (b) 2.55 2.70 (.15) 0.00 (1.42)
Year ended 6/30/96 10.18 .10 (b) 1.85 1.95 0.00 0.00 0.00
Year ended 6/30/95 9.75 .06 .37 .43 0.00 0.00 0.00
CLASS B
Year ended 6/30/99 $12.37 $.(08)(b) $ .89 $ .81 $ (.04) $0.00 $(1.64)
Year ended 6/30/98 13.04 .02(b) .82 .84 (.15) 0.00 (1.36)
Year ended 6/30/97 11.96 .08(b) 2.50 2.58 (.08) 0.00 (1.42)
Year ended 6/30/96 10.10 (.02)(b) 1.88 1.86 0.00 0.00 0.00
Year ended 6/30/95 9.74 .02 .34 .36 0.00 0.00 0.00
CLASS C
Year ended 6/30/99 $12.37 $.(08)(b) $ .89 $ .81 $ (.04) $0.00 $(1.64)
Year ended 6/30/98 13.04 .05 (b) .79 .84 (.15) 0.00 (1.36)
Year ended 6/30/97 11.96 .12 (b) 2.46 2.58 (.08) 0.00 (1.42)
Year ended 6/30/96 10.10 .03(b) 1.83 1.86 0.00 0.00 0.00
2/8/95++ to 6/30/95 9.53 .05 .52 .57 0.00 0.00 0.00
ALLIANCE INTERNATIONAL
PREMIER GROWTH
CLASS A
12/1/98 to 5/31/99+++ $ 9.63 $(.06)(b)(c) $ .69 $ .63 $0.00 $0.00 $ 0.00
3/3/98+ to 11/30/98 10.00 (.08)(b)(c) (.29) (.37) 0.00 0.00 0.00
CLASS B
12/1/98 to 5/31/99+++ $ 9.58 $(.09)(b)(c) $ .68 $ .59 $0.00 $0.00 $ 0.00
3/3/98+ to 11/30/98 10.00 (.13)(b)(c) (.29) (.42) 0.00 0.00 0.00
CLASS C
12/1/98 to 5/31/99+++ $ 9.57 $(.09)(b)(c) $ .68 $ .59 $0.00 $0.00 $ 0.00
3/3/98+ to 11/30/98 10.00 (.15)(b)(c) (.28) (.43) 0.00 0.00 0.00
ALLIANCE GLOBAL
SMALL CAP FUND
CLASS A
Year ended 7/31/99 $12.14 $(.08)(b) $ .76 $ .68 $0.00 $0.00 $(1.16)
Year ended 7/31/98 12.87 (.11)(b) .37 .26 0.00 0.00 (.99)
Year ended 7/31/97 11.61 (.15)(b) 2.97 2.82 0.00 0.00 (1.56)
Year ended 7/31/96 10.38 (.14)(b) 1.90 1.76 0.00 0.00 (.53)
Year ended 7/31/95 11.08 (.09) 1.50 1.41 0.00 0.00 (2.11)(e)
CLASS B
Year ended 7/31/99 $11.20 $(.15)(b) $ .68 $ .53 $0.00 $0.00 $(1.16)
Year ended 7/31/98 12.03 (.18)(b) .34 .16 0.00 0.00 (.99)
Year ended 7/31/97 11.03 (.21)(b) 2.77 2.56 0.00 0.00 (1.56)
Year ended 7/31/96 9.95 (.20)(b) 1.81 1.61 0.00 0.00 (.53)
Year ended 7/31/95 10.78 (.12) 1.40 1.28 0.00 0.00 (2.11)(e)
CLASS C
Year ended 7/31/99 $11.22 $(.16)(b) $ .69 $ .53 $0.00 $0.00 $(1.16)
Year ended 7/31/98 12.05 (.19)(b) .35 .16 0.00 0.00 (.99)
Year ended 7/31/97 11.05 (.22)(b) 2.78 2.56 0.00 0.00 (1.56)
Year ended 7/31/96 9.96 (.20)(b) 1.82 1.62 0.00 0.00 (.53)
Year ended 7/31/95 10.79 (.17) 1.45 1.28 0.00 0.00 (2.11)(e)
ALLIANCE INTERNATIONAL FUND
CLASS A
Year ended 6/30/99 $18.55 $(.04)(b)(c) $ (.75) $ (.79) $0.00 $(.48) $(1.04)
Year ended 6/30/98 18.69 (.01)(b)(c) 1.13 1.12 0.00 (.05) (1.21)
Year ended 6/30/97 18.32 .06 (b) 1.51 1.57 (.12) 0.00 (1.08)
Year ended 6/30/96 16.81 .05 (b) 2.51 2.56 0.00 0.00 (1.05)
Year ended 6/30/95 18.38 .04 .01 .05 0.00 0.00 (1.62)
CLASS B
Year ended 6/30/99 $17.41 $(.16)(b)(c) $ (.68) $ (.84) $0.00 $(.34) $(1.04)
Year ended 6/30/98 17.71 (.16)(b)(c) 1.07 .91 0.00 0.00 (1.21)
Year ended 6/30/97 17.45 (.09)(b) 1.43 1.34 0.00 0.00 (1.08)
Year ended 6/30/96 16.19 (.07)(b) 2.38 2.31 0.00 0.00 (1.05)
Year ended 6/30/95 17.90 (.01) (.08) (.09) 0.00 0.00 (1.62)
CLASS C
Year ended 6/30/99 $17.42 $(.16)(b)(c) $ (.69) $ (.85) $0.00 $(.34) $(1.04)
Year ended 6/30/98 17.73 (.15)(b)(c) 1.05 .90 0.00 0.00 (1.21)
Year ended 6/30/97 17.46 (.09)(b) 1.44 1.35 0.00 0.00 (1.08)
Year ended 6/30/96 16.20 (.07)(b) 2.38 2.31 0.00 0.00 (1.05)
Year ended 6/30/95 17.91 (.14) .05 (.09) 0.00 0.00 (1.62)
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 72.
68
<TABLE>
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
---------------- ---------------------------------------------------------
TOTAL NET ASSET RATIO OF RATIO OF NET
DIVIDENDS VALUE, NET ASSETS, EXPENSES INCOME (LOSS)
AND END OF TOTAL END OF PERIOD TO AVERAGE TO AVERAGE PORTFOLIO
FISCAL YEAR OR PERIOD DISTRIBUTIONS PERIOD RETURN(A) (000'S OMITTED) NET ASSETS NET ASSETS TURNOVER RATE
- --------------------- ------------- ------------- -------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE WORLDWIDE
PRIVATIZATION FUND
CLASS A
Year ended 6/30/99 $(1.76) $11.84 9.86% $ 340,194 1.92%(f) (.01)% 58%
Year ended 6/30/98 (1.54) 12.67 9.11 467,960 1.73 .80 53
Year ended 6/30/97 (1.57) 13.26 25.16 561,793 1.72 1.27 48
Year ended 6/30/96 0.00 12.13 19.16 672,732 1.87 .95 28
Year ended 6/30/95 0.00 10.18 4.41 13,535 2.56 .66 36
CLASS B
Year ended 6/30/99 $(1.68) $11.50 8.91% $ 117,420 2.63%(f) (1.43)% 58%
Year ended 6/30/98 (1.51) 12.37 8.34 156,348 2.45 .20 53
Year ended 6/30/97 (1.50) 13.04 24.34 121,173 2.43 .66 48
Year ended 6/30/96 0.00 11.96 18.42 83,050 2.83 (.20) 28
Year ended 6/30/95 0.00 10.10 3.70 79,359 3.27 .01 36
CLASS C
Year ended 6/30/99 $(1.68) $11.50 8.91% $ 20,397 2.63%(f) (1.44)% 58%
Year ended 6/30/98 (1.51) 12.37 8.34 26,635 2.44 .38 53
Year ended 6/30/97 (1.50) 13.04 24.33 12,929 2.42 1.06 48
Year ended 6/30/96 0.00 11.96 18.42 2,383 2.57 .63 28
2/8/95++ to 6/30/95 0.00 10.10 5.98 338 1.03* 1.04* 36
ALLIANCE INTERNATIONAL
PREMIER GROWTH
CLASS A
12/1/98 to 5/31/99+++ $ 0.00 $10.26 6.54% $ 10,256 2.52%(d) (1.09)% 121%
3/3/98+ to 11/30/98 0.00 9.63 (3.70) 7,255 2.50*(d) (.90)* 151
CLASS B
12/1/98 to 5/31/99+++ $ 0.00 $10.17 6.16% $ 14,807 3.22%(d) (1.80)% 121%
3/3/98+ to 11/30/98 0.00 9.58 (4.20) 11,710 3.20*(d) (1.41)* 151
CLASS C
12/1/98 to 5/31/99+++ $ 0.00 $10.16 6.16% $ 4,721 3.22%(d) (1.76)% 121%
3/3/98+ to 11/30/98 0.00 9.57 (4.30) 3,120 3.20*(d) (1.69)* 151
ALLIANCE GLOBAL
SMALL CAP FUND
CLASS A
Year ended 7/31/99 $(1.16) $11.66 7.51% $ 77,164 2.37%(f) (.79)% 120%
Year ended 7/31/98 (.99) 12.14 2.49 82,843 2.16(f) (.88) 113
Year ended 7/31/97 (1.56) 12.87 26.47 85,217 2.41(f) (1.25) 129
Year ended 7/31/96 (.53) 11.61 17.46 68,623 2.51 (1.22) 139
Year ended 7/31/95 (2.11) 10.38 16.62 60,057 2.54(d) (1.17) 128
CLASS B
Year ended 7/31/99 $(1.16) $10.57 6.74% $ 30,205 3.14%(f) (1.59)% 120%
Year ended 7/31/98 (.99) 11.20 1.80 38,827 2.88(f) (1.58) 113
Year ended 7/31/97 (1.56) 12.03 25.42 31,946 3.11(f) (1.92) 129
Year ended 7/31/96 (.53) 11.03 16.69 14,247 3.21 (1.88) 139
Year ended 7/31/95 (2.11) 9.95 15.77 5,164 3.20(d) (1.92) 128
CLASS C
Year ended 7/31/99 $(1.16) $10.59 6.72% $ 7,058 3.15%(f) (1.61)% 120%
Year ended 7/31/98 (.99) 11.22 1.79 9,471 2.88(f) (1.59) 113
Year ended 7/31/97 (1.56) 12.05 25.37 8,718 3.10(f) (1.93) 129
Year ended 7/31/96 (.53) 11.05 16.77 4,119 3.19 (1.85) 139
Year ended 7/31/95 (2.11) 9.96 15.75 1,407 3.25(d) (2.10) 128
ALLIANCE INTERNATIONAL FUND
CLASS A
Year ended 6/30/99 $(1.52) $16.24 (3.95)% $ 78,303 1.80%(d)(f) (.25)%(c) 178%
Year ended 6/30/98 (1.26) 18.55 6.79 131,565 1.65(d) (.05)(c) 121
Year ended 6/30/97 (1.20) 18.69 9.30 190,173 1.74(f) .31 94
Year ended 6/30/96 (1.05) 18.32 15.83 196,261 1.72 .31 78
Year ended 6/30/95 (1.62) 16.81 .59 165,584 1.73 .26 119
CLASS B
Year ended 6/30/99 $(1.38) $15.19 (4.56)% $ 55,724 2.61%(d)(f) (1.02)%(c) 178%
Year ended 6/30/98 (1.21) 17.41 5.92 71,370 2.49(d) (.90)(c) 121
Year ended 6/30/97 (1.08) 17.71 8.37 77,725 2.58(f) (.51) 94
Year ended 6/30/96 (1.05) 17.45 14.87 72,470 2.55% (.46) 78
Year ended 6/30/95 (1.62) 16.19 (.22) 48,998 2.57 (.62) 119
CLASS C
Year ended 6/30/99 $(1.38) $15.19 (4.62)% $ 16,876 2.61%(d)(f) (1.02)%(c) 178%
Year ended 6/30/98 (1.21) 17.42 5.85 20,428 2.48(d) (.90)(c) 121
Year ended 6/30/97 (1.08) 17.73 8.42 23,268 2.56(f) (.51) 94
Year ended 6/30/96 (1.05) 17.46 14.85 26,965 2.53 (.47) 78
Year ended 6/30/95 (1.62) 16.20 (.22) 19,395 2.54 (.88) 119
</TABLE>
69
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
------------------------------------------ ---------------------------------------
NET GAINS
NET ASSET OR LOSSES ON DIVIDENDS DISTRIBUTIONS
VALUE, SECURITIES TOTAL FROM FROM NET IN EXCESS OF DISTRIBUTIONS
BEGINNING NET INVESTMENT (BOTH REALIZED INVESTMENT INVESTMENT NET INVESTMENT FROM
FISCAL YEAR OR PERIOD OF PERIOD INCOME (LOSS) AND UNREALIZED) OPERATIONS INCOME INCOME CAPITAL GAINS
- --------------------- --------- -------------- -------------- ---------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE GREATER
CHINA '97 FUND
CLASS A
Year ended 7/31/99 $ 4.84 $ .02(b)(c) $ 3.34 $ 3.36 $0.00 $0.00 $ 0.00
9/3/97+ to 7/31/98 10.00 .08(b)(c) (5.18) (5.10) (.06) 0.00 0.00
CLASS B
Year ended 7/31/99 $ 4.82 $(.01)(b)(c) $ 3.31 $ 3.30 $0.00 $0.00 $ 0.00
9/3/97+ to 7/31/98 10.00 .03(b)(c) (5.17) (5.14) (.03) (.01) 0.00
CLASS C
Year ended 7/31/99 $ 4.82 $(.03)(b)(c) $ 3.32 $ 3.29 $0.00 $0.00 $ 0.00
9/3/97+ to 7/31/98 10.00 .03(b)(c) (5.17) (5.14) (.03) (.01) 0.00
ALLIANCE ALL-ASIA
INVESTMENT FUND
CLASS A
11/1/98 to 4/30/99+++ $ 5.86 $(.07)(b)(c) $ 1.88 $ 1.81 $0.00 $0.00 $ 0.00
Year ended 10/31/98 7.54 (.10)(b)(c) (1.58) (1.68) 0.00 0.00 0.00
Year ended 10/31/97 11.04 (.21)(b)(c) (2.95) (3.16) 0.00 0.00 (.34)
Year ended 10/31/96 10.45 (.21)(b)(c) .88 .67 0.00 0.00 (.08)
11/28/94+ to 10/31/95 10.00 (.19)(c)(b) .64 .45 0.00 0.00 0.00
CLASS B
11/1/98 to 4/30/99+++ $ 5.71 $(.09)(b)(c) $ 1.82 $ 1.73 $0.00 $0.00 $ 0.00
Year ended 10/31/98 7.39 (.14)(b)(c) (1.54) (1.68) 0.00 0.00 0.00
Year ended 10/31/97 10.90 (.28)(b)(c) (2.89) (3.17) 0.00 0.00 (.34)
Year ended 10/31/96 10.41 (.28)(b)(c) .85 .57 0.00 0.00 (.08)
11/28/94+ to 10/31/95 10.00 (.25)(b)(c) .66 .41 0.00 0.00 0.00
CLASS C
11/1/98 to 4/30/99+++ $ 5.72 $(.09)(b)(c) $ 1.83 $ 1.74 $0.00 $0.00 $ 0.00
Year ended 10/31/98 7.40 (.14)(b)(c) (1.54) (1.68) 0.00 0.00 0.00
Year ended 10/31/97 10.91 (.27)(b)(c) (2.90) (3.17) 0.00 0.00 (.34)
Year ended 10/31/96 10.41 (.28)(b)(c) .86 .58 0.00 0.00 (.08)
11/28/94+ to 10/31/95 10.00 (.35)(b)(c) .76 .41 0.00 0.00 0.00
ALLIANCE GLOBAL
ENVIRONMENT FUND (H)
CLASS A
11/1/98 to 4/30/99+++ $ 8.34 $(.11)(b)(c) $ 1.44 $ 1.33 $0.00 $0.00 $(3.10)
Year ended 10/31/98 18.77 (.24)(b) (1.12) (1.36) 0.00 0.00 (9.07)
Year ended 10/31/97 16.48 (.23)(b) 3.65 3.42 0.00 0.00 (1.13)
Year ended 10/31/96 12.37 (.13)(b) 4.26 4.13 (.02) 0.00 0.00
Year ended 10/31/95 11.74 .03 .60 .63 0.00 0.00 0.00
Year ended 10/31/94 10.97 0.00 .77 .77 0.00 0.00 0.00
CLASS B
11/1/98 to 4/30/99+++ $ 8.30 $(.13)(b)(c) $ 1.43 $ 1.30 $0.00 $0.00 $(3.10)
Year ended 10/31/98 18.76 (.27)(b) (1.12) (1.39) 0.00 0.00 (9.07)
10/3/97++ to 10/31/97 19.92 (.20)(b) (.96) (1.16) 0.00 0.00 0.00
CLASS C
11/1/98 to 4/30/99+++ $ 8.27 $(.12)(b)(c) $ 1.41 $ 1.29 $0.00 $0.00 $(3.10)
11/5/97++ to 10/31/98 19.15 (.27)(b) (1.54) (1.81) 0.00 0.00 (9.07)
</TABLE>
PLEASE REFER TO THE FOOTNOTES ON PAGE 72.
70
<TABLE>
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
---------------- ---------------------------------------------------------
TOTAL NET ASSET RATIO OF RATIO OF NET
DIVIDENDS VALUE, NET ASSETS, EXPENSES INCOME (LOSS)
AND END OF TOTAL END OF PERIOD TO AVERAGE TO AVERAGE PORTFOLIO
FISCAL YEAR OR PERIOD DISTRIBUTIONS PERIOD RETURN(A) (000'S OMITTED) NET ASSETS NET ASSETS TURNOVER RATE
- --------------------- ------------- ------------- -------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE GREATER
CHINA '97 FUND
CLASS A
Year ended 7/31/99 $ 0.00 $ 8.20 69.42% $ 1,011 2.52%(d)(f) .36% 94%
9/3/97+ to 7/31/98 (.06) 4.84 (51.20) 445 2.52(d)(f)* 1.20* 58
CLASS B
Year ended 7/31/99 $ 0.00 $ 8.12 68.46% $ 1,902 3.22%(d)(f) (.22)% 94%
9/3/97+ to 7/31/98 (.04) 4.82 (51.53) 1,551 3.22(d)(f)* .53* 58
CLASS C
Year ended 7/31/99 $ 0.00 $ 8.11 68.26% $ 162 3.22%(d)(f) (.49)% 94%
9/3/97+ to 7/31/98 (.04) 4.82 (51.53) 102 3.22(d)(f)* .50* 58
ALLIANCE ALL-ASIA
INVESTMENT FUND
CLASS A
11/1/98 to 4/30/99+++ $ 0.00 $ 7.67 30.89% $ 6,878 3.03%* (2.24)%* 210%
Year ended 10/31/98 0.00 5.86 (22.28) 3,778 3.74(d)(f) (1.50) 93
Year ended 10/31/97 (.34) 7.54 (29.61) 5,916 3.45(d) (1.97) 70
Year ended 10/31/96 (.08) 11.04 6.43 12,284 3.37*(d) (1.75) 66
11/28/94+ to 10/31/95 0.00 10.45 4.50 2,870 4.42*(d) (1.87)* 90
CLASS B
11/1/98 to 4/30/99+++ $ 0.00 $ 7.44 30.30% $ 13,042 3.73%* (2.94)%* 210%
Year ended 10/31/98 0.00 5.71 (22.73) 8,844 4.49(d)(f) (2.22) 93
Year ended 10/31/97 (.34) 7.39 (30.09) 11,439 4.15(d) (2.67) 70
Year ended 10/31/96 (.08) 10.90 5.49 23,784 4.07(d) (2.44) 66
11/28/94+ to 10/31/95 0.00 10.41 4.10 5,170 5.20*(d) (2.64)* 90
CLASS C
11/1/98 to 4/30/99+++ $ 0.00 $ 7.46 30.42% $ 3,262 3.73%* (2.95)%* 210%
Year ended 10/31/98 0.00 5.72 (22.70) 1,717 4.48(d)(f) (2.20) 93
Year ended 10/31/97 (.34) 7.40 (30.06) 1,859 4.15(d) (2.66) 70
Year ended 10/31/96 (.08) 10.91 5.59 4,228 4.07(d) (2.42) 66
11/28/94+ to 10/31/95 0.00 10.41 4.10 597 5.84*(d) (3.41)* 90
ALLIANCE GLOBAL
ENVIRONMENT FUND (H)
CLASS A
11/1/98 to 4/30/99+++ $(3.10) $ 6.57 25.60% $ 10,500 4.12%* (3.56)%* 86%
Year ended 10/31/98 (9.07) 8.34 (10.51) 13,295 2.80(f) (2.27) 205
Year ended 10/31/97 (1.13) 18.77 23.51 52,378 2.39 (1.35) 145
Year ended 10/31/96 (.02) 16.48 33.48 100,271 1.60 (.85) 268
Year ended 10/31/95 0.00 12.37 5.37 85,416 1.57 .21 109
Year ended 10/31/94 0.00 11.74 7.02 81,102 1.67 (.04) 42
CLASS B
11/1/98 to 4/30/99+++ $(3.10) $ 6.50 25.22% $ 220 4.78%* (4.22)%* 86%
Year ended 10/31/98 (9.07) 8.30 (10.79) 152 3.52(f) (2.93) 205
10/3/97++ to 10/31/97 0.00 18.76 (5.82) 235 20.84* (1.03)* 145
CLASS C
11/1/98 to 4/30/99+++ $(3.10) $ 6.46 25.18% $ 39 4.61%* (4.07)%* 86%
11/5/97++ to 10/31/98 (9.07) 8.27 (12.88) 31 3.39(f)* (2.75)* 205
</TABLE>
71
+ COMMENCEMENT OF OPERATIONS.
++ COMMENCEMENT OF DISTRIBUTION.
+++ UNAUDITED.
* ANNUALIZED.
** REFLECTS A CHANGE IN FISCAL YEAR END.
(A) 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 THE NET ASSET VALUE DURING THE PERIOD, AND A
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 INVESTMENT RETURNS CALCULATED FOR PERIODS OF LESS THAN ONE YEAR
ARE NOT ANNUALIZED.
(B) BASED ON AVERAGE SHARES OUTSTANDING.
(C) NET OF FEE WAIVER AND EXPENSE REIMBURSEMENT.
(D) NET OF EXPENSES ASSUMED AND/OR WAIVED/REIMBURSED. IF THE FOLLOWING FUNDS
HAD BORNE ALL EXPENSES IN THEIR MOST RECENT FIVE FISCAL YEARS, THEIR EXPENSE
RATIOS, WITHOUT GIVING EFFECT TO THE EXPENSE OFFSET ARRANGEMENT DESCRIBED IN
(F) BELOW, WOULD HAVE BEEN AS FOLLOWS:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE ALL-ASIA
INVESTMENT FUND
CLASS A - 10.57%* 3.61% 3.57% 4.63% -
CLASS B - 11.32%* 4.33% 4.27% 5.39% -
CLASS C - 11.38%* 4.30% 4.27% 5.42% -
ALLIANCE GROWTH
FUND
CLASS A 1.46% - - - - -
CLASS B 2.13% - - - - -
CLASS C 2.13%* - - - - -
ALLIANCE GLOBAL
SMALL CAP FUND
CLASS A - 2.61% - - - -
CLASS B - 3.27% - - - -
CLASS C - 3.31% - - - -
ALLIANCE UTILITY
INCOME FUND
CLASS A 13.72% 4.86%* 3.38% 3.55% 2.48% -
CLASS B 14.42% 5.34%* 4.08% 4.28% 3.21% -
CLASS C 14.42% 5.99%* 4.07% 4.28% 3.22% -
ALLIANCE INTERNATIONAL
FUND
CLASS A - - - - 1.80% 1.91%
CLASS B - - - - 2.64% 2.74%
CLASS C - - - - 2.63% 2.75%
ALLIANCE GREATER
CHINA '97 FUND
CLASS A - - - - 18.27%* 19.68%
CLASS B - - - - 19.18%* 20.22%
CLASS C - - - - 19.37%* 20.41%
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND
CLASS A - - - - 5.19% 3.75%
CLASS B - - - - 6.14% 4.43%
CLASS C - - - - 6.00% 4.44%
</TABLE>
FOR THE EXPENSE RATIOS OF THE FUNDS IN YEARS PRIOR TO FISCAL YEAR 1994,
ASSUMING THE FUNDS HAD BORNE ALL EXPENSES, PLEASE SEE THE FINANCIAL STATEMENTS
IN EACH FUND'S STATEMENT OF ADDITIONAL INFORMATION.
(E) "DISTRIBUTIONS FROM NET REALIZED GAINS" INCLUDES A RETURN OF CAPITAL OF
$(.12).
(F) AMOUNTS DO NOT REFLECT THE IMPACT OF EXPENSE OFFSET ARRANGEMENTS WITH THE
TRANSFER AGENT. TAKING INTO ACCOUNT SUCH EXPENSE OFFSET ARRANGEMENTS, THE RATIO
OF EXPENSES TO AVERAGE NET ASSETS, ASSUMING THE ASSUMPTION AND/OR
WAIVER/REIMBURSEMENT OF EXPENSES DESCRIBED IN (D) ABOVE, WOULD HAVE BEEN AS
FOLLOWS:
ALLIANCE BALANCED
SHARES 1997 1998 1999
CLASS A 1.46% 1.29% 1.21%
CLASS B 2.24% 2.05% 1.96%
CLASS C 2.22% 2.04% 1.94%
ALLIANCE REAL ESTATE
INVESTMENT FUND 1997 1998 1999
CLASS A 1.77% -
CLASS B 2.43% -
CLASS C 2.42% -
ALLIANCE GROWTH FUND 1997 1998 1999
CLASS A 1.25% 1.21% -
CLASS B 1.95% 1.93% -
CLASS C 1.95% 1.92% -
ALLIANCE INTERNATIONAL
FUND 1997 1998 1999
CLASS A 1.73% - 1.78%
CLASS B 2.58% - 2.59%
CLASS C 2.56% - 2.59%
ALLIANCE GLOBAL
SMALL CAP FUND 1997 1998 1999
CLASS A 2.38% 2.14% 2.33%
CLASS B 3.08% 2.86% 3.11%
CLASS C 3.08% 2.85% 3.12%
ALLIANCE TECHNOLOGY
FUND 1997 1998 1999
CLASS A 1.66% 1.65% -
CLASS B 2.36% 2.38% -
CLASS C 2.37% 2.38% -
ALLIANCE WORLDWIDE
PRIVATIZATION FUND 1997 1998 1999
CLASS A - - 1.91%
CLASS B - - 2.62%
CLASS C - - 2.61%
ALLIANCE GREATER
CHINA '97 FUND 1997 1998 1999
CLASS A - 2.50% 2.50%
CLASS B - 3.20% 3.20%
CLASS C - 3.20% 3.20%
ALLIANCE NEW EUROPE
FUND 1997 1998 1999
CLASS A 2.04% 1.84% 1.78%
CLASS B 2.74% 2.54% 2.49%
CLASS C 2.73% 2.54% 2.49%
ALLIANCE GROWTH AND
INCOME FUND 1997 1998 1999
CLASS A .91% .92% -
CLASS B 1.71% 1.71% -
CLASS C 1.70% 1.71% -
ALLIANCE QUASAR FUND 1997 1998 1999
CLASS A - 1.60% -
CLASS B - 2.38% -
CLASS C - 2.37% -
ALLIANCE PREMIER
GROWTH FUND 1997 1998 1999
CLASS A - 1.58% -
CLASS B - 2.27% -
CLASS C - 2.27% -
ALLIANCE GLOBAL
ENVIRONMENT 1997 1998 1999
CLASS A - 2.79% -
CLASS B - 3.51% -
CLASS C - 3.38% -
ALLIANCE ALL-ASIA 1997 1998 1999
CLASS A - 3.70% -
CLASS B - 4.44% -
CLASS C - 4.44% -
(G) DISTRIBUTIONS FROM NET INVESTMENT INCOME FOR THE YEARS ENDED 1999 AND 1997
INCLUDE A TAX RETURN OF CAPITAL OF $.02 AND $.08 FOR CLASS A SHARES, $.02 AND
$.09 FOR CLASS B SHARES AND $.02 AND $.08 FOR CLASS C SHARES, RESPECTIVELY.
(H) ALLIANCE GLOBAL ENVIRONMENT FUND OPERATED AS A CLOSED-END INVESTMENT
COMPANY THROUGH OCTOBER 3, 1997, WHEN IT CONVERTED TO AN OPEN-END INVESTMENT
COMPANY AND ALL SHARES OF ITS COMMON STOCK THEN OUTSTANDING WERE RECLASSIFIED
AS CLASS A SHARES.
72
- -------------------------------------------------------------------------------
APPENDIX A
- -------------------------------------------------------------------------------
The following is additional information about the United Kingdom, Japan and
Greater China countries.
INVESTMENT IN UNITED KINGDOM ISSUERS. Investment in securities of United
Kingdom issuers involves certain considerations not present with investment in
securities of U.S. issuers. As with any investment not denominated in the U.S.
Dollar, the U.S. dollar value of the Fund's investment denominated in the
British pound sterling will fluctuate with pound sterling-dollar exchange rate
movements. Between 1972, when the pound sterling was allowed to float against
other currencies, and the end of 1992, the pound sterling generally depreciated
against most major currencies, including the U.S. Dollar. Between September and
December 1992, after the United Kingdom's exit from the Exchange Rate Mechanism
of the European Monetary System, the value of the pound sterling fell by almost
20% against the U.S. Dollar. The pound sterling has since recovered due to
interest rate cuts throughout Europe and an upturn in the economy of the United
Kingdom. The average exchange rate of the U.S. Dollar to the pound sterling was
1.50 in 1993 and 1.66 in 1998. On October 25, 1999 the U.S. Dollar-pound
sterling exchange rate was 1.66.
The United Kingdom's largest stock exchange is the London Stock Exchange, which
is the third largest exchange in the world. As measured by the FT-SE 100 index,
the performance of the 100 largest companies in the United Kingdom reached
5,882.6 at the end of 1998, up approximately 15% from the end of 1997. The
FT-SE 100 index closed at 6009.40 on October 25, 1999.
The Economic and Monetary Union ("EMU") became effective on January 1, 1999.
When fully implemented in 2002, the EMU will establish a common currency for
European countries that meet the eligibility criteria and choose to
participate. Although the United Kingdom meets the eligibility criteria, the
government has not taken any action to join the EMU.
From 1979 until 1997 the Conservative Party controlled Parliament. In the May
1, 1997 general elections, however, the Labour Party, led by Tony Blair, won a
majority in Parliament, gaining 418 of 659 seats in the House of Commons. Mr.
Blair, who was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy framework intended to
protect monetary policy from political forces by vesting responsibility for
setting interest rates in a new Monetary Policy Committee headed by the
Governor of the Bank of England, as opposed to the Treasury. Prime Minister
Blair has also undertaken a comprehensive restructuring of the regulation of
the financial services industry. For further information regarding the United
Kingdom, see the SAI of New Europe Fund.
INVESTMENT IN JAPANESE ISSUERS. Investment in securities of Japanese issuers
involves certain considerations not present with investment in securities of
U.S. issuers. As with any investment not denominated in the U.S. Dollar, the
U.S. dollar value of each Fund's investments denominated in the Japanese yen
will fluctuate with yen-dollar exchange rate movements. Between 1985 and 1995,
the Japanese yen generally appreciated against the U.S. dollar. Thereafter, the
Japanese yen generally depreciated against the U.S. Dollar until mid-1998, when
it began to appreciate. In September 1999 the Japanese yen reached a 43-month
high against the U.S. Dollar.
Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section
of which is reserved for larger, established companies. As measured by the
TOPIX, a capitalization-weighted composite index of all common stocks listed in
the First Section, the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 50% through the end of 1997. On
December 31, 1998 the TOPIX closed at 1086.99, down approximately 7% from the
end of 1997. On October 25, 1999 the TOPIX closed at 1534.27 up approximately
41% from the end of 1998.
Since the early 1980s, Japan has consistently recorded large current account
trade surpluses with the U.S. that have caused difficulties in the relations
between the two countries. On October 1, 1994, the U.S. and Japan reached an
agreement that was expected to more open Japanese markets with respect to trade
in certain goods and services. Since then, the two countries have agreed in
principle to increase Japanese imports of American automobiles and automotive
parts, as well as other goods and services. Nevertheless, the surpluses have
persisted and it is expected that continuing the friction between the U.S. and
Japan with respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers will be subject to uncertainty
resulting from the instability of recent Japanese ruling coalitions. From 1955
to 1993, Japan's government was controlled by a single political party. Between
August 1993 and October 1996, Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20, 1996, however,
Japan returned to a single-party government led by Ryutaro Hashimoto, a member
of the Liberal Democratic Party ("LDP"). While the LDP does not control a
majority of the seats in the parliament, subsequent to the 1996 elections it
established a majority in the House of Representatives as individual members
joined the ruling party. The popularity of the LDP declined, however, due to
the dissatisfaction with Mr. Hashimoto's leadership. In the July 1998 House of
Councillors election, the LDP's representation fell to 103 seats from 120
seats. As a result of the LDP's defeat, Mr. Hashimoto resigned as prime
minister and leader of the LDP. Mr. Hashimoto was replaced by Keizo Obuchi. On
January 14, 1999, the LDP formed a coalition government with a major opposition
party. As a result, Mr. Obuchi's administration strengthened its position in
the parliament, where it increased its majority in the House of Representatives
and reduced its shortfall in the House of Councillors. The LDP formed a new
three-party coalition government on October 5, 1999 that further strengthens
the position of Mr. Obuchi's administration in the parliament. For the past
several years, Japan's banking industry has been
73
weakened by a significant amount of problem loans. Japan's banks also have had
significant exposure to the recent financial turmoil in other Asian markets.
Following the insolvency of one of Japan's largest banks in November 1997, the
government proposed several plans designed to strengthen the weakened banking
sector. In October 1998, the Japanese parliament approved several new laws that
made $508 billion in public funds available to increase the capital of Japanese
banks, to guarantee depositors' accounts and to nationalize the weakest banks.
It is unclear whether these laws will achieve their intended effect. For
further information regarding Japan, see the SAIs of ALLIANCE INTERNATIONAL
FUND and ALLIANCE ALL-ASIA INVESTMENT FUND.
INVESTMENT IN GREATER CHINA ISSUERS. China, in particular, but Hong Kong and
Taiwan, as well, in significant measure because of their existing and
increasing economic, and now in the case of Hong Kong, direct political ties
with China, may be subject to a greater degree of economic, political and
social instability than is the case in the United States.
China's economy is very much in transition. While the government still controls
production and pricing in major economic sectors, significant steps have been
taken toward capitalism and China's economy has become increasingly market
oriented. China's strong economic growth and ability to attract significant
foreign investment in recent years stem from the economic liberalization
initiated by Deng Xiaoping, who assumed power in the late 1970s. The economic
growth, however, has not been smooth and has been marked by extremes in many
respects of inordinate growth, which has not been tightly controlled, followed
by rigid measures of austerity.
The rapidity and erratic nature of the growth have resulted in inefficiencies
and dislocations, including at times high rates of inflation.
China's economic development has occurred notwithstanding the continuation of
the power of China's Communist Party and China's authoritarian government
control, not only of centrally planned economic decisions, but of many aspects
of the social structure. While a significant portion of China's population has
benefited from China's economic growth, the conditions of many leave much room
for improvement. Notwithstanding restrictions on freedom of expression and the
absence of a free press, and notwithstanding the extreme manner in which past
unrest has been dealt with, the 1989 Tianamen Square uprising being a recent
reminder, the potential for renewed popular unrest associated with demands for
improved social, political and economic conditions cannot be dismissed.
Following the death of Deng Xiaoping in February 1997, Jiang Zemin became the
leader of China's Communist Party. The transfer of political power has
progressed smoothly and Jiang's popularity and credibility have gradually
increased. Jiang continues to consolidate his power, but as of yet does not
appear to have the same degree of control as did Deng Xiaoping. Jiang has
continued the market-oriented policies of Deng. Currently, China's major
economic challenge centers on reforming or eliminating inefficient state-owned
enterprises without creating an unacceptable level of unemployment. Recent
capitalistic policies have in many respects effectively outdated the Communist
Party and the governmental structure, but both remain entrenched. The Communist
Party still controls access to governmental positions and closely monitors
governmental action.
In addition to the economic impact of China's internal political uncertainties,
the potential effect of China's actions, not only on China Itself, but on Hong
Kong and Taiwan as well, could also be significant.
China is heavily dependent on foreign trade, particularly with Hong Kong,
Japan, the U.S., South Korea and Taiwan. Political developments adverse to its
trading partners, as well as political and social repression, could cause the
U.S. and others to alter their trading policy towards China. For example, in
the U.S. the continued extension of normal trade relations (formerly known
as most favored nation trading status) with China, which is reviewed regularly
and was reviewed in 1999, is an issue of significant controversy. Loss of that
status would clearly hurt China's economy by reducing its exports. With much of
China's trading activity being funneled through Hong Kong and with trade
through Taiwan becoming increasingly significant, any sizable reduction in
demand for goods from China would have negative implications for both
countries. China is believed to be the largest investor in Hong Kong and its
markets and an economic downturn in China would be expected to reverberate
through Hong Kong's markets as well.
China has committed by treaty to preserve Hong Kong's autonomy and its
economic, political and social freedoms for fifty years from the July 1, 1997
transfer of sovereignty from Great Britain to China. Hong Kong is headed by a
chief executive, appointed by the central government of China, whose power is
checked by both the government of China and a Legislative Council. Although
Hong Kong voters voted overwhelmingly for pro-democracy candidates in the
recent election, it remains possible that China could exert its authority so as
to alter the economic structure, political structure or existing social policy
of Hong Kong. Investor and business confidence in Hong Kong can be
significantly affected by such developments, which in turn can affect markets
and business performance. In this connection, it is noted that a substantial
portion of the companies listed on the Hong Kong Stock Exchange are involved in
real estate-related activities.
The securities markets of China and to a lesser extent Taiwan, are relatively
small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, ALLIANCE GREATER CHINA '97 FUND may experience
greater price volatility and significantly lower liquidity than a portfolio
invested solely in equity securities of U.S. companies. These markets may be
subject to greater influence by adverse events generally affecting the market,
and by large investors trading significant blocks of securities, than is usual
in the U.S. Securities settlements may in some instances be subject to delays
and related administrative uncertainties.
74
Foreign investment in the securities markets of China and Taiwan is restricted
or controlled to varying degrees. These restrictions or controls, which apply
to the ALLIANCE GREATER CHINA '97 FUND, may at times limit or preclude
investment in certain securities and may increase the cost and expenses of the
Fund. China and Taiwan require governmental approval prior to investments by
foreign persons or limit investment by foreign persons to only a specified
percentage of an issuer's outstanding securities or a specific class of
securities which may have less advantageous terms (including price) than
securities of the company available for purchase by nationals. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from China and Taiwan is controlled under regulations, including in
some cases the need for certain advance government notification or authority,
and if a deterioration occurs in a country's balance of payments, the country
could impose restrictions on foreign capital remittances.
ALLIANCE GREATER CHINA '97 FUND could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for repatriation, as well
as by the application to it of other restrictions on investment. The liquidity
of the Fund's investments in any country in which any of these factors exists
could be affected by any such factor or factors on the Fund's investments. The
limited liquidity in certain Greater China markets is a factor to be taken into
account in the Fund's valuation of portfolio securities in this category and
may affect the Fund's ability to dispose of securities in order to meet
redemption requests at the price and time it wishes to do so. It is also
anticipated that transaction costs, including brokerage commissions for
transactions both on and off the securities exchanges in Greater China
countries, will be higher than in the U.S.
Issuers of securities in Greater China countries are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as timely disclosure of information, insider trading rules, restrictions on
market manipulation and shareholder proxy requirements. Reporting, accounting
and auditing standards of Greater China countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in securities of Greater China country issuers
than to investors in securities of U.S. issuers.
Investment in Greater China companies that are in the initial stages of their
development involves greater risk than is customarily associated with
securities of more established companies. The securities of such companies may
have relatively limited marketability and may be subject to more abrupt or
erratic market movements than securities of established companies or broad
market indices.
75
For more information about the Funds, the following documents are available
upon request:
. ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected a Fund's performance during its last fiscal year.
. STATEMENT OF ADDITIONAL INFORMATION (SAI)
Each Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Funds' SAIs are
incorporated by reference into (and are legally part of) this prospectus.
You may request a free copy of the current annual/semi-annual report or the
SAI, or make inquiries concerning the Funds, by contacting your broker or other
financial intermediary, or by contacting Alliance:
BY MAIL: c/o Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
BY PHONE: For Information: (800) 221-5672
For Literature: (800) 227-4618
Or you may view or obtain these documents from the Commission:
. Call the SEC at 1-202-942-8090 for information on the operation of the
Public Reference Room.
. Reports and other information about the Fund are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov
. Copies of the information may be obtained, after paying a duplicating fee,
by electronic request at [email protected], or by writing the Commission's
Public Reference Section, Wash. DC 20549-0102
ON THE INTERNET: www.sec.gov
Your also may find more information about Alliance and the Funds on the
Internet at: www.Alliancecapital.com
Fund SEC File No.
Alliance Premier Growth Fund 811-06730
Alliance Health Care Fund 811-09329
Alliance Growth Fund 811-05088
Alliance Technology Fund 811-03131
Alliance Quasar Fund 811-01716
The Alliance Fund 811-00204
Alliance Growth & Income 811-00126
Alliance Balanced Shares 811-00134
Alliance Utility Income Fund 811-07916
Alliance Real Estate Investment Fund 811-07707
Alliance New Europe Fund 811-06028
Alliance Worldwide Privatization Fund 811-08426
Alliance International Premier Growth Fund 811-08527
Alliance Global Small Cap Fund 811-01415
Alliance International Fund 811-03130
Alliance Greater China '97 Fund 811-08201
Alliance All-Asia Investment Fund 811-08776
Alliance Global Environment Fund 811-05993
76
<PAGE>
THE ALLIANCE STOCK FUNDS
The Alliance Stock Funds provide a broad selection of investment alternatives
to investors seeking capital growth or high total return.
Advisor Class Prospectus and Application
November 1, 1999
DOMESTIC STOCK FUNDS
> Alliance Premier Growth Fund
> Alliance Health Care Fund
> Alliance Growth Fund
> Alliance Technology Fund
> Alliance Quasar Fund
> The Alliance Fund
TOTAL RETURN FUNDS
> Alliance Growth & Income Fund
> Alliance Balanced Shares
> Alliance Utility Income Fund
> Alliance Real Estate Investment Fund
GLOBAL STOCK FUNDS
> Alliance New Europe Fund
> Alliance Worldwide Privatization Fund
> Alliance International Premier Growth Fund
> Alliance Global Small Cap Fund
> Alliance International Fund
> Alliance Greater China '97 Fund
> Alliance All-Asia Investment Fund
> Alliance Global Environment Fund
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
ALLIANCE CAPITAL
INVESTMENT PRODUCTS OFFERED
> ARE NOT FDIC INSURED
> MAY LOSE VALUE
> ARE NOT BANK GUARANTEED
2
TABLE OF CONTENTS
Page
RISK/RETURN SUMMARY 3
Domestic Stock Funds 4
Total Return Funds 10
Global Stock Funds 14
Summary of Principal Risks 22
Principal Risks by Fund 23
FEES AND EXPENSES OF THE FUNDS 24
GLOSSARY 27
DESCRIPTION OF THE FUNDS 28
Investment Objectives and Policies 28
Description of Investment Practices 41
Additional Risk Considerations 48
MANAGEMENT OF THE FUNDS 53
PURCHASE AND SALE OF SHARES 56
How The Funds Value Their Shares 56
How To Buy Shares 57
How to Exchange Shares 57
How To Sell Shares 57
DIVIDENDS, DISTRIBUTIONS AND TAXES 58
CONVERSION FEATURE 59
GENERAL INFORMATION 59
FINANCIAL HIGHLIGHTS 61
APPENDIX A--ADDITIONAL INFORMATION
ABOUT THE UNITED KINGDOM, JAPAN, AND
GREATER CHINA COUNTRIES 67
The Funds' investment adviser is Alliance Capital Management L.P., a global
investment manager providing diversified services to institutions and
individuals through a broad line of investments including more than 100 mutual
funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the Alliance Stock
Funds. You will find additional information about each Fund, including a
detailed description of the risks of an investment in each Fund, after this
Summary.
The Risk/Return Summary describes the Funds' objectives, principal investment
strategies, principal risks and fees. Each Fund's Summary page includes a short
discussion of some of the principal risks of investing in that Fund. A further
discussion of these and other risks begins on page 22.
More detailed descriptions of the Funds, including the risks associated with
investing in the Funds, can be found further back in this Prospectus. Please be
sure to read this additional information BEFORE you invest. Each of the Funds
also may at times use certain types of investment derivatives such as options,
futures, forwards, and swaps. The use of these techniques involves special
risks that are discussed in this Prospectus.
The Summary includes a table for each Fund showing its average annual returns
and a bar chart showing its annual returns. The table and bar chart provide an
indication of the historical risk of an investment in each Fund by showing:
- how the Fund's average annual returns for one, five, and 10 years (or over
the life of the Fund if the Fund is less than 10 years old) compare to those of
a broad based securities market index; and
- changes in the Fund's performance from year to year over 10 years (or over
the life of the Fund if the Fund is less than 10 years old).
A Fund's past performance, of course, does not necessarily indicate how it will
perform in the future. As with all investments you may lose money by investing
in the Funds.
3
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range
of alternative approaches to investing primarily in U.S. equity markets.
ALLIANCE PREMIER GROWTH FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL BY INVESTING
PREDOMINANTLY IN EQUITY SECURITIES OF A LIMITED NUMBER OF LARGE, CAREFULLY
SELECTED, HIGH-QUALITY U.S. COMPANIES THAT ARE JUDGED LIKELY TO ACHIEVE
SUPERIOR EARNINGS GROWTH.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of U.S. companies. Unlike most
equity funds, the Fund focuses on a relatively small number of intensively
researched companies. Alliance selects the Fund's investments from a research
universe of more than 600 companies that have strong management, superior
industry positions, excellent balance sheets and superior earnings growth
prospects.
Normally, the Fund invests in about 40-60 companies, with the 25 most highly
regarded of these companies usually constituting approximately 70% of the
Fund's net assets. During market declines, while adding to positions in favored
stocks, the Fund becomes somewhat more aggressive, gradually reducing the
number of companies represented in its portfolio. Conversely, in rising
markets, while reducing or eliminating fully-valued positions, the Fund becomes
somewhat more conservative, gradually increasing the number of companies
represented in its portfolio. Through this approach, Alliance seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets. The Fund also may invest up to 20% of its net assets in
convertible securities.
Among the principal risks of investing in the Fund is market risk. Because the
Fund invests in a smaller number of securities than many other equity funds,
your investment has the risk that changes in the value of a single security may
have a more significant effect, either negative or positive, on the Fund's net
asset value.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- ----------------------------------------------------
ADVISOR CLASS 49.85% 42.97%
RUSSELL 1000 GROWTH INDEX 38.71% 34.67%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 7.37%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 33.11 49.85
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 31.15%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -12.02%, 3RD QUARTER, 1998.
4
ALLIANCE HEALTH CARE FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS CAPITAL APPRECIATION AND, SECONDARILY,
CURRENT INCOME.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
Under normal circumstances the Fund invests at least 65%, and normally
substantially all, of the value of its total assets in securities issued by
companies principally engaged in health care and health care-related industries
("Health Care Industries") (companies principally engaged in the discovery,
development, provision, production or distribution of products and services
that relate to the diagnosis, treatment and prevention of diseases or other
medical disorders). Although the payment of dividends will be a factor
considered in the selection of investments for the Fund, the Fund seeks
primarily to take advantage of capital appreciation opportunities identified by
Alliance in emerging technologies and services in Health Care Industries by
investing in companies which are expected to profit from the development of new
products and services for these industries. Under normal circumstances the Fund
invests primarily in the equity securities of U.S. companies. The Fund may
invest up to 40% of its total assets in securities of non-U.S. companies and
other foreign securities. The Fund may invest in new, smaller or less-seasoned
companies as well as in larger, established companies in the Health Care
Industries.
Among the principal risks of investing in the Fund are market risk and sector
risk. Unlike many other equity funds, the Fund invests in the securities of
companies principally engaged in Health Care Industries. As a result, certain
economic conditions and market changes that affect those industries may have a
more significant effect on the Fund's net asset value than on the value of a
more broadly diversified fund. For example, the Fund's share price could be
affected by changes in competition, legislation or government regulation,
government funding, product liability and other litigation, the obsolescence or
development of products, or other factors specific to the health care and
health sciences industries. The Fund's investments in foreign securities have
foreign risk and currency risk. The Fund's investment in small- to
mid-capitalization companies have capitalization risk. These investments may
be more volatile than investments in large-cap companies.
BAR CHART AND PERFORMANCE TABLE:
There is no bar chart or performance table for the Fund because it has not
completed a full calendar year of operations.
5
ALLIANCE GROWTH FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. CURRENT INCOME
IS INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of companies with favorable
earnings outlooks and whose long-term growth rates are expected to exceed that
of the U.S. economy over time. The Fund emphasizes investments in large- and
mid-cap companies. The Fund also may invest up to 25% of its total assets in
lower-rated fixed-income securities and convertible bonds and generally up to
15% of its total assets in foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile than investments in large-cap
companies. To the extent the Fund invests in lower-rated fixed-income
securities and convertible bonds, your investment may have interest rate or
credit risk. The Fund's investments in foreign securities have foreign risk and
currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- ----------------------------------------------------
ADVISOR CLASS 28.55% 29.34%
S&P 500 INDEX 28.60% 31.37%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 3.19%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 27.46 28.55
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 28.97%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -16.20%, 3RD QUARTER, 1998.
6
ALLIANCE TECHNOLOGY FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL. CURRENT INCOME IS
INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in securities of companies that use technology
extensively in the development of new or improved products or processes. Within
this framework, the Fund may invest in any company and industry and in any type
of security with potential for capital appreciation. It invests in well-known,
established companies or in new or unseasoned companies. The Fund also may
invest in debt securities and up to 10% of its total assets in foreign
securities.
Among the principal risks of investing in the Fund is market risk. In addition,
technology stocks, especially those of smaller, less-seasoned companies, tend
to be more volatile than the overall stock market. To the extent the Fund
invests in debt and foreign securities, your investment has interest rate risk,
credit risk, currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 63.68% 30.01%
S&P 500 INDEX 28.60% 31.37%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 19.09%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 4.84 63.68
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 39.98%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -16.43%, 4TH QUARTER, 1997.
7
ALLIANCE QUASAR FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS GROWTH OF CAPITAL BY PURSUING AGGRESSIVE
INVESTMENT POLICIES. CURRENT INCOME IS INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund generally invests in a widely-diversified portfolio of equity
securities spread among many industries that offer the possibility of
above-average earnings growth. The Fund currently emphasizes investment in
small cap companies. The Fund invests in well-known and established companies
and in new and unseasoned companies. The Fund can invest in the equity
securities of any company and industry and in any type of security with
potential for capital appreciation. When selecting securities, Alliance
considers the economic and political outlook, the values of specific securities
relative to other investments, trends in the determinants of corporate profits,
and management capabilities and practices. The Fund also may invest in
non-convertible bonds, preferred stocks, and foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in smaller companies tend to be more volatile than investments in large-cap or
mid-cap companies. To the extent the Fund invests in non-convertible bonds,
preferred stocks, and foreign stocks, your investment has interest rate risk,
credit risk, foreign risks and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS -4.30% 6.74%
RUSSELL 2000 INDEX -2.55% 11.81%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was -4.49%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 17.48 -4.30
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 17.44%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -28.39%, 3RD QUARTER, 1998.
8
THE ALLIANCE FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL AND INCOME
PRIMARILY THROUGH INVESTMENTS IN COMMON STOCKS.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund normally invests substantially all of its assets in high-quality
common stocks that Alliance expects to increase in value. The Fund may invest
in a broad range of companies, from large to small, but tends to emphasize
attractive opportunities in mid-cap companies. While the Fund's diversified and
high-quality investments cannot prevent fluctuations in market values, they
tend to limit investment risk and contribute to achieving the Fund's objective.
The Fund also may invest in convertible securities, U.S. Government securities,
and foreign securities.
Among the principal risks of investing in the Fund is market risk. Investments
in mid-cap companies may be more volatile than investments in large-cap
companies. To the extent the Fund invests in convertible securities and U.S.
Government securities, your investment may have interest rate or credit risk.
The Fund's investments in foreign securities have currency risk and foreign
risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS -2.41% 18.30%
S&P 400 MID-CAP INDEX 19.11% 26.51%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 6.07%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 36.27 -2.41
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 23.88%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -24.17%, 3RD QUARTER, 1998.
9
TOTAL RETURN FUNDS
The Total Return Funds offer investors seeking both growth of capital and
current income a range of investment alternatives.
ALLIANCE GROWTH & INCOME FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS APPRECIATION THROUGH INVESTMENTS PRIMARILY
IN DIVIDEND-PAYING COMMON STOCKS OF GOOD QUALITY, ALTHOUGH THE FUND ALSO MAY
INVEST IN FIXED-INCOME AND CONVERTIBLE SECURITIES.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in dividend-paying common stocks of large,
well-established "blue-chip" companies. The Fund also may invest in
fixed-income and convertible securities and in securities of foreign issuers.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. The Fund's investments in foreign securities have
foreign risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 21.48% 27.57%
RUSSELL 1000 VALUE INDEX 15.63% 26.14%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 3.32%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 29.57 21.48
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 23.28%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -13.76%, 3RD QUARTER, 1998.
10
ALLIANCE BALANCED SHARES
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS HIGH RETURN THROUGH A COMBINATION OF CURRENT
INCOME AND CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in a diversified portfolio of equity and fixed-income
securities. The percentage of the Fund's assets invested in each type of
security will vary, but the Fund will not purchase a security if as a result
less than 25% of the Fund's total assets will be invested in fixed-income
senior securities. The Fund invests in common and preferred stocks, U.S.
Government and agency securities, bonds and senior debt securities. The Fund's
investments in each type of security depends on current economic conditions and
market outlooks. The Fund also may invest up to 15% of its total assets in
foreign equity and fixed-income securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk, allocation risk and credit risk. To the extent the Fund invests in
foreign securities, your investment has currency risk and foreign risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 16.03% 21.61%
S&P 500 INDEX 28.60% 31.37%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 0.07%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 27.43 16.03
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 13.52%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -6.36%, 3RD QUARTER, 1998.
11
ALLIANCE UTILITY INCOME FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS CURRENT INCOME AND CAPITAL APPRECIATION BY
INVESTING PRIMARILY IN EQUITY AND FIXED-INCOME SECURITIES OF COMPANIES IN THE
UTILITIES INDUSTRY.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in income-producing equity securities. The Fund
invests in securities of utility companies in the electric, telecommunications,
gas, and water utility industries. The Fund may invest in both U.S. and foreign
utility companies, although the Fund will limit its investments in issuers in
any one foreign country to no more than 15% of its total assets. The Fund may
maintain up to 35% of its net assets in lower-rated securities and up to 30% of
its net assets in convertible securities.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in companies in a specific industry, there is the risk that factors
affecting utility companies will have a significant effect on the value of the
Fund's investments. To the extent the Fund invests in lower-rated securities,
your investment is subject to more credit risk than a fund that invests in
higher rated securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 24.83% 28.57%
NYSE UTILITY 33.04% 30.08%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 7.97%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 31.16 24.83
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 15.63%, 4TH QUARTER, 1997; AND WORST QUARTER WAS DOWN
- -3.01%, 1ST QUARTER, 1997.
12
ALLIANCE REAL ESTATE INVESTMENT FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN FROM LONG-TERM GROWTH OF
CAPITAL AND INCOME PRINCIPALLY THROUGH INVESTING IN EQUITY SECURITIES OF
COMPANIES THAT ARE PRIMARILY ENGAGED IN OR RELATED TO THE REAL ESTATE INDUSTRY.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of real estate investment
trusts or "REITs" and other real estate industry companies. The Fund invests in
real estate companies that Alliance believes have strong property fundamentals
and management teams. The Fund seeks to invest in real estate companies whose
underlying portfolios are diversified geographically and by property type. The
Fund may invest up to 35% of its total assets in mortgage-backed securities,
which are securities that directly or indirectly represent participations in,
or are collateralized by and payable from, mortgage loans secured by real
property.
Among the principal risks of investing in the Fund are market risk, interest
rate risk and credit risk. Because the Fund invests a substantial portion of
its assets in the real estate market, it has many of the same risks as direct
ownership of real estate including the risk that the value of real estate could
decline due to a variety of factors affecting the real estate market. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws. Because the Fund invests in mortgage-backed securities, it is subject to
the risk that mortgage loans will be prepaid when interest rates decline,
forcing the Fund to reinvest in securities with lower interest rates. For this
and other reasons, mortgage-backed securities may have significantly greater
price and yield volatility than traditional debt securities.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS -20.05% 7.79%
S&P 500 INDEX 28.60% 31.37%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was -5.04%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 23.27 -20.05
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 14.51%, 3RD QUARTER, 1997; AND WORST QUARTER WAS DOWN
- -12.33%, 3RD QUARTER, 1998.
13
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors seeking long-term capital appreciation a
range of alternative approaches to investing in foreign securities.
ALLIANCE NEW EUROPE FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION THROUGH
INVESTMENTS PRIMARILY IN THE EQUITY SECURITIES OF COMPANIES BASED IN EUROPE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of European companies. The Fund
diversifies its investments among a number of European countries and normally
invests in companies based in at least three of these countries, although it
may invest 25% or more of its assets in issuers in a single country. The Fund
may invest up to 35% of its total assets in high-quality U.S. Dollar or foreign
currency denominated fixed-income securities issued or guaranteed by European
governmental entities, European or multinational companies, or supranational
organizations. At December 31, 1998, the Fund had approximately 26% of its
assets invested in securities of United Kingdom issuers.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, the Fund's investments in U.S. Dollar or
foreign currency denominated fixed-income securities have interest rate and
credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 25.39% 23.61%
MSCI EUROPE INDEX 28.91% 28.25%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 1.30%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 17.08 25.39
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 22.56%, 1ST QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -19.61%, 3RD QUARTER, 1998.
14
ALLIANCE WORLDWIDE PRIVATIZATION FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of companies that are
undergoing, or have undergone, privatization. The Fund also invests in
securities of companies that will benefit from privatizations. The Fund takes
advantage of investment opportunities, historically inaccessible to U.S.
individual investors, that result from the privatization of state enterprises
in both established and developing economies. Because privatizations are
integral to a country's economic restructuring, securities sold in initial
public offerings often are attractively priced to secure the issuer's
transition to private sector ownership. In addition, these enterprises often
dominate their local markets and have the potential for significant managerial
and operational efficiency gains.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in four, and usually considerably more, countries. The
Fund may invest up to 30% of its total assets in any one of France, Germany,
Great Britain, Italy, and Japan and may invest all of its assets in a single
world region. The Fund also may invest up to 35% of its total assets in debt
securities and convertible debt securities of privatized companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Investments in companies that are undergoing, or have
undergone, privatization could have more risk because they have no operating
history as a private company. In addition, the Fund's investments in U.S.
Dollar or foreign currency denominated fixed-income securities have interest
rate and credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 9.33% 13.04%
MSCI WORLD INDEX
(MINUS THE U.S.) 19.11% 11.03%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 16.65%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 13.45 9.33
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 16.58%, 1ST QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -17.42%, 3RD QUARTER, 1998.
15
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL BY INVESTING
PREDOMINANTLY IN EQUITY SECURITIES OF A LIMITED NUMBER OF CAREFULLY SELECTED
NON-U.S. COMPANIES THAT ARE JUDGED LIKELY TO ACHIEVE SUPERIOR EARNINGS GROWTH.
CURRENT INCOME IS INCIDENTAL TO THE FUND'S OBJECTIVE.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of comparatively large,
high-quality, non-U.S. companies. The Fund invests in at least four, and
usually considerably more, countries. Normally, the Fund invests no more than
15% of its total assets in issuers of any one foreign country, but may invest
up to 25% of its total assets in each of Canada, France, Germany, Italy, Japan,
The Netherlands, Switzerland and the United Kingdom. Unlike more typical
international equity funds, the Fund focuses on a relatively small number of
intensively researched companies. Alliance selects the Fund's investments from
a research universe of approximately 900 companies.
Normally, the Fund invests in about 40 companies, with the 30 most highly
regarded of these companies usually constituting approximately 70%, and often
more, of the Fund's net assets. The Fund invests in companies with market
values generally in excess of $10 billion. Alliance may take advantage of
market volatility to adjust the Fund's portfolio positions. To the extent
consistent with local market liquidity considerations, the Fund strives to
capitalize on apparently unwarranted price fluctuations, both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. The
Fund invests primarily in equity securities and also may invest in convertible
securities.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. In addition, since the Fund invests in a smaller number
of securities than many other international equity funds, changes in the value
of a single security may have a more significant effect, either negative or
positive, on the Fund's net asset value.
BAR CHART AND PERFORMANCE TABLE:
There is no bar chart or performance table for the Fund because it has not
completed a full calendar year of operations.
16
ALLIANCE GLOBAL SMALL CAP FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL THROUGH
INVESTMENT IN A GLOBAL PORTFOLIO OF EQUITY SECURITIES OF SELECTED COMPANIES
WITH RELATIVELY SMALL MARKET CAPITALIZATIONS.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of global companies, both
domestic and foreign, with relatively small market capitalizations. The Fund's
investments emphasize companies that are in the smallest 20% of the U.S. stock
market (or less than approximately $1.5 billion). Although these companies are
small by U.S. standards, they may be among the largest companies in their own
countries. The Fund may invest up to 35% of its total assets in securities of
companies whose market capitalizations exceed the Fund's size standard. The
Fund invests in at least three countries including the U.S.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Investments in smaller companies tend to be more
volatile than investments in large-cap or mid-cap companies.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 3.81% 6.59%
MSCI WORLD INDEX 24.80% 20.83%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 11.19%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 8.44 3.81
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 17.82%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -22.96%, 3RD QUARTER, 1998.
17
ALLIANCE INTERNATIONAL FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN FROM LONG-TERM GROWTH OF
CAPITAL AND INCOME PRIMARILY THROUGH INVESTMENT IN A BROAD PORTFOLIO OF
MARKETABLE SECURITIES OF ESTABLISHED NON-U.S. COMPANIES, COMPANIES
PARTICIPATING IN FOREIGN ECONOMIES WITH PROSPECTS FOR GROWTH, INCLUDING U.S.
COMPANIES HAVING THEIR PRINCIPAL ACTIVITIES AND INTERESTS OUTSIDE THE U.S. AND
IN FOREIGN GOVERNMENT SECURITIES.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in equity securities of established non-U.S.
companies, companies participating in foreign economies with prospects for
growth, including U.S. companies having their principal activities and
interests outside the U.S., and foreign government securities. The Fund
diversifies its investments broadly among countries and normally invests in
companies in at least three foreign countries, although it may invest a
substantial portion of its assets in companies in one or more foreign countries.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS 9.96% 5.85%
MSCI EAFE INDEX 20.33% 11.28%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 7.17%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a 1.59 9.96
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 15.81%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -17.80%, 3RD QUARTER, 1998.
18
ALLIANCE GREATER CHINA '97 FUND
OBJECTIVE:
The Fund's investment objective is long-term capital appreciation through
investment of at least 80% of its total assets in equity securities of Greater
China companies.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests in equity securities of Greater China companies, which are
companies in China, Hong Kong, and Taiwan. Of these countries, the Fund expects
to invest a significant portion of its assets, which may be greater than 50%,
in Hong Kong companies and may invest all of its assets in Hong Kong companies
or companies of either of the other Greater China countries. The Fund also may
invest in convertible securities and equity-linked debt securities issued or
guaranteed by Greater China companies or Greater China Governments, their
agencies, or instrumentalities. As of December 31, 1998 the Fund had
approximately 75% of its assets invested in securities of Hong Kong companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency rate risk. Because it invests in Greater China companies, the
Fund's returns will be significantly more volatile and differ substantially
from U.S. markets generally. Your investment also has the risk that market
changes or other events affecting the Greater China countries, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. In addition, the Fund is
"non-diversified," meaning that it invests its assets in a smaller number of
companies than many other international funds. As a result, changes in the
value of a single security may have a more significant effect, either negative
or positive, on the Fund's net asset value. The Fund's investments in debt
securities have interest rate and credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS -7.87% -26.74%
MSCI CHINA FREE INDEX -43.83% -54.48%
MSCI HONG KONG INDEX -2.92% -25.58%
MSCI TAIWAN INDEX -20.64% -30.14%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 9/3/97. Index returns are from 9/30/97.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 22.71%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a n/a -7.87
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 27.38%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -26.92%, 2ND QUARTER, 1998.
19
ALLIANCE ALL-ASIA INVESTMENT FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund primarily invests in securities of various types of companies based in
Asia. The Fund invests in equity securities, preferred stocks, and
equity-linked debt securities issued by Asian companies and may invest more
than 50% of its total assets in equity securities of Japanese issuers. The Fund
also may invest up to 35% of its total assets in debt securities issued or
guaranteed by Asian companies or by Asian governments, their agencies or
instrumentalities, and may invest up to 25% of its net assets in convertible
securities. At December 31, 1998, the Fund had approximately 60% of its total
assets invested in securities of Japanese companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in Asian and Pacific region
countries and emerging markets, the Fund's returns will be significantly more
volatile and may differ substantially from the overall U.S. market generally.
Your investment has the risk that market changes or other factors affecting
Asian and Pacific region countries and other emerging markets, including
political instability and unpredictable economic conditions, may have a more
significant effect on the Fund's net asset value. To the extent that the Fund
invests a substantial amount of its assets in Japanese companies, your
investment has the risk that market changes or other events affecting that
country may have a more significant effect on the Fund's net asset value. In
addition, the Fund's investments in debt securities have interest rate and
credit risks.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS -12.15% -22.56%
MSCI ALL COUNTRY ASIA
PACIFIC INDEX 2.03% -13.47%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 10/1/96. Index return is from 10/31/96.
BAR CHART
The following chart shows the annual returns for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 57.86%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a -34.83 -12.15
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 13.57%, 4TH QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -18.65%, 4TH QUARTER, 1997.
20
ALLIANCE GLOBAL ENVIRONMENT FUND
OBJECTIVE:
THE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM CAPITAL APPRECIATION THROUGH
INVESTMENT OF SUBSTANTIALLY ALL OF ITS ASSETS IN EQUITY SECURITIES OF COMPANIES
THAT ARE EXPECTED TO BENEFIT FROM ADVANCES OR IMPROVEMENTS IN PRODUCTS,
PROCESSES OR SERVICES INTENDED TO FOSTER THE PROTECTION OF THE ENVIRONMENT.
PRINCIPAL INVESTMENT STRATEGIES AND RISKS:
The Fund invests primarily in environmental companies, which are companies
whose principal business involves the sale of environmental protection systems
or services. The Fund also invests in companies whose principal business lies
outside the environmental sector but who anticipate environmental regulations
or consumer preferences through the development of new products or services
that would contribute to a cleaner and healthier environment. The Fund will
invest substantially all of its assets in these two types of companies. The
Fund invests in securities of companies in at least three, and normally
considerably more, countries. At December 31, 1998, the Fund had approximately
82% invested in equity securities of U.S. companies.
Among the principal risks of investing in the Fund are market risk, foreign
risk and currency risk. Because it invests in non-U.S. companies and in
specific types of companies that provide environmental services, the Fund's
returns will be more volatile and differ, sometimes substantially, from the
overall U.S. market generally. The Fund's investments also have the risk that
government regulations or other action could negatively affect the business of
environmental companies.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
SINCE
1 YEAR INCEPTION
- -----------------------------------------------------
ADVISOR CLASS -2.99% 0.09%
S&P 500 INDEX 28.60% 28.60%
Average annual total returns are for the periods ended December 31, 1998.
Advisor Class shares inception date is 12/29/97. Index return is from 12/31/97.
BAR CHART
The following chart shows the annual return for the Advisor Class shares since
inception. Through 9/30/99, the year-to-date unannualized return for Advisor
Class shares was 1.74%.
[GRAPHIC OMITTED]
n/a n/a n/a n/a n/a n/a n/a n/a n/a -2.99
- -------------------------------------------------------------------------------
89 90 91 92 93 94 95 96 97 98
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
BEST QUARTER WAS UP 15.74%, 1ST QUARTER, 1998; AND WORST QUARTER WAS DOWN
- -19.83%, 3RD QUARTER, 1998.
21
SUMMARY OF PRINCIPAL RISKS
The value of your investment in a Fund will change with changes in the values
of that Fund's investments. Many factors can affect those values. In this
Summary, we describe the principal risks that may affect a Fund's portfolio as
a whole. These risks and the Funds particularly subject to these risks appear
in a chart at the end of the section. All Funds could be subject to additional
principal risks because the types of investments made by each Fund can change
over time. This Prospectus has additional descriptions of the types of
investments that appear in bold type in the discussions under "Description of
Investment Practices" or "Additional Risk Considerations." These sections also
include more information about the Funds, their investments, and related risks.
MARKET RISK
This is the risk that the value of a Fund's investments will fluctuate as the
stock or bond markets fluctuate and that prices overall will decline over
short- or long-term periods. All of the Alliance Stock Funds are subject to
market risk.
SECTOR RISK
This is the risk of investments in a particular industry sector. Market or
economic factors affecting that industry sector could have a major effect on
the value of a Fund's investments. Funds particularly subject to this risk are
ALLIANCE HEALTH CARE FUND, ALLIANCE TECHNOLOGY FUND, ALLIANCE UTILITY INCOME
FUND, ALLIANCE REAL ESTATE INVESTMENT FUND, ALLIANCE WORLDWIDE PRIVATIZATION
FUND and ALLIANCE GLOBAL ENVIRONMENT FUND. This risk may be greater for
ALLIANCE TECHNOLOGY FUND because technology stocks, especially those of
smaller, less-seasoned companies, tend to be more volatile than the overall
market.
CAPITALIZATION RISK
This is the risk of investments in small- to mid-capitalization companies.
Investments in mid-cap companies may be more volatile than investments in
large-cap companies. ALLIANCE GROWTH FUND and THE ALLIANCE FUND are
particularly subject to this risk. Investments in small-cap companies tend to
be more volatile than investments in large-cap or mid-cap companies. A Fund's
investments in smaller capitalization stocks may have additional risks because
these companies often have limited product lines, markets or financial
resources. ALLIANCE HEALTH CARE FUND, ALLIANCE QUASAR FUND and ALLIANCE GLOBAL
SMALL CAP FUND are particularly subject to this risk.
INTEREST RATE RISK
This is the risk that changes in interest rates will affect the value of a
Fund's investments in income-producing, fixed-income (I.E., debt) securities.
Increases in interest rates may cause the value of a Fund's investments to
decline and this decrease in value may not be offset by the higher interest
rate income. Interest rate risk is particularly applicable to Funds that invest
in fixed-income securities and is greater for those Alliance StockFunds that
invest a substantial portion of their assets in fixed-income securities, such
as ALLIANCE GROWTH AND INCOME FUND, ALLIANCE BALANCED SHARES and ALLIANCE
UTILITY INCOME FUND. Interest rate risk is greater for those Funds that invest
in LOWER-RATED SECURITIES or comparable unrated securities ("junk bonds") such
as ALLIANCE UTILITY INCOME FUND. ALLIANCE REAL ESTATE INVESTMENT FUND also has
more exposure to interest rate risk because it invests in real estate industry
companies and in mortgage-backed securities.
CREDIT RISK
This is the risk that the issuer of a security, or the other party to an
over-the-counter transaction, will be unable or unwilling to make timely
payments of interest or principal, or to otherwise honor its obligations. The
degree of risk for a particular security may be reflected in its CREDIT RATING.
Credit risk is applicable to Funds that invest in fixed-income securities and
is greater for those Alliance Stock Funds that invest a substantial portion of
their assets in LOWER-RATED SECURITIES, such as ALLIANCE UTILITY INCOME FUND.
FOREIGN RISK
This is the risk of investments in issuers located in foreign countries. All
Alliance Stock Funds with FOREIGN SECURITIES are subject to this risk,
including, in particular, ALLIANCE HEALTH CARE FUND, ALLIANCE NEW EUROPE FUND,
ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL PREMIER GROWTH
FUND, ALLIANCE GLOBAL SMALL CAP FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE
GREATER CHINA '97 FUND, ALLIANCE ALL-ASIA INVESTMENT FUND and ALLIANCE GLOBAL
ENVIRONMENT FUND. Funds investing in foreign securities may experience more
rapid and extreme changes in value than Funds with investments solely in
securities of U.S. companies. This is because the securities markets of many
foreign countries are relatively small, with a limited number of companies
representing a small number of industries. Additionally, foreign securities
issuers are usually 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. Also,
nationalization, expropriation or confiscatory taxation, currency blockage, or
political changes or diplomatic developments could adversely affect a Fund's
investments in a foreign country. In the event of nationalization,
expropriation, or other confiscation, a Fund could lose its entire investment.
COUNTRY OR GEOGRAPHIC RISK
This is the risk of investments in issuers located in a particular country or
geographic region. Market changes or other factors affecting that country or
region, including political instability and unpredictable economic conditions,
may have a particularly significant effect on a Fund's net asset value. The
Funds particularly subject to this risk are ALLIANCE NEW EUROPE FUND,
22
ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE
GREATER CHINA '97 FUND and ALLIANCE ALL-ASIA INVESTMENT FUND.
CURRENCY RISK
This is the risk that fluctuations in the exchange rates between the U.S.
Dollar and foreign currencies may negatively affect the value of a Fund's
investments. Funds with FOREIGN SECURITIES are subject to this risk, including,
in particular, ALLIANCE HEALTH CARE FUND, ALLIANCE NEW EUROPE FUND, ALLIANCE
WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL PREMIER GROWTH FUND,
ALLIANCE GLOBAL SMALL CAP FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE GREATER
CHINA '97 FUND, ALLIANCE ALL-ASIA INVESTMENT FUND and ALLIANCE GLOBAL
ENVIRONMENT FUND.
MANAGEMENT RISK
Each Alliance Stock Fund is subject to management risk because it is an
actively managed investment portfolio. Alliance will apply its investment
techniques and risk analyses in making investment decisions for the Funds, but
there is no guarantee that its decisions will produce the intended result.
FOCUSED PORTFOLIO RISK
Funds, such as ALLIANCE PREMIER GROWTH FUND and ALLIANCE INTERNATIONAL PREMIER
GROWTH FUND, that invest in a limited number of companies, may have more risk
because changes in the value of a single security may have a more significant
effect, either negative or positive, on the Fund's net asset value. Similarly,
ALLIANCE GREATER CHINA '97 FUND may have more risk because it is
"non-diversified," meaning that it can invest more of its assets in a smaller
number of companies than many other international funds.
ALLOCATION RISK
ALLIANCE BALANCED SHARES has the risk that the allocation of its investments
between equity and debt securities may have a more significant effect on the
Fund's net asset value when one of these asset classes is performing more
poorly than the other.
PRINCIPAL RISKS BY FUND
The following chart summarizes the principal risks of each Fund. Risks not
marked for a particular Fund may, however, still apply to some extent to that
Fund at various times.
<TABLE>
<CAPTION>
CAPITAL- INTEREST COUNTRY OR FOCUSED
MARKET SECTOR IZATION RATE CREDIT FOREIGN GEOGRAPHIC CURRENCY MANAGE- PORTFOLIO ALLOCATION
FUND RISK RISK RISK RISK RISK RISK RISK RISK MENT RISK RISK RISK
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE PREMIER
GROWTH FUND x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HEALTH
CARE FUND x x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH FUND x x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE TECHNOLOGY
FUND x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE QUASAR FUND x x x
- ----------------------------------------------------------------------------------------------------------------------------------
THE ALLIANCE FUND x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH AND
INCOME FUND x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE BALANCED
SHARES x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE UTILITY
INCOME FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE REAL ESTATE
INVESTMENT FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE NEW EUROPE
FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE WORLDWIDE
PRIVATIZATION FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL
SMALL CAP FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL
FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GREATER
CHINA '97 FUND x x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE ALL-ASIA
INVESTMENT FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL
ENVIRONMENT FUND x x x x x
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
SHAREHOLDER FEES (fees paid directly from your investment)
ADVISOR CLASS SHARE
Maximum Front-end or Deferred Sales Charge (Load) None
(as a percentage of original purchase
price or redemption proceeds,
whichever is lower)
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
and EXAMPLES
The Examples are to help you compare the cost of investing in the Funds with
the cost of investing in other funds. They assume that you invest $10,000 in
each Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. They also assume that your investment has a 5% return
each year, that the Fund's operating expenses stay the same and that all
dividends and distributions are reinvested. Your actual costs may be higher or
lower.
OPERATING EXPENSES EXAMPLES
- -------------------------------------------- --------------------------
ALLIANCE PREMIER GROWTH FUND
Management fees 1.00% After 1 year $ 128
Distribution (12b-1) fees None After 3 years $ 400
Other expenses .26% After 5 years $ 692
Total fund operating expenses 1.26% After 10 years $1,523
ALLIANCE HEALTH CARE FUND
Management fees .95% After 1 year $ 223
Distribution (12b-1) fees None After 3 years (b) $ 718
Other expenses 1.40% After 5 years (b) $1,240
Total fund operating expenses 2.35% After 10 years (b) $2,675
Waiver and/or expense
reimbursement (a) (.15%)
Net expenses 2.20%
ALLIANCE GROWTH FUND
Management fees .70% After 1 year $ 95
Distribution (12b-1) fees None After 3 years $ 296
Other expenses .23% After 5 years $ 515
Total fund operating expenses 0.93% After 10 years $1,143
ALLIANCE TECHNOLOGY FUND
Management fees 1.02% After 1 year $ 139
Distribution (12b-1) fees None After 3 years $ 434
Other expenses .35% After 5 years $ 750
Total fund operating expenses 1.37% After 10 years $1,646
ALLIANCE QUASAR FUND
Management fees 1.04% After 1 year $ 140
Distribution (12b-1) fees None After 3 years $ 437
Other expenses .34% After 5 years $ 755
Total fund operating expenses 1.38% After 10 years $1,657
THE ALLIANCE FUND
Management fees .67% After 1 year $ 85
Distribution (12b-1) fees None After 3 years $ 265
Other expenses .16% After 5 years $ 460
Total fund operating expenses 0.83% After 10 years $1,025
PLEASE REFER TO FOOTNOTES ON PAGE 26.
24
OPERATING EXPENSES EXAMPLES
- -------------------------------------------- --------------------------
ALLIANCE GROWTH AND
INCOME FUND
Management fees .48% After 1 year $ 78
Distribution (12b-1) fees None After 3 years $ 243
Other expenses .28% After 5 years $ 422
Total fund operating expenses 0.76% After 10 years $ 942
ALLIANCE BALANCED SHARES FUND
Management fees .59% After 1 year $ 99
Distribution (12b-1) fees None After 3 years $ 309
Other expenses .38% After 5 years $ 536
Total fund operating expenses .97% After 10 years $1,190
ALLIANCE UTILITY INCOME FUND
Management fees .75% After 1 year $ 122
Distribution (12b-1) fees None After 3 years (b) $ 594
Other expenses 1.46% After 5 years (b) $1,092
Total fund operating expenses 2.21% After 10 years (b) $2,465
Waiver and/or expense
reimbursement (a) (1.01)%
Net expenses 1.20%
ALLIANCE REAL ESTATE
INVESTMENT FUND
Management fees .90% After 1 year $ 132
Distribution (12b-1) fees None After 3 years $ 412
Other expenses .40% After 5 years $ 713
Total fund operating expenses 1.30% After 10 years $1,568
ALLIANCE NEW EUROPE FUND
Management fees .95% After 1 year $ 154
Distribution (12b-1) fees None After 3 years $ 477
Other expenses .56% After 5 years $ 824
Total fund operating expenses 1.51% After 10 years $1,802
ALLIANCE WORLDWIDE
PRIVATIZATION FUND
Management fees 1.00% After 1 year $ 165
Distribution (12b-1) fees None After 3 years $ 511
Other expenses .62% After 5 years $ 881
Total fund operating expenses 1.62% After 10 years $1,922
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND
Management fees 1.00% After 1 year $ 223
Distribution (12b-1) fees None After 3 years (b) $1,498
Other expenses 5.28% After 5 years (b) $2,740
Total fund operating expenses 6.28% After 10 years (b) $5,709
Waiver and/or expense
reimbursement (a) (4.08)%
Net expenses 2.20%
ALLIANCE GLOBAL
SMALL CAP FUND
Management Fees 1.00% After 1 year $ 216
Distribution (12b-1) Fees None After 3 years $ 667
Other Expenses 1.13% After 5 years $1,144
Total fund operating expenses 2.13% After 10 years $2,462
PLEASE REFER TO FOOTNOTES ON PAGE 26.
25
OPERATING EXPENSES EXAMPLES
- -------------------------------------------- --------------------------
ALLIANCE INTERNATIONAL FUND
Management fees .95% After 1 year $ 160
Distribution (12b-1) fees None After 3 years (b) $ 523
Other expenses .75% After 5 years (b) $ 910
Total fund operating expenses 1.70% After 10 years (b) $1,996
Waiver and/or expense
reimbursement (a) (.13)%
Net expenses 1.57%
ALLIANCE GREATER
CHINA '97 FUND
Management fees 1.00% After 1 year $ 225
Distribution (12b-1) fees None After 3 years (b) $3,588
Other expenses 18.01% After 5 years (b) $6,075
Total fund operating expenses 19.01% After 10 years (b) $9,815
Waiver and/or expense
reimbursement (a) (16.79)%
Net expenses 2.22%
ALLIANCE ALL-ASIA
INVESTMENT FUND
Management fees 1.00% After 1 year $ 273
Distribution (12b-1) fees None After 3 years (b) $1,177
Administration fees .15% After 5 years (b) $2,092
Other operating expenses 3.24% After 10 years (b) $4,428
Total fund operating expenses 4.39%
Waiver and/or expense
reimbursement (a) (1.69)%
Net Expenses 2.70%
ALLIANCE GLOBAL
ENVIRONMENT FUND
Management Fees 1.10% After 1 year $ 472
Distribution (12b-1) Fees None After 3 years $1,419
Other Expenses 3.61% After 5 years $2,372
Total fund operating expenses 4.71% After 10 years $4,779
(A) REFLECTS ALLIANCE'S CONTRACTUAL WAIVER OF A PORTION OF ITS ADVISORY FEE
AND/OR REIMBURSEMENT OF A PORTION OF THE FUND'S OPERATING EXPENSES. THIS WAIVER
EXTENDS THROUGH THE END OF THE FUND'S CURRENT FISCAL YEAR AND MAY BE EXTENDED
BY ALLIANCE FOR ADDITIONAL ONE YEAR TERMS.
(B) THESE EXAMPLES ASSUME THAT ALLIANCE'S AGREEMENT TO WAIVE MANAGEMENT FEES
AND/OR REIMBURSE FUND EXPENSES IS NOT EXTENDED BEYOND ITS INITIAL PERIOD.
26
GLOSSARY
This Prospectus uses the following terms.
TYPES OF SECURITIES
CONVERTIBLE SECURITIES are fixed-income securities that are convertible into
common stock.
DEBT SECURITIES are bonds, debentures, notes, bills, loans, other direct debt
instruments, and other fixed, floating and variable rate debt obligations, but
do not include convertible securities.
DEPOSITARY RECEIPTS include American Depositary Receipts ("ADRS"), Global
Depositary Receipts ("GDRS") and other types of depositary receipts.
EQUITY SECURITIES include (i) common stocks, partnership interests, business
trust shares and other equity or ownership interests in business enterprises
and (ii) securities convertible into, and rights and warrants to subscribe for
the purchase of, such stocks, shares and interests.
FIXED-INCOME SECURITIES are debt securities and dividend-paying preferred
stocks, including floating rate and variable rate instruments.
FOREIGN GOVERNMENT SECURITIES are securities issued or guaranteed, as to
payment of principal and interest, by foreign governments, quasi-governmental
entities, governmental agencies or other governmental entities.
QUALIFYING BANK DEPOSITS are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks that have total assets of more than
$1 billion and are members of the Federal Deposit Insurance Corporation.
RULE 144A SECURITIES are securities that may be resold under Rule 144A of the
Securities Act.
U.S. GOVERNMENT SECURITIES are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
TYPES OF COMPANIES
ASIAN COMPANY is an entity that (i) is organized under the laws of an Asian
country and conducts business in an Asian country, (ii) derives 50% or more of
its total revenues from business in Asian countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in an Asian
country.
ASIAN COUNTRIES are Australia, the Democratic Socialist Republic of Sri Lanka,
the Hong Kong Special Administrative Region of the People's Republic of China
(Hong Kong), the Islamic Republic of Pakistan, Japan, the Kingdom of Thailand,
Malaysia, Negara Brunei Darussalam (Brunei), New Zealand, the People's Republic
of China, the People's Republic of Kampuchea (Cambodia), the Republic of China
(Taiwan), the Republic of India, the Republic of Indonesia, the Republic of
Korea (South Korea), the Republic of the Philippines, the Republic of
Singapore, the Socialist Republic of Vietnam and the Union of Myanmar.
BENEFICIARY COMPANIES are Eligible Companies whose principal businesses lie
outside the environmental sector but nevertheless anticipate environmental
regulations or consumer preferences through the development of new products,
processes or services that are intended to contribute to a cleaner and
healthier environment, such as companies that anticipate the demand for plastic
substitutes, aerosol substitutes, alternative fuels and processes that generate
less hazardous waste.
ELIGIBLE COMPANIES are companies expected to benefit from advances or
improvements in products, processes or services intended to foster the
protection of the environment.
ENVIRONMENTAL COMPANIES are Eligible Companies that have a principal business
involving the sale of systems or services intended to foster environmental
protection, such as waste treatment and disposal, remediation, air pollution
control and recycling.
EUROPEAN COMPANY is a company (i) organized under the laws of a European
country that issues equity or debt securities that are traded principally on a
European stock exchange, or (ii) a company that derives 50% or more of its
total revenues or profits from businesses in Europe.
GREATER CHINA COMPANY is an entity that (i) is organized under the laws of a
Greater China country and conducts business in a Greater China country, (ii)
derives 50% or more of its total revenues from businesses in Greater China
countries, or (iii) issues equity or debt securities that are traded
principally on a stock exchange in a Greater China country. A company of a
particular Greater China country is a company that meets any of these criteria
with respect to that country.
HEALTH CARE INDUSTRIES include the health care and health care-related
(including health sciences) industries. These industries are principally
engaged in the discovery, development, provision, production or distribution of
products and services that relate to the diagnosis, treatment and prevention of
diseases or other medical disorders. Companies in these fields include, but are
not limited to, pharmaceutical firms; companies that design, manufacture or
sell medical supplies, equipment and support services; companies that operate
hospitals and other health care facilities; and companies engaged in medical,
diagnostic, biochemical, biotechnological or other health sciences research and
development.
GREATER CHINA COUNTRIES are the People's Republic of China ("China"), the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong") and the Republic of China ("Taiwan").
NON-U.S. COMPANY is an entity that (i) is organized under the laws of a foreign
country and conducts business in a foreign country, (ii) derives 50% or more of
its total revenues from business in foreign countries, or (iii) issues equity
or debt securities that are traded principally on a stock exchange in a foreign
country.
27
RATING AGENCIES, RATED SECURITIES AND INDEXES
DUFF & PHELPS is Duff & Phelps Credit Rating Co.
EAFE INDEX is Morgan Stanley Capital International Europe, Australasia and Far
East ("EAFE") Index.
FITCH is Fitch IBCA, Inc.
INVESTMENT GRADE SECURITIES are fixed-income securities rated Baa and above by
Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by
Alliance to be of equivalent quality.
LOWER-RATED SECURITIES are fixed-income securities rated Ba or below by Moody's
or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be
of equivalent quality, and are commonly referred to as "JUNK BONDS."
MOODY'S is Moody's Investors Service, Inc.
PRIME COMMERCIAL PAPER is commercial paper rated Prime 1 by Moody's or A-1 or
higher by S&P or, if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
S&P is Standard & Poor's Ratings Services.
S&P 500 INDEX is S&P's 500 Composite Stock Price Index, a widely recognized
unmanaged index of market activity.
OTHER
1940 ACT is the Investment Company Act of 1940, as amended.
CODE is the Internal Revenue Code of 1986, as amended.
COMMISSION is the Securities and Exchange Commission.
EXCHANGE is the New York Stock Exchange.
SECURITIES ACT is the Securities Act of 1933, as amended.
DESCRIPTION OF THE FUNDS
This section of the Prospectus provides a more complete description of the
Funds' investment objectives, principal strategies and risks. Of course, there
can be no assurance that any Fund will achieve its investment objective.
Please note that:
- - Additional discussion of the Funds' investments, including the risks of
the investments, can be found in the discussion under DESCRIPTION OF INVESTMENT
PRACTICES following this section.
- - The description of the principal risks for a Fund may include risks
described in the SUMMARY OF PRINCIPAL RISKS above. Additional information about
the risks of investing in a Fund can be found in the discussion under
ADDITIONAL RISK CONSIDERATIONS.
- - Additional descriptions of each Fund's strategies, investments and risks
can be found in the Fund's Statement of Additional Information or SAI.
- - Except as noted, (i) the Funds' investment objectives are "fundamental"
and cannot be changed without a shareholder vote, and (ii) the Funds'
investment policies are not fundamental and thus can be changed without a
shareholder vote.
INVESTMENT OBJECTIVES AND POLICIES
DOMESTIC STOCK FUNDS
The Domestic Stock Funds offer investors seeking capital appreciation a range
of alternative approaches to investing in the U.S. equity markets.
ALLIANCE PREMIER GROWTH FUND
ALLIANCE PREMIER GROWTH FUND seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth. As a matter of fundamental policy, the Fund normally
invests at least 85% of its total assets in the equity securities of U.S.
companies. A U.S. company is a company that is organized under United States
law, has its principal office in the United States and issues equity securities
that are traded principally in the United States. Normally, about 40-60
companies will be represented in the Fund's portfolio, with the 25 most highly
regarded of these companies usually constituting approximately 70% of the
Fund's net assets. The Fund is thus atypical from most equity mutual funds in
its focus on a relatively small number of intensively researched companies. The
Fund is designed for those seeking to accumulate capital over time with less
volatility than that associated with investment in smaller companies.
Alliance's investment strategy for the Fund emphasizes stock selection and
investment in the securities of a limited number of issuers. Alliance relies
heavily upon the fundamental analysis and research of its large internal
research staff, which generally follows a primary research universe of more
than 500 companies that have strong management, superior industry positions,
excellent balance sheets and superior earnings growth prospects. An emphasis is
placed on identifying companies whose substantially above average prospective
earnings growth is not fully reflected in current market valuations.
In managing the Fund, Alliance seeks to utilize market volatility judiciously
(assuming no change in company fundamentals), striving to capitalize on
apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. The Fund
normally remains nearly fully invested and does not take significant cash
positions for market timing purposes. During market declines, while adding to
positions in favored stocks, the Fund becomes somewhat more aggressive,
gradually reducing the number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund becomes somewhat more
28
conservative, gradually increasing the number of companies represented in its
portfolio. Alliance thus seeks to gain positive returns in good markets while
providing some measure of protection in poor markets.
Alliance expects the average market capitalization of companies represented in
the Fund's portfolio normally to be in the range, or in excess, of the average
market capitalization of companies included in the S&P 500 Index.
The Fund also may:
- - invest up to 20% of its net assets in CONVERTIBLE SECURITIES;
- - invest up to 5% of its net assets in RIGHTS OR WARRANTS;
- - invest up to 15% of its total assets in FOREIGN SECURITIES;
- - purchase and sell exchange-traded index OPTIONS and stock index FUTURES
CONTRACTS; and
- - write covered exchange-traded call OPTIONS on its securities of up to 15%
of its total assets, and purchase and sell exchange-traded call and put options
on common stocks written by others of up to, for all options, 10% of its total
assets.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment has the risk that changes in the value of a
single security may have a more significant effect, either negative or
positive, on the Fund's net asset value.
ALLIANCE HEALTH CARE FUND
ALLIANCE HEALTH CARE FUND seeks capital appreciation and, secondarily, current
income. In seeking to achieve its investment objective, under normal
circumstances the Fund invests at least 65%, and normally substantially all, of
the value of its total assets in securities issued by companies principally
engaged in Health Care Industries.
The Fund seeks investments in both new, smaller and less seasoned companies and
well-known, larger and established companies. Whenever possible, investments in
new, smaller or less seasoned companies will be made with a view to benefiting
from the development and growth of new products and markets in Health Care
Industries. Investments in these companies may offer more reward but may also
entail more risk than is generally true of larger, established companies.
While the Fund anticipates that a substantial portion of its portfolio will be
invested in the securities of U.S. companies, the Fund is not limited to
investing in such securities. Many companies in the forefront of world medical
technology are located outside the United States, primarily in Japan and
Europe. Accordingly, the Fund may invest up to 40% of the value of its total
assets in foreign securities, including up to 25% in issuers located in any one
foreign country. However, no more than 5% of the value of the Fund's total net
assets may be invested in securities of issuers located in emerging market
countries. All percentage limitations are applied at the time of investment.
Although the payment of dividends will be a factor considered in the selection
of investments for the Fund, the Fund seeks primarily to take advantage of
capital appreciation opportunities identified by Alliance in emerging
technologies and services in Health Care Industries by investing in companies
that are expected to profit from the development of new products and services
for these industries. Examples of such emerging technologies and services
include:
- - New methods for administering drugs to a patient, such as surgical
implants and skin patches that enhance the effectiveness of the drugs and may
reduce patient side effects by delivering the drugs in precise quantities over
a prolonged time period or by evading natural body defense mechanisms which
delay the effect of the drugs;
- - Developments in medical imaging such as the application of computer
technology to the output of conventional x-ray systems that allow for
cross-sectional images of soft tissue and organs (CT scanning) and continuous
imaging (digital radiography) as well as more advanced nuclear medicine,
ultrasound and magnetic resonance imaging (MRI);
- - Advances in minimally invasive surgical techniques, such as angioplasty
and related technologies for diseased blood vessels and laser beams for the
eye, general and cardiovascular surgery, which provide greater effectiveness,
lower cost and improved patient safety than more traditional surgical
techniques;
- - New therapeutic pharmaceutical compounds that control or alleviate
disease, including prescription and non-prescription drugs and treatment
regimes for conditions not controlled, alleviated or treatable by existing
medications or treatments and chemical or biological pharmaceuticals for use in
diagnostic testing;
- - Advances in molecular biology such as signal transduction, cell adhesion
and cell to cell communication which have facilitated a rapid increase in new
classes of drugs. These have included monoclonal antibodies, bio-engineered
proteins and small molecules from novel synthesis and screening techniques;
- - Genomics, which allows scientists to better understand the causes of human
diseases, and in some cases has led to the manufacture of proteins for use as
therapeutic drugs;
- - Gene chips and other equipment that provide for the screening, diagnosis
and treatment of diseases;
- - The introduction of large scale business efficiencies to the management of
nursing homes, acute and specialty hospitals, as well as free-standing
outpatient facilities, surgical centers and rehabilitation centers;
- - Adaptations of microprocessors for use by pharmaceutical manufacturers,
hospitals, doctors and others in Health Care Industries to increase
distribution efficiency;
- - Health care delivery organizations that combine cost effectiveness with
high quality medical care and help address the rising cost of health care; and
29
- - The sale of prescription drugs and pharmaceuticals to consumers via the
Internet.
The Fund's portfolio may also include companies that provide traditional
products and services currently in use in Health Care Industries and that are
likely to benefit from any increases in the general demand for such products
and services. The following are examples of the products and services that may
be offered by companies in Health Care Industries:
- - DRUGS OR PHARMACEUTICALS, including both ethical and proprietary drugs,
drug administration products and pharmaceutical components used in diagnostic
testing;
- - MEDICAL EQUIPMENT AND SUPPLIES, including equipment and supplies used by
health service companies and individual practitioners, such as electronic
equipment used for diagnosis and treatment, surgical and medical instruments
and other products designed especially for Health Care Industries;
- - HEALTH CARE SERVICES, including the services of clinical testing
laboratories, hospitals, nursing homes, clinics, centers for convalescence and
rehabilitation, and products and services for home health care; and
- - MEDICAL RESEARCH, including scientific research to develop drugs,
processes or technologies with possible commercial application in Health Care
Industries.
The Fund also may:
- - purchase or sell FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS;
- - enter into FORWARD COMMITMENTS for the purchase or sale of securities;
- - make SECURED LOANS OF SECURITIES of up to 20% of its total assets; and
- - enter into REPURCHASE AGREEMENTS.
ALLIANCE GROWTH FUND
ALLIANCE GROWTH FUND seeks long-term growth of capital. Current income is only
an incidental consideration. The Fund seeks to achieve its objective by
investing primarily in equity securities of companies with favorable earnings
outlooks and long-term growth rates that are expected to exceed that of the
U.S. economy over time. The Fund's investment objective is not fundamental.
The Fund also may invest up to 25% of its total assets in lower-rated
fixed-income securities and convertible bonds. The Fund generally will not
invest in securities rated at the time of purchase below Caa- by Moody's and
CCC- by S&P, Duff & Phelps or Fitch or in securities judged by Alliance to be
of comparable investment quality. From time to time, however, the Fund may
invest in securities rated in the lowest grades (i.e., C by Moody's or D or
equivalent by S&P, Duff & Phelps or Fitch) or securities of comparable
investment quality if there are prospects for an upgrade or a favorable
conversion into equity securities. If the credit rating of a security held by
the Fund falls below its rating at the time of purchase (or Alliance determines
that the credit quality of the security has deteriorated), the Fund may
continue to hold the security if such investment is considered appropriate
under the circumstances.
The Fund also may:
- - invest in ZERO-COUPON and PAYMENT-IN-KIND BONDS;
- - invest in FOREIGN SECURITIES although not generally in excess of 15% of
its total assets;
- - buy or sell foreign currencies, OPTIONS ON FOREIGN CURRENCIES, and FOREIGN
CURRENCY FUTURES CONTRACTS (and related options) and deal in FORWARD FOREIGN
CURRENCY EXCHANGE CONTRACTS;
- - enter into FORWARD COMMITMENTS;
- - buy and sell stock index FUTURES CONTRACTS and OPTIONS ON FUTURE CONTRACTS
and on stock indices;
- - purchase and sell FUTURES CONTRACTS and OPTIONS ON FUTURES CONTRACTS and
U.S. Treasury securities;
- - write covered call and put OPTIONS;
- - purchase and sell put and call OPTIONS;
- - make LOANS OF PORTFOLIO SECURITIES of up to 25% of its total assets; and
- - enter into REPURCHASE AGREEMENTS of up to 25% of its total assets;
ALLIANCE TECHNOLOGY FUND
ALLIANCE TECHNOLOGY FUND emphasizes growth of capital and invests for capital
appreciation. Current income is only an incidental consideration. The Fund may
seek income by writing listed call options. The Fund invests primarily in
securities of companies expected to benefit from technological advances and
improvements (i.e., companies that use technology extensively in the
development of new or improved products or processes). The Fund normally will
have at least 80% of its assets invested in the securities of these companies.
The Fund normally will have substantially all its assets invested in equity
securities, but it also invests in debt securities offering an opportunity for
price appreciation. The Fund will invest in listed and unlisted securities, in
U.S. securities, and up to 10% of its total assets in foreign securities.
The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies.
The Fund also may:
- - write covered call OPTIONS on its securities of up to 15% of its total
assets and purchase exchange-listed call and put options, including
exchange-traded index put options of up to, for all options, 10% of its total
assets;
- - invest up to 10% of its total assets in WARRANTS; and
- - make LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets.
30
Because the Fund invests primarily in technology companies, factors affecting
those types of companies could have a significant effect on the Fund's net
asset value. In addition, the Fund's investments in technology stocks,
especially those of smaller, less seasoned companies, tend to be more volatile
than the overall market. The Fund's investments in debt and foreign securities
have credit risk and foreign risk.
ALLIANCE QUASAR FUND
ALLIANCE QUASAR FUND seeks growth of capital by pursuing aggressive investment
policies. The Fund invests for capital appreciation and only incidentally for
current income. The Fund's practice of selecting securities based on the
possibility of appreciation cannot, of course, ensure against a loss in value.
Moreover, because the Fund's investment policies are aggressive, an investment
in the Fund is risky and investors who want assured income or preservation of
capital should not invest in the Fund.
The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities for
the Fund, Alliance considers the economic and political outlook, the values of
specific securities relative to other investments, trends in the determinants
of corporate profits, and management capability and practices.
The Fund invests principally in equity securities, but it also invests to a
limited degree in non-convertible bonds and preferred stocks. The Fund invests
in listed and unlisted U.S. and foreign securities. The Fund can periodically
invest in the securities of companies that are expected to appreciate due to a
development particularly or uniquely applicable to a company regardless of
general business conditions or movements of the market as a whole.
The Fund also may:
- - make SHORT SALES OF SECURITIES AGAINST THE BOX but not more than 15% of
its net assets may be deposited on short sales; and
- - write covered call OPTIONS of up to 15% of its total assets and purchase
and sell put and call options written by others of up to, for all options, 10%
of its total assets.
Investments in smaller companies may have more risk because they tend to be
more volatile than the overall stock market. The Fund's investments in
non-convertible bonds, preferred stocks and foreign stocks may have credit risk
and foreign risk.
THE ALLIANCE FUND
THE ALLIANCE FUND seeks long-term growth of capital and income primarily
through investment in common stocks. The Fund normally invests substantially
all of its assets in common stocks that Alliance believes will appreciate in
value. The Fund also may invest in other types of securities such as
convertible securities, investment grade instruments, U.S. Government
securities and high quality, short-term obligations such as repurchase
agreements, bankers' acceptances and domestic certificates of deposit. The Fund
may invest without limit in foreign securities. The Fund generally does not
effect portfolio transactions in order to realize short-term trading profits or
exercise control.
The Fund also may:
- - write exchange-traded covered call OPTIONS on up to 25% of its total
assets;
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 25% of its total
assets; and
- - enter into REPURCHASE AGREEMENTS of up to seven days' duration with
commercial banks, but only if those agreements together with any restricted
securities and any securities which do not have readily available market
quotations do not exceed 10% of its net assets.
While the diversification and generally high quality of the Fund's investments
cannot prevent fluctuations in market values, they tend to limit investment
risk and contribute to achieving the Fund's objective.
TOTAL RETURN FUNDS
The Total Return Funds provide a range of investment alternatives to investors
seeking both growth of capital and current income.
ALLIANCE GROWTH AND INCOME FUND
ALLIANCE GROWTH AND INCOME FUND seeks appreciation through investments
primarily in dividend-paying common stocks of good quality. The Fund also may
invest in fixed-income securities and convertible securities.
The Fund also may try to realize income by writing covered call options listed
on domestic securities exchanges. The Fund also invests in foreign securities.
Since the purchase of foreign securities entails certain political and economic
risks, the Fund restricts its investments in these securities to issues of high
quality. The Fund also may purchase and sell financial forward and futures
contracts and options on these securities for hedging purposes.
ALLIANCE BALANCED SHARES
ALLIANCE BALANCED SHARES seeks a high return through a combination of current
income and capital appreciation. Although the Fund's investment objective is
not fundamental, the Fund is a "balanced" fund as a matter of fundamental
policy. The Fund invests in equity securities of high-quality, financially
strong, dividend-paying companies. Normally, the Fund's investments will
consist of about 60% in stocks, but stocks may make up to 75% of its
investments. The Fund will not purchase a security if as a result less than 25%
of its total assets will be in fixed income senior securities. These
investments may include short- and long-term debt securities, preferred stocks,
convertible debt securities and convertible preferred stocks to the extent that
their values are attributable to their fixed-income characteristics. Other than
this restriction, the percentage of the Fund's assets invested in each type of
security will vary.
The Fund invests in U.S. Government securities, bonds, senior debt securities,
and preferred and common stocks in such
31
proportions and of such type as Alliance deems best adapted to the current
economic and market outlooks. The Fund may invest up to 15% of the value of its
total assets in foreign equity and fixed-income securities eligible for
purchase by the Fund under its investment policies described above.
The Fund also may:
- - enter into contracts for the purchase or sale for future delivery of
foreign currencies;
- - purchase and write put and call OPTIONS on foreign currencies and enter
into FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS for hedging purposes; and
- - subject to market conditions, write covered call OPTIONS listed on a
domestic exchange to realize income.
As a balanced fund, the Fund has the risk that the allocation of its
investments between equity and debt securities may have a more significant
effect on the Fund's net asset value when one of these asset classes is
performing more poorly than the other.
ALLIANCE UTILITY INCOME FUND
ALLIANCE UTILITY INCOME FUND seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. As a fundamental policy, the Fund normally invests at least
65% of its total assets in securities of companies in the utilities industry.
The Fund seeks to take advantage of the characteristics and historical
performance of securities of utility companies, many of which pay regular
dividends and increase their common stock dividends over time. The Fund
considers a company to be in the utilities industry if, during the most recent
twelve-month period, at least 50% of the company's gross revenues, on a
consolidated basis, were derived from its utilities activities.
The Fund may invest in securities of both U.S. and foreign issuers, although
the Fund will invest no more than 15% of its total assets in issuers in any one
foreign country. The Fund invests at least 65% of its total assets in
income-producing securities, but there is otherwise no limit on the allocation
of the Fund's investments between equity securities and fixed-income
securities. The Fund may maintain up to 35% of its net assets in lower-rated
securities. The Fund will not retain a security that is downgraded below B or
determined by Alliance to have undergone similar credit quality deterioration
following purchase.
The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other
than utility companies. These securities include U.S. Government securities and
repurchase agreements for those securities, foreign government securities,
corporate fixed-income securities of domestic issuers, corporate fixed-income
securities of foreign issuers denominated in foreign currencies or in U.S.
Dollars (in each case including fixed-income securities of an issuer in one
country denominated in the currency of another country), qualifying bank
deposits, and prime commercial paper.
The Fund also may:
- - invest up to 30% of its net assets in CONVERTIBLE SECURITIES;
- - invest up to 5% of its net assets in RIGHTS OR WARRANTS;
- - invest in DEPOSITARY RECEIPTS, securities of supranational entities
denominated in the currency of any country, securities denominated in European
Currency Units, and "semi-governmental securities";
- - write covered call and put OPTIONS, purchase call and put options on
securities of the types in which it is permitted to invest that are
exchange-traded and over-the-counter, and write uncovered call options for
cross-hedging purposes;
- - purchase and sell exchange-traded OPTIONS on any securities index composed
of the types of securities in which it may invest;
- - enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including an index of U.S. Government securities, foreign government
securities, corporate fixed-income securities, or common stock, and may
purchase and write options on futures contracts;
- - purchase and write call and put OPTIONS on foreign currencies traded on
U.S. and foreign exchanges or over-the-counter for hedging purposes;
- - purchase or sell FORWARD CONTRACTS;
- - enter into INTEREST RATE SWAPS and purchase or sell INTEREST RATE CAPS and
FLOORS;
- - enter into FORWARD COMMITMENTS;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - enter into REPURCHASE AGREEMENTS for U.S. Government securities;
- - make SHORT SALES of securities or maintain a short position; and
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 20% of its total
assets.
The Fund's principal risks include those that arise from its investing
primarily in electric utility companies. Factors affecting that industry sector
can have a significant effect on the Fund's net asset value. The U.S. utilities
industry has experienced significant changes in recent years. Electric utility
companies in general have been favorably affected by lower fuel costs, the full
or near completion of major construction programs and lower financing costs. In
addition, many utility companies have generated cash flows in excess of current
operating expenses and construction expenditures, permitting some degree of
diversification into unregulated businesses. Regulatory changes, however, could
increase costs or impair the ability of nuclear and conventionally fueled
generating facilities to operate their facilities and reduce their ability to
make dividend payments on their securities. Rates of return of utility
companies generally are subject to review and limitation by state public
utilities
32
commissions and tend to fluctuate with marginal financing costs. Rate changes
ordinarily lag behind changes in financing costs and can favorably or
unfavorably affect the earnings or dividend pay-outs of utilities stocks
depending upon whether the rates and costs are declining or rising.
Utility companies historically have been subject to the risks of increases in
fuel and other operating costs, high interest costs, costs associated with
compliance with environmental and nuclear safety regulations, service
interruptions, economic slowdowns, surplus capacity, competition, and
regulatory changes. There also can be no assurance that regulatory policies or
accounting standards changes will not negatively affect utility companies'
earnings or dividends. Utility companies are subject to regulation by various
authorities and may be affected by the imposition of special tariffs and
changes in tax laws. To the extent that rates are established or reviewed by
governmental authorities, utility companies are subject to the risk that such
authorities will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more
susceptible than most other mutual funds to economic, political or regulatory
occurrences affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although the regulation may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their respective governments than utility companies located in the
U.S. As in the U.S., foreign utility companies generally are required to seek
government approval for rate increases. In addition, many foreign utility
companies use fuels that cause more pollution than those used in the U.S. and
may yet be required to invest in pollution control equipment. Foreign utility
regulatory systems vary from country to country and may evolve in ways
different from regulation in the U.S. The percentage of the Fund's assets
invested in issuers of particular countries will vary.
Increases in interest rates may cause the value of the Fund's investments to
decline and the decrease in value may not be offset by higher interest rate
income. The Fund's investments in lower-rated securities may be subject to more
credit risk than a fund that invests in higher-rated securities.
ALLIANCE REAL ESTATE INVESTMENT FUND
ALLIANCE REAL ESTATE INVESTMENT FUND seeks a total return from long-term growth
of capital and from income principally through investing in a portfolio of
equity securities of issuers that are primarily engaged in or related to the
real estate industry.
The Fund normally invests at least 65% of its total assets in equity securities
of real estate investment trusts, or REITs, and other real estate industry
companies. A "real estate industry company" is a company that derives at least
50% of its gross revenues or net profits from the ownership, development,
construction, financing, management, or sale of commercial, industrial, or
residential real estate or interests in these properties. The Fund invests in
equity securities that include common stock, shares of beneficial interest of
REITs, and securities with common stock characteristics, such as preferred
stock or convertible securities ("Real Estate Equity Securities").
The Fund may invest up to 35% of its total assets in (a) securities that
directly or indirectly represent participations in, or are collateralized by
and payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real estate mortgage
investment conduit certificates ("REMICs") and collateralized mortgage
obligations ("CMOs") and (b) short-term investments. These securities are
described below.
In selecting Real Estate Equity Securities, Alliance's analysis will focus on
determining the degree to which the company involved can achieve sustainable
growth in cash flow and dividend paying capability. Alliance believes that the
primary determinant of this capability is the economic viability of property
markets in which the company operates and that the secondary determinant of
this capability is the ability of management to add value through strategic
focus and operating expertise. The Fund will purchase Real Estate Equity
Securities when, in the judgment of Alliance, their market price does not
adequately reflect this potential. In making this determination, Alliance will
take into account fundamental trends in underlying property markets as
determined by proprietary models, site visits conducted by individuals
knowledgeable in local real estate markets, price-earnings ratios (as defined
for real estate companies), cash flow growth and stability, the relationship
between asset value and market price of the securities, dividend payment
history, and such other factors that Alliance may determine from time to time
to be relevant. Alliance will attempt to purchase for the Fund Real Estate
Equity Securities of companies whose underlying portfolios are diversified
geographically and by property type.
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles that 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 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.
The Fund's investment strategy with respect to Real Estate Equity Securities is
based on the premise that property market fundamentals are the primary
determinant of growth underlying the performance of Real Estate Equity
Securities. Value and management further distinguishes the most attractive Real
Estate Equity Securities. The Fund's research and investment process is
designed to identify those companies with strong
33
property fundamentals and strong management teams. This process is comprised of
real estate market research, specific property inspection, and securities
analysis. Alliance believes that this process will result in a portfolio that
will consist of Real Estate Equity Securities of companies that own assets in
the most desirable markets across the country, diversified geographically and
by property type.
To implement the Fund's research and investment process, Alliance has retained
the consulting services of CB Richard Ellis, Inc. ("CBRE"), a publicly held
company and the largest real estate services company in the United States.
CBRE's business includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory activities. The
universe of property-owning real estate industry firms consists of
approximately 142 companies of sufficient size and quality to merit
consideration for investment by the Fund. As consultant to Alliance, CBRE
provides access to its proprietary model, REIT-Score, which analyzes the
approximately 18,000 properties owned by these 142 companies. Using proprietary
databases and algorithms, CBRE analyzes local market rent, expenses, occupancy
trends, market specific transaction pricing, demographic and economic trends,
and leading indicators of real estate supply such as building permits. Over
1,000 asset-type specific geographic markets are analyzed and ranked on a
relative scale by CBRE in compiling its REIT-Score database. The relative
attractiveness of these real estate industry companies is similarly ranked
based on the composite rankings of the properties they own.
Once the universe of real estate industry companies has been distilled through
the market research process, CBRE's local market presence provides the
capability to perform site specific inspections of key properties. This
analysis examines specific location, condition, and sub-market trends. CBRE's
use of locally based real estate professionals provides Alliance with a window
on the operations of the portfolio companies as information can immediately be
put in the context of local market events. Only those companies whose specific
property portfolios reflect the promise of their general markets will be
considered for investment by the Fund.
Alliance further screens the universe of real estate industry companies by
using rigorous financial models and by engaging in regular contact with
management of targeted companies. Each management's strategic plan and ability
to execute the plan are determined and analyzed. Alliance makes extensive use
of CBRE's network of industry analysts in order to assess trends in tenant
industries. This information is then used to further evaluate management's
strategic plans. Financial ratio analysis is used to isolate those companies
with the ability to make value-added acquisitions. This information is combined
with property market trends and used to project future earnings potential.
The Fund may invest in short-term investments including: corporate commercial
paper and other short-term commercial obligations, in each case rated or issued
by companies with similar securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; obligations (including
certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.
The Fund may invest in debt securities rated BBB or higher by S&P or Baa or
higher by Moody's or, if not rated, of equivalent credit quality as determined
by Alliance. The Fund expects that it will not retain a debt security that is
downgraded below BBB or Baa or, if unrated, determined by Alliance to have
undergone similar credit quality deterioration, subsequent to purchase by the
Fund.
The Fund also may:
- - invest up to 15% of its net assets in CONVERTIBLE SECURITIES;
- - enter into FORWARD COMMITMENTS;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - make SHORT SALES of securities or maintain a short position but only if at
all times when a short position is open not more than 25% of the Fund's net
assets is held as collateral for such sales;
- - invest up to 10% of its net assets in RIGHTS OR WARRANTS;
- - make LOANS OF PORTFOLIO SECURITIES of up to 25% of its total assets; and
- - enter into REPURCHASE AGREEMENTS of up to seven days' duration.
Because the Fund invests a substantial portion of its assets in the real estate
market, it is subject to many of the same risks involved in direct ownership of
real estate. For example, the value of real estate could decline due to a
variety of factors affecting the real estate market generally, such as
overbuilding, increases in interest rates, or declines in rental rates. In
addition, REITs are dependent on the capability of their managers, may have
limited diversification, and could be significantly affected by changes in tax
laws.
The Fund's investments in mortgage-backed securities have prepayment risk,
which is the risk that mortgage loans will be prepaid when interest rates
decline and the Fund will have to reinvest in securities with lower interest
rates. This risk causes mortgage-backed securities to have significantly
greater price and yield volatility than traditional fixed-income securities.
The Fund's investments in REMICs, CMOs and other types of mortgage-backed
securities may be subject to special risks that are described under
"Description of Investment Practices."
GLOBAL STOCK FUNDS
The Global Stock Funds offer investors the opportunity to participate in the
potential for long-term capital appreciation available from investment in
foreign securities.
ALLIANCE NEW EUROPE FUND
ALLIANCE NEW EUROPE FUND seeks long-term capital appreciation through
investment primarily in the equity securities of
34
companies based in Europe. The Fund intends to invest substantially all of its
assets in the equity securities of European companies and has a fundamental
policy of normally investing at least 65% of its total assets in these
securities. The Fund may invest up to 35% of its total assets in high-quality
U.S. Dollar or foreign currency denominated fixed-income securities issued or
guaranteed by European governmental entities, or by European or multinational
companies or supranational organizations.
The Fund expects that it will invest primarily in the more established and
liquid markets in Europe. However, the Fund may also invest in the
lesser-developed markets in Europe including those countries in Southern and
Eastern Europe, as well as the former communist countries in the Soviet Union.
The Fund does not expect to invest more than 20% of its total assets in these
developing markets under normal circumstances or more than 10% of its total
assets in issuers based in any one of these developing countries.
In managing the Fund, Alliance utilizes a disciplined approach to invest on a
bottom-up basis in those companies exhibiting the best available combination of
sustainable fundamental growth at a reasonable price. Alliance's approach
emphasizes proprietary qualitative and quantitative inputs provided by its
in-house analysts. Internal analysis focuses primarily on large to upper-medium
capitalization stocks (those with a market value of $3 billion and above).
Country and industry exposures are by-products of the stock selection process.
Alliance does not actively manage currency exposures for this Fund but may
hedge underlying exposures back to US Dollars when conditions are perceived to
be extreme.
Stock selection focuses on companies in growth industries that exhibit
above-average growth based on a competitive or sustainable advantage based on
brand, technology, or market share. A stock is typically sold when its relative
fundamentals are no longer as attractive as other investment opportunities
available to the Fund. This may be a function of the stock having achieved its
fair market value, deterioration in fundamentals relative to Alliance's
expectations, or because the management team loses confidence in company
management.
The Fund diversifies its investments among a number of European countries and
normally invests in companies based in at least three of these countries. The
Fund's investment policies do not require that the Fund concentrate its
investments in any single country. However, these policies also do not prevent
the Fund from concentrating its investments in a single country and in recent
years the Fund has invested more than 25% of its total assets in the United
Kingdom. The Fund may invest without limit in any single European country.
During such times, the Fund would be subject to a correspondingly greater risk
of loss due to adverse political or regulatory developments, or an economic
downturn, within that country.
The Fund also may:
- - invest up to 20% of its total assets in RIGHTS OR WARRANTS;
- - invest in DEPOSITARY RECEIPTS or other securities convertible into
securities of companies based in European countries, debt securities of
supranational entities denominated in the Euro or the currency of any European
country, debt securities denominated in the Euro of an issuer in a European
country (including supranational issuers), and "semi-governmental securities";
- - purchase and sell FORWARD CONTRACTS;
- - write covered call or put OPTIONS and sell and purchase exchange-traded
put and call options, including exchange-traded index options;
- - enter into financial FUTURES CONTRACTS, including contracts for the
purchase or sale for future delivery of foreign currencies and futures
contracts based on stock indices, and purchase and write options on futures
contracts;
- - purchase and write put options on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets; and
- - enter into FORWARD COMMITMENTS.
The Fund's investments in non-U.S. countries and smaller countries may have
more risk because they tend to be more volatile than the overall stock market.
To the extent the Fund invests a substantial amount of its assets in a
particular European country, your investment is subject to the risk that market
changes or other events affecting that country may have a more significant
effect on the Fund's net asset value. The Fund's investments in U.S. Dollar- or
foreign currency-denominated fixed-income securities have interest rate and
credit risk.
ALLIANCE WORLDWIDE PRIVATIZATION FUND
ALLIANCE WORLDWIDE PRIVATIZATION FUND seeks long-term capital appreciation. As
a fundamental policy, the Fund invests at least 65% of its total assets in
equity securities issued by enterprises that are undergoing, or have undergone,
privatization (as described below), although normally significantly more of its
assets will be invested in such securities. The balance of its investments will
include securities of companies believed by Alliance to be beneficiaries of
privatizations. The Fund is designed for investors desiring to take advantage
of investment opportunities, historically inaccessible to U.S. individual
investors, that are created by privatizations of state enterprises in both
established and developing economies. These companies include those in Western
Europe and Scandinavia, Australia, New Zealand, Latin America, Asia, Eastern
and Central Europe and, to a lesser degree, Canada and the United States.
The Fund's investments in enterprises undergoing privatization may comprise
three distinct situations. First, the Fund may invest in the initial offering
of publicly traded equity securities (an "initial equity offering") of a
government- or state-owned or controlled company or enterprise (a "state
enterprise"). Secondly, the Fund may purchase securities of a current or
35
former state enterprise following its initial equity offering. Finally, the
Fund may make privately negotiated purchases of stock or other equity interests
in a state enterprise that has not yet conducted an initial equity offering.
Alliance believes that substantial potential for capital appreciation exists as
privatizing enterprises rationalize their management structures, operations and
business strategies in order to compete efficiently in a market economy and the
Fund will thus emphasize investments in such enterprises.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany, and Italy, and those with developing economies,
including Argentina, Mexico, Chile, Indonesia, Malaysia, Poland, and Hungary,
are engaged in privatizations. The Fund will invest in any country believed to
present attractive investment opportunities.
A major premise of the Fund's approach is that the equity securities of
privatized companies offer opportunities for significant capital appreciation.
In particular, because privatizations are integral to a country's economic
restructuring, securities sold in initial equity offerings often are priced
attractively to secure the issuer's successful transition to private sector
ownership. Additionally, these enterprises often dominate their local markets
and typically have the potential for significant managerial and operational
efficiency gains.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in at least four, and usually considerably more,
countries. The Fund may maintain no more than 15% of its total assets in
issuers in any one foreign country, except that the Fund may invest up to 30%
of its total assets in issuers in any one of France, Germany, Great Britain,
Italy and Japan. The Fund may invest all of its assets within a single region
of the world.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities. The Fund may invest up to 5% of its net assets in
lower-rated securities. The Fund will not retain a non-convertible security
that is downgraded below C or determined by Alliance to have undergone similar
credit quality deterioration following purchase.
The Fund also may:
- - invest up to 20% of its total assets in RIGHTS OR WARRANTS;
- - write covered call and put OPTIONS, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for cross-hedging
purposes;
- - enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, foreign government
securities, or common stock, and may purchase and write options on future
contracts;
- - purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
- - purchase or sell FORWARD CONTRACTS;
- - enter into FORWARD COMMITMENTS;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - enter into CURRENCY SWAPS for hedging purposes;
- - make SHORT SALES of securities or maintain a short position;
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets; and
- - enter into REPURCHASE AGREEMENTS for U.S. Government securities.
Investments in non-U.S. companies and smaller companies may have more risk
because they tend to be more volatile than the overall stock market. The Fund's
investments in debt securities and convertible securities have interest risk
and credit risk.
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND
ALLIANCE INTERNATIONAL PREMIER GROWTH FUND seeks long-term capital appreciation
by investing predominately in the equity securities of a limited number of
carefully selected non-U.S. companies that are judged likely to achieve
superior earnings growth. As a matter of fundamental policy, the Fund will
invest under normal circumstances at least 85% of its total assets in equity
securities. The Fund makes investments based upon their potential for capital
appreciation. Current income is incidental to that objective.
In the main, the Fund's investments will be in comparatively large,
high-quality companies. Normally, about 40 companies will be represented in the
Fund's portfolio, and the 30 most highly regarded of these companies usually
will constitute approximately 70%, and often more, of the Fund's net assets.
The Fund thus differs from more typical international equity mutual funds by
focusing on a relatively small number of intensively researched companies. The
Fund is designed for investors seeking to accumulate capital over time. Because
of market risks inherent in any investment, the selection of securities on the
basis of their appreciation possibilities cannot ensure against possible loss
in value. There is, of course, no assurance that the Fund's investment
objective will be met.
Alliance expects the market capitalization of the companies represented in the
Fund's portfolio will generally be in excess of $10 billion.
Within the investment framework of the Fund, Alliance's Large Cap Growth Group,
headed by Alfred Harrison, Alliance's Vice Chairman, has responsibility for
managing the Fund's portfolio. As discussed below, in selecting the Fund's
portfolio investments, Alliance's Large Cap Growth Group will follow a
structured, disciplined research and investment process that is essentially
similar to that which it employs in managing the PREMIER GROWTH FUND.
36
In managing the Fund's assets, Alliance's investment strategy will emphasize
stock selection and investment in the securities of a limited number of
issuers. Alliance depends heavily upon the fundamental analysis and research of
its large global equity research team situated in numerous locations around the
world. Its global equity analysts follow a research universe of approximately
900 companies. As one of the largest multinational investment management firms,
Alliance has access to considerable information concerning the companies in its
research universe, an in-depth understanding of the products, services, markets
and competition of these companies, and a good knowledge of their management.
Research emphasis is placed on the identification of companies whose superior
prospective earnings growth is not fully reflected in current market valuations.
Alliance constantly adds to and deletes from this universe as fundamentals and
valuations change. Alliance's global equity analysts rate companies in three
categories. The performance of each analyst's ratings is an important
determinant of his or her incentive compensation. The equity securities of
"one-rated" companies are expected to significantly outperform the local market
in local currency terms. All equity securities purchased for the Fund's
portfolio will be selected from the universe of approximately 100 "one-rated"
companies. As noted above, the Fund usually invests approximately 70% of its
net assets in approximately 30 of the most highly regarded of these companies.
The Fund's portfolio emphasis upon particular industries or sectors will be a
by-product of the stock selection process rather than the result of assigned
targets or ranges.
The Fund diversifies its investments among at least four, and usually
considerably more, countries. No more than 15% of the Fund's total assets will
be invested in issuers in any one foreign country, except that the Fund may
invest up to 25% of its total assets in issuers in each of Canada, France,
Germany, Italy, Japan, The Netherlands, Switzerland, and the United Kingdom.
Within these limits, geographic distribution of the Fund's investments among
countries or regions also will be a product of the stock selection process
rather than a predetermined allocation. To the extent that the Fund
concentrates its assets within one region, the Fund may be subject to any
special risks associated with that region. While the Fund may engage in
currency hedging programs in periods in which Alliance perceives extreme
exchange rate risk, the Fund normally will not make significant use of currency
hedging strategies.
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. To the extent
consistent with local market liquidity considerations, the Fund will strive to
capitalize on apparently unwarranted price fluctuations, both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. Under
normal circumstances, the Fund will remain substantially fully invested in
equity securities and will not take significant cash positions for market
timing purposes. Rather, through "buying into declines" and "selling into
strength," Alliance seeks superior relative returns over time.
The Fund also may:
- - invest up to 20% of its total assets in CONVERTIBLE SECURITIES;
- - invest up to 20% of its total assets in RIGHTS OR WARRANTS;
- - write covered call and put OPTIONS, purchase put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options, and write uncovered options for cross hedging
purposes;
- - enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, foreign government
securities, or common stock and may purchase and write options on such future
contracts;
- - purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
- - purchase or sell FORWARD CONTRACTS;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - enter into FORWARD COMMITMENTS;
- - enter into CURRENCY SWAPS for hedging purposes;
- - make SHORT SALES of securities or maintain short positions of no more than
5% of its net assets as collateral for short sales;
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets; and
- - enter into REPURCHASE AGREEMENTS for U.S. Government securities.
Because the Fund invests in a smaller number of securities than many other
equity funds, your investment also has the risk that changes in the value of a
single security may have a more significant effect, either negative or
positive, on the Fund's net asset value.
ALLIANCE GLOBAL SMALL CAP FUND
ALLIANCE GLOBAL SMALL CAP FUND seeks long-term growth of capital through
investment in a global portfolio of the equity securities of selected companies
with relatively small market capitalization. The Fund's portfolio emphasizes
companies with market capitalizations that would have placed them (when
purchased) in about the smallest 20% by market capitalization of actively
traded U.S. companies, or market capitalizations of up to about $1.5 billion.
Because the Fund applies the U.S. size standard on a global basis, its foreign
investments might rank above the lowest 20%, and, in fact, might in some
countries rank among the largest, by market capitalization in local markets.
Normally, the Fund invests at least 65% of its assets in equity securities of
these smaller capitalization companies. These companies are located in at least
three countries, one of which may be the U.S. The Fund may invest up to 35% of
its total assets in securities of companies whose market capitalizations exceed
the Fund's size standard. The Fund's
37
portfolio securities may be listed on a U.S. or foreign exchange or traded
over-the-counter.
The Fund also may:
- - invest up to 20% of its total assets in WARRANTS to purchase equity
securities;
- - invest in DEPOSITARY RECEIPTS or other securities representing securities
of companies based in countries other than the U.S.;
- - purchase or sell FORWARD FOREIGN CURRENCY CONTRACTS;
- - write covered call OPTIONS on its securities of up to 15% of its total
assets, and purchase exchange-traded call and put options, including put
options on market indices of up to, for all options, 10% of its total assets;
and
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets.
One of the Fund's principal risks is its investments in smaller capitalization
companies. Alliance believes that smaller capitalization companies often have
sales and earnings growth rates exceeding those of larger companies and that
these growth rates tend to cause more rapid share price appreciation. Investing
in smaller capitalization stocks, however, involves greater risk than is
associated with larger, more established companies. For example, smaller
capitalization companies often have limited product lines, markets, or
financial resources. They may be dependent for management on one or a few key
persons and can be more susceptible to losses and risks of bankruptcy. Their
securities may be thinly traded (and therefore have to be sold at a discount
from current market prices or sold in small lots over an extended period of
time), may be followed by fewer investment research analysts, and may be
subject to wider price swings. For these reasons, the Fund's investments may
have a greater chance of loss than investments in securities of larger
capitalization companies. In addition, transaction costs in small
capitalization stocks may be higher than in those of larger capitalization
companies.
The Fund's investments in non-U.S. companies and in smaller companies will be
more volatile and may differ substantially from the overall U.S. market.
ALLIANCE INTERNATIONAL FUND
ALLIANCE INTERNATIONAL FUND seeks a total return on its assets from long-term
growth of capital and from income primarily through a broad portfolio of
marketable securities of established non-U.S. companies, companies
participating in foreign economies with prospects for growth, including U.S.
companies having their principal activities and interests outside the U.S. and
foreign government securities. Normally, the Fund will invest more than 80% of
its assets in these types of companies.
The Fund expects to invest primarily in common stocks of established non-U.S.
companies that Alliance believes have potential for capital appreciation or
income or both, but the Fund is not required to invest exclusively in common
stocks or other equity securities. The Fund may invest in any other type of
investment grade security, including convertible securities, as well as in
warrants, or obligations of the U.S. or foreign governments and their political
subdivisions.
The Fund intends to diversify its investments broadly among countries and
normally invests in at least three foreign countries, although it may invest a
substantial portion of its assets in one or more of these countries. The Fund
may invest in companies, wherever organized, that Alliance judges have their
principal activities and interests outside the U.S. These companies may be
located in developing countries, which involves exposure to economic structures
that are generally less diverse and mature and to political systems that can be
expected to have less stability than those of developed countries. The Fund
currently does not intend to invest more than 10% of its total assets in
companies in, or governments of, developing countries.
The Fund also may:
- - purchase or sell FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS;
- - write covered call or put OPTIONS, sell and purchase U.S. or foreign
exchange-listed put and call options, including exchange-traded index options;
- - enter into FINANCIAL FUTURES CONTRACTS, including contracts for the
purchase or sale for future delivery of foreign currencies and stock index
futures, and purchase and write put and call options on futures contracts
traded on U.S. or foreign exchanges or over-the-counter;
- - purchase and write put OPTIONS on foreign currencies traded on securities
exchanges or boards of trade or over-the-counter;
- - make LOANS OF PORTFOLIO SECURITIES of up to 30% of its total assets; and
- - enter into REPURCHASE AGREEMENTS of up to seven days' duration for up to
10% of the Fund's total assets.
Investments in non-U.S. countries may have more risk because they tend to be
more volatile than the U.S. stock market. To the extent that the Fund invests a
substantial amount of its assets in a particular foreign country, an investment
in the Fund has the risk that market changes or other events affecting that
country may have a more significant effect, either negative or positive, on the
Fund's net asset value.
ALLIANCE GREATER CHINA '97 FUND
ALLIANCE GREATER CHINA '97 FUND is a non-diversified investment company that
seeks long-term capital appreciation through investment of at least 80% of its
total assets in equity securities issued by Greater China companies. The Fund
expects to invest a significant portion, which may be greater than 50%, of its
assets in equity securities of Hong Kong companies and may invest, from time to
time, all of its assets in Hong Kong companies or companies of either of the
other Greater China countries.
38
In recent years, China, Hong Kong and Taiwan have each experienced a high level
of real economic growth, although growth is expected to slow in 1999. This
growth has resulted from advantageous economic conditions, including favorable
demographics, competitive wage rates, and rising per capita income and consumer
demand. Significantly, the growth has also been fueled by an easing by both
China and Taiwan of government restrictions and an increased receptivity to
foreign investment. This expanded, if not yet complete, openness to foreign
investment extends as well to the securities markets of both countries. Hong
Kong's free-market economy has historically included securities markets
completely open to foreign investments. All three countries have regulated
stock exchanges upon which shares of an increasing number of Greater China
companies are traded.
With its population estimated at more than 1.2 billion as a driving force, and
notwithstanding its continuing political rigidity, China's economic growth has
been coupled with significantly reduced government economic intervention and
basic economic structural change. Recent years have seen large increases in
industrial production with a significant decline in the state sector share of
industrial output, and increased involvement of local governmental units and
the private sector in establishing new business enterprises.
With China's growth has come an increasing direct and indirect economic
involvement of all three Greater China countries. For some time, Hong Kong, a
world financial and trade center in its own right, with a large stock exchange
and offices of many of the world's multinational companies, has been the
gateway to trade with and foreign investment in China. With the transfer on
July 1, 1997 of the sovereignty of Hong Kong from Great Britain to China, not
only the political but the economic ties between China and Hong Kong are
expected to continue to intensify, with the continuation of Hong Kong's
economic system as provided for in the law governing its sovereignty.
Notwithstanding the, at times considerable, political tension between the two
countries, it is generally recognized that substantially increased trade and
investment with China has been generated from Taiwan, in many cases through
Hong Kong. Along with this increased interaction with China, Taiwan is becoming
a regional technological and telecommunication center, while continuing the
process of opening its economy up to foreign investment. Although
geographically limited, Taiwan boasts an economy among the world's 20 largest
and its foreign exchange reserves are the third largest in the world measured
in U.S. dollars. As China's economy continues to expand, it is expected that
Taiwan's economic interaction with China will likewise increase.
Alliance believes that over the long term conditions are favorable for
continuing and expanding economic growth in all three Greater China countries.
It is this potential which the Fund hopes to take advantage of by investing
both in established and new and emerging companies. Appendix A has additional
information about the Greater China countries.
In addition to investing in equity securities of Greater China companies, the
Fund may invest up to 20% of its total assets in (i) debt securities issued or
guaranteed by Greater China companies or by Greater China governments, their
agencies or instrumentalities, and (ii) equity or debt securities issued by
issuers other than Greater China companies. The Fund will invest only in
investment grade securities. The Fund will sell a security that is downgraded
below investment grade or is determined by Alliance to have undergone a similar
credit quality deterioration, the Fund will sell of that security.
The Fund also may:
- - invest up to 25% of its net assets in the CONVERTIBLE SECURITIES;
- - invest up to 20% of its net assets in RIGHTS OR WARRANTS;
- - invest in DEPOSITARY RECEIPTS, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
- - invest up to 25% of its net assets in EQUITY-LINKED DEBT SECURITIES with
the objective of realizing capital appreciation;
- - invest up to 20% of its net assets in LOANS AND OTHER DIRECT DEBT
SECURITIES;
- - write covered call and put OPTIONS, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
- - enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, securities issued
by foreign government entities, or common stock, and may purchase and write
options on future contracts;
- - purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
- - purchase or sell FORWARD CONTRACTS;
- - enter into INTEREST RATE SWAPS and purchase or sell INTEREST RATE CAPS and
FLOORS;
- - enter into FORWARD COMMITMENTS;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - enter into CURRENCY SWAPS for hedging purposes;
- - make SHORT SALES of securities or maintain a short position, in each case
only if AGAINST THE BOX;
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets; and
- - enter into REPURCHASE AGREEMENTS for U.S. Government securities.
All or some of the policies and practices listed above may not be available to
the Fund in the Greater China countries and the Fund will utilize these
policies only to the extent permissible.
39
The Fund's investments in Greater China companies will be significantly more
volatile and will differ from the overall U.S. market. Your investment also has
the risk that market changes or other events affecting the Greater China
countries may have a more significant effect on the Fund's net asset value. In
addition, the Fund is "non-diversified," meaning that it invests its assets in
a smaller number of companies than many other international funds. As a result,
changes in the value of a single security may have a more significant effect,
either negative or positive, on the Fund's net asset value.
ALLIANCE ALL-ASIA INVESTMENT FUND
ALLIANCE ALL-ASIA INVESTMENT FUND'S investment objective is long-term capital
appreciation. The Fund invests at least 65% of its total assets in equity
securities (for the purposes of this investment policy, rights, warrants, and
options to purchase common stocks are not deemed to be equity securities),
preferred stocks and equity-linked debt securities issued by Asian companies.
The Fund may invest up to 35% of its total assets in debt securities issued or
guaranteed by Asian companies or by Asian governments, their agencies or
instrumentalities. The Fund will invest at least 80% of its total assets in
Asian companies and Asian debt securities, but also may invest in securities
issued by non-Asian issuers. The Fund expects to invest, from time to time, a
significant portion, which may be in excess of 50%, of its assets in equity
securities of Japanese companies.
In the past decade, Asian countries generally have experienced a high level of
real economic growth due to political and economic changes, including foreign
investment and reduced government intervention in the economy. Alliance
believes that certain conditions exist in Asian countries that create the
potential for continued rapid economic growth. These conditions include
favorable demographics and competitive wage rates, increasing levels of foreign
direct investment, rising per capita incomes and consumer demand, a high
savings rate, and numerous privatization programs. Asian countries also are
becoming more industrialized and are increasing their intra-Asian exports while
reducing their dependence on Western export demand. Alliance believes that
these conditions are important to the long-term economic growth of Asian
countries.
As the economies of many Asian countries move through the "emerging market"
stage, thus increasing the supply of goods, services and capital available to
less developed Asian markets and helping to spur economic growth in those
markets, the potential is created for many Asian companies to experience rapid
growth. In addition, many Asian companies that have securities listed on
exchanges in more developed Asian countries will be participants in the rapid
economic growth of the lesser-developed countries. These companies generally
offer the advantages of more experienced management and more developed market
regulation.
As their economies have grown, the securities markets in Asian countries have
also expanded. New exchanges have been created and the number of listed
companies, annual trading volume, and overall market capitalization have
increased significantly. Additionally, new markets continue to open to foreign
investments. The Fund also offers investors the opportunity to access
relatively restricted markets. Alliance believes that investment opportunities
in Asian countries will continue to expand.
The Fund will invest in companies believed to possess rapid growth potential.
Thus, the Fund will invest in smaller, emerging companies, but will also invest
in larger, more established companies in such growing economic sectors as
capital goods, telecommunications, and consumer services.
The Fund will primarily invest in investment grade debt securities, but may
maintain no more than 5% of its net assets in lower-rated securities,
lower-rated loans, and other lower-rated direct debt instruments. The Fund will
not retain a security that is downgraded below C or determined by Alliance to
have undergone similar credit quality deterioration following purchase.
The Fund also may:
- - invest up to 25% of its net assets in the CONVERTIBLE SECURITIES;
- - invest up to 20% of its net assets in RIGHTS OR WARRANTS;
- - invest in DEPOSITARY RECEIPTS, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities";
- - invest up to 25% of its net assets in EQUITY-LINKED DEBT SECURITIES with
the objective of realizing capital appreciation;
- - invest up to 25% of its net assets in LOANS AND OTHER DIRECT DEBT
INSTRUMENTS;
- - write covered call and put OPTIONS, sell or purchase exchange-traded index
options, and write uncovered options for cross-hedging purposes;
- - enter into contracts for the purchase or sale for future delivery of
fixed-income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, securities issued
by foreign government entities, or common stock and may purchase and write
options on future contracts;
- - purchase and write put and call OPTIONS on foreign currencies for hedging
purposes;
- - purchase or sell FORWARD CONTRACTS;
- - enter into INTEREST RATE SWAPS and purchase or sell INTEREST RATE CAPS and
FLOORS;
- - enter into FORWARD COMMITMENTS;
- - enter into STANDBY COMMITMENT AGREEMENTS;
- - enter into CURRENCY SWAPS for hedging purposes;
- - make SHORT SALES of securities or maintain a short position, in each case
only if AGAINST THE BOX;
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets; and
40
- - enter into REPURCHASE AGREEMENTS for U.S. Government securities.
The Fund's investments in Asian and Pacific region countries will be
significantly more volatile and may differ significantly from the overall U.S.
market. To the extent the Fund invests a substantial amount of its assets in
Japanese companies, your investment has the risk that market changes or other
events affecting that country may have a more significant effect on the Fund's
net asset value. The Fund's investments in debt securities have interest rate
and credit risk.
ALLIANCE GLOBAL ENVIRONMENT FUND
ALLIANCE GLOBAL ENVIRONMENT FUND is a non-diversified investment company that
seeks long-term capital appreciation through investment in equity securities of
Eligible Companies. For purposes of the Fund's investment objective and
investment policies, "equity securities" are common stocks (but not preferred
stocks), rights or warrants to subscribe for or purchase common stocks, and
preferred stocks or debt securities that are convertible into common stocks
without the payment of any further consideration.
The Fund invests in two categories of Eligible Companies--Environmental
Companies and Beneficiary Companies. The Fund may invest in a company with a
broadly diversified business only a part of which provides such products,
processes, or services, when Alliance believes that these products, processes
or services will yield a competitive advantage that significantly enhances the
issuer's growth prospects. As a matter of fundamental policy, the Fund will,
under normal circumstances, invest substantially all of its total assets in
equity securities of Eligible Companies.
A major premise of the Fund's investment approach is that environmental
concerns will be a significant source of future growth opportunities, and that
Environmental Companies will see an increased demand for their systems and
services. Environmental Companies operate in the areas of pollution control,
clean energy, solid waste management, hazardous waste treatment and disposal,
pulp and paper recycling, waste-to-energy alternatives, biodegradable cartons,
packages, plastics and other products, remedial projects and emergency cleanup
efforts, manufacture of environmental supplies and equipment, the achievement
of purer air, groundwater and foods, and the detection, evaluation and
treatment of both existing and potential environmental problems including,
among others, air pollution and acid rain.
The environmental services industry generally is positively affected by
increasing governmental action intended to foster environmental protection. As
environmental regulations are developed and enforced, Environmental Companies
providing the means of compliance with such regulations are afforded
substantial opportunities for growth. Beneficiary Companies may also derive an
advantage to the extent that they have anticipated environmental regulation and
are therefore at a competitive advantage.
In the view of Alliance, increasing public and political awareness of
environmental concerns and resultant environmental regulations are long-term
phenomena that are driven by an emerging global consensus that environmental
protection is a vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other economically
developed countries will have increasing opportunities for earnings growth
resulting not only from an increased demand for their existing products or
services but also from innovative responses to changing regulations and
priorities and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also within many
economically developing countries, such as those of Eastern Europe and the
Pacific Rim. These countries lag well behind developed countries in the
conservation and efficient use of natural resources and in their implementation
of policies that protect the environment.
Alliance believes that global investing offers opportunities for superior
investment returns. The Fund spreads investment risk among the capital markets
of a number of countries and invests in equity securities of companies based in
at least three, and normally considerably more, such countries. The percentage
of the Fund's assets invested in securities of companies in a particular
country or denominated in a particular currency will vary in accordance with
Alliance's assessment of the appreciation potential of such securities and the
strength of that currency.
The Fund also may:
- - invest up to 20% of its total assets in WARRANTS to purchase equity
securities;
- - invest in DEPOSITARY RECEIPTS;
- - purchase and write put and call options on foreign currencies for hedging
purposes;
- - enter into FORWARD FOREIGN CURRENCY TRANSACTIONS for hedging purposes;
- - invest in CURRENCY FUTURES and options on such futures for hedging
purposes; and
- - make SECURED LOANS OF PORTFOLIO SECURITIES of up to 30% of its total
assets.
The Fund's investments in non-U.S. companies and in specific types of companies
that provide environmental services will be more volatile and may differ
substantially from the overall market. The Fund's investments also have the
risk that government regulations or other action could negatively affect the
business of environmental companies.
DESCRIPTION OF INVESTMENT PRACTICES
This section describes the Funds' investment practices and associated risks.
Unless otherwise noted, a Fund's use of any of these practices was specified in
the previous section.
ASSET-BACKED SECURITIES. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables, and other payment obligations, both
secured and unsecured. These assets are generally held by a trust and payments
of principal
41
and interest or interest only are passed through monthly or quarterly to
certificate holders and may be guaranteed up to certain amounts by letters of
credit issued by a financial institution affiliated or unaffiliated with the
trustee or originator of the trust.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs of enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors.
CONVERTIBLE SECURITIES. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which
generally provide a stable stream of income with yields that are generally
higher than those of equity securities of the same or similar issuers. The
price of a convertible security will normally vary with changes in the price of
the underlying equity security, although the higher yield tends to make the
convertible security less volatile than the underlying equity security. As with
debt securities, the market value of convertible securities tends to decrease
as interest rates rise and increase as interest rates decline. While
convertible securities generally offer lower interest or dividend 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 Baa or lower by
Moody's or BBB or lower by S&P, Duff & Phelps or Fitch and comparable unrated
securities as determined by Alliance may share some or all of the risks of
non-convertible debt securities with those ratings.
CURRENCY SWAPS. Currency swaps involve the individually negotiated exchange by
a Fund with another party of a series of payments in specified currencies. A
currency swap may involve the delivery at the end of the exchange period of a
substantial amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a currency swap
is subject to the risk that the other party to the swap will default on its
contractual delivery obligations. A Fund will not enter into any currency swap
unless the credit quality of the unsecured senior debt or the claims-paying
ability of the counterparty is rated in the highest rating category of at least
one nationally recognized rating organization at the time of entering into the
transaction. If there is a default by the counterparty to the transaction, the
Fund will have contractual remedies under the transaction agreements.
DEPOSITARY RECEIPTS AND SECURITIES OF SUPRANATIONAL ENTITIES. Depositary
receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the
issuers of the stock of unsponsored depositary receipts are not obligated to
disclose material information in the United States and, therefore, there may
not be a correlation between such information and the market value of the
depositary receipts. ADRs are depositary receipts typically issued by an U.S.
bank or trust company that evidence ownership of underlying securities issued
by a foreign corporation. GDRs and other types of depositary receipts are
typically issued by foreign banks or trust companies and evidence ownership of
underlying securities issued by either a foreign or an U.S. company. Generally,
depositary receipts in registered form are designed for use in the U.S.
securities markets, and depositary receipts in bearer form are designed for use
in foreign securities markets. For purposes of determining the country of
issuance, investments in depositary receipts of either type are deemed to be
investments in the underlying securities, except with respect to ALLIANCE
GROWTH FUND, where investments in ADRs are deemed to be investments in
securities issued by U.S. issuers and those in GDRs and other types of
depositary receipts are deemed to be investments in the underlying securities.
A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include, among others, the
World Bank (International Bank for Reconstruction and Development) and the
European Investment Bank. A European Currency Unit is a basket of specified
amounts of the currencies of the member states of the European Economic
Community. "Semi-governmental securities" are securities issued by entities
owned by either a national, state or equivalent government or are obligations
of one of such government jurisdictions that are not backed by its full faith
and credit and general taxing powers.
EQUITY-LINKED DEBT SECURITIES. Equity-linked debt securities are securities on
which the issuer is obligated to pay interest and/or principal that is linked
to the performance of a specified index of equity securities. The interest or
principal payments may be significantly greater or less than payment
obligations for other types of debt securities. Adverse changes in equity
securities indices and other adverse changes in the securities markets may
reduce payments made under, and/or the principal of, equity-linked debt
securities held by a Fund. As with any debt securities, the values of
equity-linked debt securities will generally vary inversely with changes in
interest rates. A Fund's ability to dispose of equity-linked debt securities
will depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to be speculative.
FORWARD COMMITMENTS. Forward commitments for the purchase or sale of securities
may include purchases on a "when-issued" basis or purchases or sales on a
"delayed delivery" basis. In some cases, a forward commitment may be
conditioned upon the occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt restructuring (i.e.,
a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but a Fund may negotiate settlements beyond
42
two months. Securities purchased or sold under a forward commitment are subject
to market fluctuations and no interest or dividends accrue to the purchaser
prior to the settlement date.
The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling
prices. In periods of falling interest rates and rising bond prices, a Fund
might sell a security in its portfolio and purchase the same or a similar
security on a when-issued or forward commitment basis to obtain the benefit of
currently higher cash yields. If, however, Alliance were to forecast
incorrectly the direction of interest rate movements, a 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 a 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 a 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. No forward commitments will be made by ALLIANCE
HEALTH CARE FUND, ALLIANCE UTILITY INCOME FUND, ALLIANCE REAL ESTATE INVESTMENT
FUND, ALLIANCE NEW EUROPE FUND, ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE
INTERNATIONAL PREMIER GROWTH FUND, ALLIANCE GREATER CHINA '97 FUND or ALLIANCE
ALL-ASIA INVESTMENT FUND if, as a result, the Fund's aggregate commitments
under the transactions would be more than 30% of its total assets. In the event
the other party to a forward commitment transaction were to default, a Fund
might lose the opportunity to invest money at favorable rates or to dispose of
securities at favorable prices.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A Fund may purchase or sell
forward foreign currency exchange contracts to minimize the risk of adverse
changes in the relationship between the U.S. Dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific currency for
an agreed price at a future date, and is individually negotiated and privately
traded.
A Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. Dollar price of the security
("transaction hedge"). A Fund will not engage in transaction hedges with
respect to the currency of a particular country to an extent greater than the
aggregate amount of the Fund's transactions in that currency. When a Fund
believes that a foreign currency may suffer a substantial decline against the
U.S. Dollar, it may enter into a forward sale contract to sell an amount of
that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency, or when the Fund
believes that the U.S. Dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount ("position hedge"). A Fund will not
position hedge with respect to a particular currency to an extent greater than
the aggregate market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency. Instead of
entering into a position hedge, a Fund may, in the alternative, enter into a
forward contract to sell a different foreign currency for a fixed U.S. dollar
amount where the Fund believes that the U.S. Dollar value of the currency to be
sold pursuant to the forward contract will fall whenever there is a decline in
the U.S. Dollar value of the currency in which portfolio securities of the Fund
are denominated ("cross-hedge"). Unanticipated changes in currency prices may
result in poorer overall performance for the Fund than if it had not entered
into such forward contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the
currency at a price above the devaluation level it anticipates. ALLIANCE NEW
EUROPE FUND, ALLIANCE GLOBAL SMALL CAP FUND and ALLIANCE INTERNATIONAL FUND
will not enter into a forward contract with a term of more than one year or if,
as a result, more than 50% of its total assets would be committed to such
contracts. ALLIANCE NEW EUROPE FUND'S, ALLIANCE GLOBAL SMALL CAP FUND'S and
ALLIANCE INTERNATIONAL FUND'S investments in forward contracts will be limited
to hedging involving either specific transactions or portfolio positions.
ALLIANCE GROWTH FUND also may purchase and sell foreign currency on a spot
basis.
ILLIQUID SECURITIES. The Funds will limit their investments in illiquid
securities to no more than 15% of their net assets, except the limit is 10% for
ALLIANCE HEALTH CARE FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE TECHNOLOGY
FUND, ALLIANCE QUASAR FUND, ALLIANCE NEW EUROPE FUND, and ALLIANCE GLOBAL SMALL
CAP FUND and 5% for THE ALLIANCE FUND and ALLIANCE GROWTH FUND. Illiquid
securities generally include: (i) direct placements or other securities that
are subject to legal or contractual restrictions on resale or for which there
is no readily available market (E.G., when trading in the security is suspended
or, in the case of unlisted securities, when market makers do not exist or will
not entertain bids or offers), including many individually negotiated currency
swaps and any assets used to cover currency swaps and most privately negotiated
investments in state enterprises that have not yet conducted an initial equity
offering, (ii) over-the-counter options and assets used to cover
over-the-counter options, and (iii) repurchase agreements not terminable within
seven days.
Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. Alliance will monitor the
liquidity of a Fund's investments in illiquid securities. Except with respect
to ALLIANCE
43
QUASAR FUND, Rule 144A securities will not be treated as "illiquid" for
purposes of this limit on investments.
A Fund that invests in securities for which there is no ready market may not be
able to readily sell such securities. Such securities are unlike securities
that are traded in the open market and can be expected to be sold immediately
if the market is adequate. The sale price of illiquid securities may be lower
or higher than Alliance's most recent estimate of their fair value. Generally,
less public information is available about the issuers of such securities than
about companies whose securities are traded on an exchange. To the extent that
these securities are foreign securities, there is no law in many of the
countries in which a Fund may invest similar to the Securities Act requiring an
issuer to register the sale of securities with a governmental agency or
imposing legal restrictions on resales of securities, either as to length of
time the securities may be held or manner of resale. However, there may be
contractual restrictions on resales of non-publicly traded foreign securities.
INTEREST RATE TRANSACTIONS (SWAPS, CAPS, AND FLOORS). Each Fund that may enter
into interest rate transactions expects to do so primarily to preserve a return
or spread on a particular investment or portion of its portfolio or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Funds do not intend to use these transactions in a
speculative manner.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (E.G., an exchange of
floating rate payments for fixed rate payments). Interest rate swaps are
entered on a net basis (i.e., the two payment streams are netted out, with the
Fund receiving or paying, as the case may be, only the net amount of the two
payments). With respect to ALLIANCE UTILITY INCOME FUND, ALLIANCE GREATER CHINA
'97 FUND and ALLIANCE ALL-ASIA INVESTMENT FUND, the exchange commitments can
involve payments in the same currency or in different currencies. The purchase
of an interest rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payments of interest on
a contractually-based principal amount from the party selling such interest
rate cap. The purchase of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined interest rate, to
receive payments of interest on an agreed principal amount from the party
selling the interest rate floor.
A Fund may enter into interest rate swaps, caps, and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities. A Fund will not enter into an interest rate swap, cap,
or floor transaction unless the unsecured senior debt or the claims-paying
ability of the other party is rated in the highest rating category of at least
one nationally recognized rating organization. Alliance will monitor the
creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they
are less liquid than swaps.
The use of interest rate transactions is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance were to incorrectly
forecast market values, interest rates and other applicable factors, the
investment performance of a Fund would be adversely affected by the use of
these investment techniques. Moreover, even if Alliance is correct in its
forecasts, there is a risk that the transaction position may correlate
imperfectly with the price of the asset or liability being hedged. There is no
limit on the amount of interest rate transactions that may be entered into by a
Fund that is permitted to enter into such transactions. These transactions do
not involve the delivery of securities or other underlying assets or principal.
Accordingly, the risk of loss with respect to interest rate transactions is
limited to the net amount of interest payments that a Fund is contractually
obligated to make. If the counterparty to an interest rate transaction
defaults, a Fund's risk of loss consists of the net amount of interest payments
that the Fund contractually is entitled to receive.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS. Loans and other direct debt
instruments are interests in amounts owed by a corporate, governmental or other
borrower to another party. They may represent amounts owed to lenders or
lending syndicates (loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other creditors. Direct
debt instruments involve the risk of loss in case of default or insolvency of
the borrower and may offer less legal protection to a Fund in the event of
fraud or misrepresentation than debt securities. In addition, loan
participations involve a risk of insolvency of the lending bank or other
financial intermediary. Direct debt instruments may also include standby
financing commitments that obligate a Fund to supply additional cash to the
borrower on demand. Loans and other direct debt instruments are generally
illiquid and may be transferred only through individually negotiated private
transactions.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally recognized
rating service. Failure to receive scheduled interest or principal payments on
these types of investments could adversely affect a Fund's net asset value and
yield. Loans that are fully secured offer a Fund more protection than unsecured
loans in the event of non-payment of scheduled interest or principal. However,
there is no assurance that the liquidation of collateral from a secured loan
would satisfy the borrower's obligation, or that the collateral can be
liquidated. Making loans to borrowers whose creditworthiness is poor may
involve substantial risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of government issuers will
44
also involve a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, a Fund could become part owner of any
collateral and would bear the costs and liabilities associated with owning and
disposing of the collateral. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary.
A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified on the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be
subject to the claims of the agent's general creditors, the Fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.
Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
a Fund to pay additional cash on demand. These commitments may have the effect
of requiring a Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid.
LOANS OF PORTFOLIO SECURITIES. The risk in lending portfolio securities, as
with other extensions of credit, consists of the possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income from the
securities. The Fund may invest any cash collateral in portfolio securities and
earn additional income or receive an agreed-upon amount of income from a
borrower who has delivered equivalent collateral. Each 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. A Fund may pay reasonable
finders', administrative, and custodial fees in connection with a loan.
MORTGAGE-BACKED SECURITIES AND ASSOCIATED RISKS. Interest and principal
payments (including prepayments) on the mortgages underlying mortgage-backed
securities are passed through to the holders of the securities. As a result of
the pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Prepayments occur when the
mortgagor on a mortgage prepays the remaining principal before the mortgage's
scheduled maturity date. Because the prepayment characteristics of the
underlying mortgages vary, it is impossible to predict accurately the realized
yield or average life of a particular issue of pass-through certificates.
Prepayments are important because of their effect on the yield and price of the
mortgage-backed securities. During periods of declining interest rates,
prepayments can be expected to accelerate and a Fund that invests in these
securities would be required to reinvest the proceeds at the lower interest
rates then available. Conversely, during periods of rising interest rates, a
reduction in prepayments may increase the effective maturity of the securities,
subjecting them to a greater risk of decline in market value in response to
rising interest rates. In addition, prepayments of mortgages underlying
securities purchased at a premium could result in capital losses.
Mortgage-Backed Securities include mortgage pass-through certificates and
multiple-class pass-through securities, such as REMIC pass-through
certificates, CMOs and stripped mortgage-backed securities ("SMBS"), and other
types of Mortgage-Backed Securities that may be available in the future.
GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. ALLIANCE REAL ESTATE INVESTMENT
FUND may invest in guaranteed mortgage pass-through securities which represent
participation interests in pools of residential mortgage loans and are issued
by U.S. governmental or private lenders and guaranteed by the U.S. Government
or one of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for timely payment of
principal and interest on the certificates. Fannie Mae certificates are
guaranteed by Fannie Mae, a federally chartered and privately-owned
corporation, for full and timely payment of principal and interest on the
certificates. Freddie Mac certificates are guaranteed by Freddie Mac, a
corporate instrumentality of the United States Government, for timely payment
of interest and the ultimate collection of all principal of the related
mortgage loans.
MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE OBLIGATIONS.
Mortgage-Backed Securities also include CMOs and REMIC pass-through or
participation certificates that may be issued by, among others, U.S. Government
agencies and instrumentalities as well as private lenders. CMOs and REMIC
certificates are issued in multiple classes and the principal of and interest
on the mortgage assets may be allocated among the several classes of CMOs or
REMIC certificates in various ways. Each class of CMOs or REMIC certificates,
often referred to as a "tranche," is issued at a specific adjustable or fixed
interest rate and must be fully retired no later than its final distribution
date. Generally, interest is paid or accrues on all classes of CMOs or REMIC
certificates on a monthly basis. ALLIANCE REAL ESTATE INVESTMENT FUND will not
invest in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac certificates
but also may be collateralized by other mortgage assets such as whole loans or
private mortgage pass-through securities. Debt service on CMOs is provided from
payments of
45
principal and interest on collateral of mortgaged assets and any reinvestment
income.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property
and other permitted investments. Investors may purchase "regular" and
"residual" interest shares of beneficial interest in REMIC trusts, although
ALLIANCE REAL ESTATE INVESTMENT FUND does not intend to invest in residual
interests.
OPTIONS ON SECURITIES. An option gives the purchaser of the option, upon
payment of a premium, the right to deliver to (in the case of a put) or receive
from (in the case of a call) the writer a specified amount of a security on or
before a fixed date at a predetermined price. A call option written by a 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 that of the call option it has written. A
put option written by a Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than that of
the put option it has written.
A call option is for cross-hedging purposes if a Fund does not own the
underlying security, and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire. A
Fund would write a call option for cross-hedging purposes, instead of writing a
covered call option, when the premium to be received from the cross-hedge
transaction would exceed that which would be received from writing a covered
call option, while at the same time achieving the desired hedge.
In purchasing an option, a Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in
the case of a call) or decreased (in the case of a put) by an amount in excess
of the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then be purchased
or sold by the Fund at a disadvantageous price. Entering into a closing
transaction (i.e., by disposing of the option prior to its exercise) could
reduce these risks. A Fund retains the premium received from writing a put or
call option whether or not the option is exercised. The writing of covered call
options could result in increases in a Fund's portfolio turnover rate,
especially during periods when market prices of the underlying securities
appreciate.
ALLIANCE TECHNOLOGY FUND and ALLIANCE GLOBAL SMALL CAP FUND will not write a
call option if the premium to be received by the Fund would not produce an
annualized return of at least 15% of the then current market value of the
securities subject to the option (without giving effect to commissions, stock
transfer taxes and other expenses that are deducted from premium receipts).
Options purchased or written by a Fund in negotiated transactions are illiquid
and it may not be possible for the Fund to effect a closing transaction at an
advantageous time.
OPTIONS ON SECURITIES INDICES. An option on a securities index is similar to an
option on a security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount
of cash if the closing level of the chosen index is greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.
OPTIONS ON FOREIGN CURRENCIES. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and a Fund could be required to purchase
or sell foreign currencies at disadvantageous exchange rates and incur losses.
The purchase of an option on a foreign currency may constitute an effective
hedge against fluctuations in exchange rates although, in the event of rate
movements adverse to a Fund's position, it may forfeit the entire amount of the
premium plus related transaction costs. For Funds that may invest in options on
foreign currencies, see the Fund's SAI for further discussion of the use,
risks, and costs of options on foreign currencies.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price on a specified date. A "purchase" of a futures contract
means the incurring of an obligation to acquire the securities, foreign
currencies or other commodity called for by the contract at a specified price
on a specified date. The purchaser of a futures contract on an index agrees to
take or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract ("current contract value") and the price at which the contract was
originally struck. No physical delivery of the securities underlying the index
is made.
A Fund will purchase options on futures contracts written or purchased by a
Fund that are traded on U.S. or foreign exchanges or over-the-counter. These
investment techniques will be used only to hedge against anticipated future
changes in market conditions and interest or exchange rates which otherwise
might either adversely affect the value of the Fund's portfolio securities or
adversely affect the prices of securities which the Fund intends to purchase at
a later date.
No Fund will 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 its total assets,
or in the case of ALLIANCE INTERNATIONAL PREMIER GROWTH FUND 100% of its total
assets. ALLIANCE PREMIER GROWTH FUND and ALLIANCE GROWTH AND
46
INCOME FUND may not purchase or sell a stock index future if immediately
thereafter more than 30% of its total assets would be hedged by stock index
futures. ALLIANCE PREMIER GROWTH FUND and ALLIANCE GROWTH AND INCOME FUND may
not purchase or sell a stock index future if, immediately thereafter, the sum
of the amount of margin deposits on the Fund's existing futures positions would
exceed 5% of the market value of the Fund's total assets.
REPURCHASE AGREEMENTS. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit a Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. If a vendor defaults on its
repurchase obligation, a Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price.
If a vendor goes bankrupt, a Fund might be delayed in, or prevented from,
selling the collateral for its benefit. Alliance monitors the creditworthiness
of the vendors with which the Fund enters into repurchase agreements.
RIGHTS AND WARRANTS. A Fund will invest in rights or warrants only if Alliance
deems the underlying equity securities themselves appropriate for inclusion in
the Fund's portfolio. Rights and warrants entitle the holder to buy equity
securities at a specific price for a specific period of time. Rights are
similar to warrants except that they have a substantially shorter duration.
Rights and warrants may be considered more speculative than certain other types
of investments in that they do not entitle a holder to dividends or voting
rights with respect to the underlying securities nor do they represent any
rights in the assets of the issuing company. The value of a right or warrant
does not necessarily change with the value of the underlying security, although
the value of a right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in perception as to
the potential of the underlying security, or any combination of these factors.
If the market price of the underlying security is below the exercise price of
the warrant on the expiration date, the warrant will expire worthless.
Moreover, a right or warrant ceases to have value if it is not exercised prior
to the expiration date.
SHORT SALES. A short sale is effected by selling a security that a 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
a Fund contemporaneously owns or has the right to obtain securities identical
to those sold short without payment. ALLIANCE UTILITY INCOME FUND, ALLIANCE
WORLDWIDE PRIVATIZATION FUND, ALLIANCE GREATER CHINA '97 FUND and ALLIANCE
ALL-ASIA INVESTMENT FUND, each may make short sales of securities or maintain
short positions only for the purpose of deferring realization of gain or loss
for U.S. federal income tax purposes, provided that at all times when a short
position is open the Fund owns an equal amount of securities of the same issue
as, and equal in amount to, the securities sold short. In addition, each of
those Funds may not make a short sale if as a result more than 10% of the
Fund's net assets would be held as collateral for short sales, except that
ALLIANCE REAL ESTATE INVESTMENT FUND, ALLIANCE GREATER CHINA '97 FUND and
ALLIANCE ALL-ASIA INVESTMENT FUND may not make a short sale if as a result more
than 25% of the Fund's net assets would be held as collateral for short sales.
If the price of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
STANDBY COMMITMENT AGREEMENTS. Standby commitment agreements commit a Fund, for
a stated period of time, to purchase a stated amount of a security that may be
issued and sold to the Fund at the option of the issuer. The price and coupon
of the security are fixed at the time of the commitment. At the time of
entering into the agreement, the Fund is paid a commitment fee, regardless of
whether the security ultimately is issued, typically equal to approximately
0.5% of the aggregate purchase price of the security the Fund has committed to
purchase. A Fund will enter into such agreements only for the purpose of
investing in the security underlying the commitment at a yield and price
considered advantageous to the Fund and unavailable on a firm commitment basis.
Investments in standby commitments will be limited so that the aggregate
purchase price of the securities subject to the commitments will not exceed 25%
with respect to ALLIANCE REAL ESTATE INVESTMENT FUND and ALLIANCE NEW EUROPE
FUND, 50% with respect to ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE
INTERNATIONAL PREMIER GROWTH FUND, ALLIANCE GREATER CHINA '97 FUND and ALLIANCE
ALL-ASIA INVESTMENT FUND and 20% with respect to ALLIANCE UTILITY INCOME FUND,
of the Fund's assets at the time of making the commitment.
There is no guarantee that a security 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, a 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.
ZERO-COUPON AND PAYMENT-IN-KIND BONDS. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate cash to
meet current interest payments. These bonds may involve greater credit risks
than bonds paying interest currently. Although these bonds do not pay current
interest in cash, a Fund is nonetheless required to accrue interest income on
such
47
investments and to distribute such amounts at least annually to shareholders.
Thus, a Fund could be required at times to liquidate other investments in order
to satisfy its dividend requirements.
FUTURE DEVELOPMENTS. A Fund may, following written notice to its shareholders,
take advantage of other investment practices that are not currently
contemplated for use by the Fund, or are not available but may yet be
developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.
GENERAL. The successful use of the investment practices described above draws
upon Alliance's special skills and experience and usually depends on Alliance's
ability to forecast price movements, interest rates, or currency exchange rate
movements correctly. Should interest rates, prices or exchange rates move
unexpectedly, a Fund may not achieve the anticipated benefits of the
transactions or may realize losses and thus be in a worse position than if such
strategies had not been used. Unlike many exchange-traded futures contracts and
options on futures contracts, there are no daily price fluctuation limits for
certain options and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time. In addition,
the correlation between movements in the prices of futures contracts, options
and forward contracts and movements in the prices of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.
A Fund's ability to dispose of its position in futures contracts, options, and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types
of securities and currencies are relatively new and still developing, and there
is no public market for forward contracts. It is impossible to predict the
amount of trading interest that may exist in various types of futures
contracts, options, and forward contracts. If a secondary market does not exist
for an option purchased or written by a Fund, it might not be possible to
effect a closing transaction in the option (i.e., dispose of the option), with
the result that (i) an option purchased by the Fund would have to be exercised
in order for the Fund to realize any profit and (ii) the Fund may not be able
to sell currencies or portfolio securities covering an option written by the
Fund until the option expires or it delivers the underlying security, futures
contract or currency upon exercise. Therefore, no assurance can be given that
the Funds will be able to utilize these instruments effectively. In addition, a
Fund's ability to engage in options and futures transactions may be limited by
tax considerations and the use of certain hedging techniques may adversely
impact the characterization of income to a Fund for U.S. federal income tax
purposes.
PORTFOLIO TURNOVER. The portfolio turnover rate for each Fund is included in
the FINANCIAL HIGHLIGHTS section. The Funds are actively managed and, in some
cases in response to market conditions, a Fund's portfolio turnover may exceed
100%. A higher rate of portfolio turnover increases brokerage and other
expenses, which must be borne by the Fund and its shareholders. High portfolio
turnover also may result in the realization of substantial net short-term
capital gains, which, when distributed, are taxable to shareholders.
TEMPORARY DEFENSIVE POSITION. For temporary defensive purposes, each Fund may
reduce its position in equity securities and invest in, without limit, certain
types of short-term, liquid, high grade or high quality (depending on the Fund)
debt securities. These securities may include U.S. Government securities,
qualifying bank deposits, money market instruments, prime commercial paper and
other types of short-term debt securities including notes and bonds. For Funds
that may invest in foreign countries, such securities also may include
short-term, foreign-currency denominated securities of the type mentioned above
issued by foreign governmental entities, companies, and supranational
organizations. While the Funds are investing for temporary defensive purposes,
they may not achieve their investment objectives.
ADDITIONAL RISK CONSIDERATIONS
Investment in certain of the Funds involves the special risk considerations
described below. These risks may be heightened when investing in emerging
markets.
CURRENCY CONSIDERATIONS. Substantially all of the assets of ALLIANCE NEW EUROPE
FUND, ALLIANCE WORLDWIDE PRIVATIZATION FUND, ALLIANCE INTERNATIONAL PREMIER
GROWTH FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE GREATER CHINA '97 FUND and
ALLIANCE ALL-ASIA INVESTMENT FUND, and a substantial portion of the assets of
ALLIANCE GLOBAL SMALL CAP FUND and ALLIANCE GLOBAL ENVIRONMENT FUND are
invested in securities denominated in foreign currencies. The Funds receive a
corresponding portion of their revenues in foreign currencies. Therefore, the
dollar equivalent of their net assets, distributions, and income will be
adversely affected by reductions in the value of certain foreign currencies
relative to the U.S. Dollar. If the value of the foreign currencies in which a
Fund receives its income falls relative to the U.S. Dollar between receipt of
the income and the making of Fund distributions, the Fund may be required to
liquidate securities in order to make distributions if it has insufficient cash
in U.S. Dollars to meet distribution requirements that the Fund must satisfy to
qualify as a regulated investment company for federal income tax purposes.
Similarly, if an exchange rate declines between the time a Fund incurs expenses
in U.S. Dollars and the time cash expenses are paid, the amount of the currency
required to be converted into U.S. Dollars in order to pay expenses in U.S.
Dollars could be greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these risks, a Fund may
engage in currency hedging transactions, as described above, which involve
certain special risks.
FOREIGN SECURITIES. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, a Fund whose investment portfolio
48
includes foreign securities may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in equity
securities of U.S. companies. These markets may be subject to greater influence
by adverse events generally affecting the market, and by large investors
trading significant blocks of securities, than is usual in the United States.
Securities settlements may in some instances be subject to delays and related
administrative uncertainties.
Certain foreign countries require governmental approval prior to investments by
foreign persons or limit investment by foreign persons to only a specified
percentage of an issuer's outstanding securities or a specific class of
securities that may have less advantageous terms (including price) than
securities of the company available for purchase by nationals. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of a Fund. In addition, the
repatriation of investment income, capital, or the proceeds of sales of
securities from certain countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority.
If a deterioration occurs in a country's balance of payments, the country could
impose temporary restrictions on foreign capital remittances.
A Fund also could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application of other restrictions on investment. Investing in local markets may
require a Fund to adopt special procedures that may involve additional costs to
a Fund. These factors may affect the liquidity of a Fund's investments in any
country and Alliance will monitor the effect of any such factor or factors on a
Fund's investments. Furthermore, transaction costs including brokerage
commissions for transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects and less information
may be available to investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available about certain
non-U.S. issuers than is available about U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability, or diplomatic
developments could affect adversely the economy of a foreign country and the
Fund's investments. In the event of expropriation, nationalization or other
confiscation, a Fund could lose its entire investment in the country involved.
In addition, laws in foreign countries governing business organizations,
bankruptcy and insolvency may provide less protection to security holders such
as the Fund than that provided by U.S. laws.
ALLIANCE INTERNATIONAL FUND, ALLIANCE NEW EUROPE FUND, ALLIANCE GREATER CHINA
'97 FUND and ALLIANCE ALL-ASIA INVESTMENT FUND may invest substantial amounts
of their assets in United Kingdom issuers, Japanese issuers, and/or Greater
China issuers. Please refer to Appendix A for a discussion of risks associated
with investments in these countries.
INVESTMENT IN PRIVATIZED ENTERPRISES BY ALLIANCE WORLDWIDE PRIVATIZATION FUND.
In certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or
terms on which the Fund may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance that governments
that have embarked on privatization programs will continue to divest their
ownership of state enterprises, that proposed privatizations will be successful
or that governments will not re-nationalize enterprises that have been
privatized. Furthermore, in the case of certain of the enterprises in which the
Fund may invest, large blocks of the stock of those enterprises may be held by
a small group of stockholders, even after the initial equity offerings by those
enterprises. The sale of some portion or all of those blocks could have an
adverse effect on the price of the stock of any such enterprise.
Most state enterprises or former state enterprises go through an internal
reorganization of management prior to conducting an initial equity offering in
an attempt to better enable these enterprises to compete in the private sector.
However, certain reorganizations could result in a management team that does
not function as well as the enterprise's prior management and may have a
negative effect on such enterprise. After making an initial equity offering,
enterprises that may have enjoyed preferential treatment from the respective
state or government that owned or controlled them may no longer receive such
preferential treatment and may become subject to market competition from which
they were previously protected. Some of these enterprises may not be able to
effectively operate in a competitive market and may suffer losses or experience
bankruptcy due to such competition. In addition, the privatization of an
enterprise by its government may occur over a number of years, with the
government continuing to hold a controlling position in the enterprise even
after the initial equity offering for the enterprise.
INVESTMENT IN SMALLER, EMERGING COMPANIES. The Funds may invest in smaller,
emerging companies. ALLIANCE NEW EUROPE FUND and ALLIANCE GLOBAL SMALL CAP FUND
will emphasize investment in, and ALLIANCE ALL-ASIA INVESTMENT FUND, ALLIANCE
GREATER CHINA '97 FUND and ALLIANCE GLOBAL ENVIRONMENT FUND may emphasize
investment in, smaller, emerging companies. Investment in such companies
involves greater risks than is customarily associated with securities of more
established companies. Companies in the earlier stages of their
49
development often have products and management personnel which have not been
thoroughly tested by time or the marketplace; their financial resources may not
be as substantial as those of more established companies. The securities of
smaller companies may have relatively limited marketability and may be subject
to more abrupt or erratic market movements than securities of larger companies
or broad market indices. The revenue flow of such companies may be erratic and
their results of operations may fluctuate widely and may also contribute to
stock price volatility.
EXTREME GOVERNMENTAL ACTION; LESS PROTECTIVE LAWS. In contrast to investing in
the U.S., foreign investment may involve in certain situations greater risk of
nationalization, expropriation, confiscatory taxation, currency blockage or
other extreme governmental action which could adversely impact a Fund's
investments. In the event of certain such actions, a Fund could lose its entire
investment in the country involved. In addition, laws in various foreign
countries, including in certain respects each of the Greater China countries,
governing, among other subjects, business organization and practices,
securities and securities trading, bankruptcy and insolvency may provide less
protection to investors such as the Fund than provided under United States laws.
INVESTMENTS IN ENVIRONMENTAL COMPANIES BY ALLIANCE GLOBAL ENVIRONMENT FUND.
Governmental regulations or other action can inhibit an Environmental Company's
performance, and it may take years to translate environmental legislation into
sales and profits. Environmental Companies generally face competition in fields
often characterized by relatively short product cycles and competitive pricing
policies. Losses may result from large product development or expansion costs,
unprotected marketing or distribution systems, erratic revenue flows and low
profit margins. Additional risks that Environmental Companies may face include
difficulty in financing the high cost of technological development,
uncertainties due to changing governmental regulation or rapid technological
advances, potential liabilities associated with hazardous components and
operations, and difficulty in finding experienced employees.
THE REAL ESTATE INDUSTRY. Although ALLIANCE REAL ESTATE INVESTMENT FUND does
not invest directly in real estate, it invests primarily in Real Estate Equity
Securities and has a policy of concentration of its investments in the real
estate industry. Therefore, an investment in the Fund is subject to certain
risks associated with the direct ownership of real estate and with the real
estate industry in general. These risks include, among others: possible
declines in the value of real estate; risks related to general and local
economic conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in competition,
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties for damages resulting
from, environmental problems; casualty or condemnation losses; uninsured
damages from floods, earthquakes or other natural disasters; limitations on and
variations in rents; and changes in interest rates. To the extent that assets
underlying the Fund's investments are concentrated geographically, by property
type or in certain other respects, the Fund may be subject to certain of the
foregoing risks to a greater extent.
In addition, if ALLIANCE REAL ESTATE INVESTMENT FUND receives rental income or
income from the disposition of real property acquired as a result of a default
on securities the Fund owns, the receipt of such income may adversely affect
the Fund's ability to retain its tax status as a regulated investment company.
Investments by the Fund in securities of companies providing mortgage servicing
will be subject to the risks associated with refinancings and their impact on
servicing rights.
REITS. 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. REITs are also 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.
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 been more volatile in price than the
larger capitalization stocks included in the S&P 500 Index.
MORTGAGE-BACKED SECURITIES. Investing in Mortgage-Backed Securities involves
certain unique risks in addition to those risks associated with investment in
the real estate industry in general. These risks include the failure of a
counterparty to meet its commitments, adverse interest rate changes and the
effects of prepayments on mortgage cash flows. When interest rates decline, the
value of an investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of an 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 investments in
such loans will gradually align themselves to reflect changes in market
interest rates, causing the value of
50
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Further, the yield characteristics of Mortgage-Backed Securities, such as those
in which ALLIANCE REAL ESTATE INVESTMENT FUND may invest, differ from those of
traditional fixed-income securities. The major differences typically include
more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social, and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Early payment
associated with Mortgage-Backed Securities causes these securities to
experience significantly greater price and yield volatility than that
experienced by traditional fixed-income securities. Under certain interest rate
and prepayment rate scenarios, the Fund may fail to recoup fully its investment
in Mortgage-Backed Securities notwithstanding any direct or indirect
governmental or agency guarantee. When the Fund reinvests amounts representing
payments and unscheduled prepayments of principal, it may receive a rate of
interest that is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and adjustable rate
mortgage pass-through securities in particular, may be less effective than
other types of U.S. Government securities as a means of "locking in" interest
rates.
U.S. AND FOREIGN TAXES. A Fund's investment in foreign securities may be
subject to taxes withheld at the source on dividend or interest payments.
Foreign taxes paid by a Fund may be creditable or deductible by U.S.
shareholders for U.S. income tax purposes. No assurance can be given that
applicable tax laws and interpretations will not change in the future.
Moreover, non-U.S. investors may not be able to credit or deduct such foreign
taxes.
FIXED-INCOME SECURITIES. The value of each Fund's shares will fluctuate with
the value of its investments. The value of each Fund's investments in
fixed-income securities will change as the general level of interest rates
fluctuates. During periods of falling interest rates, the values of
fixed-income securities generally rise. Conversely, during periods of rising
interest rates, the values of fixed-income securities generally decline.
Under normal market conditions, the average dollar-weighted maturity of a
Fund's portfolio of debt or other fixed-income securities is expected to vary
between five and 30 years in the case of ALLIANCE ALL-ASIA INVESTMENT FUND,
between five and 25 years in the case of ALLIANCE UTILITY INCOME FUND, and
between one year or less and 30 years in the case of all other Funds that
invest in such securities. In periods of increasing interest rates, each of the
Funds may, to the extent it holds mortgage-backed securities, be subject to the
risk that the average dollar-weighted maturity of the Fund's portfolio of debt
or other fixed-income securities may be extended as a result of lower than
anticipated prepayment rates.
INVESTMENT IN LOWER-RATED FIXED-INCOME SECURITIES. Lower-rated securities,
i.e., those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps
or Fitch, are subject to greater credit risk or loss of principal and interest
than higher-rated securities. They also are generally considered to be subject
to greater market risk than higher-rated securities. The capacity of issuers of
lower-rated securities to pay interest and repay principal is more likely to
weaken than is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In addition,
lower-rated securities may be more susceptible to real or perceived adverse
economic conditions than investment grade securities.
The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, a Fund may experience difficulty
in valuing the securities for the purpose of computing a Fund's net asset
value. In addition, adverse publicity and investor perceptions about
lower-rated securities, whether or not factual, may tend to impair their market
value and liquidity.
Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will not occur.
Since the risk of default is higher for lower-rated securities, Alliance's
research and credit analysis are a correspondingly more important aspect of its
program for managing a Fund's securities than would be the case if a Fund did
not invest in lower-rated securities.
In seeking to achieve a Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization
of capital losses on securities in a Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated securities of
comparable quality may be subject to wider fluctuations in yield and market
values than higher-rated securities under certain market conditions. Such
fluctuations after a security is acquired do not affect the cash income
received from that security but are reflected in the net asset value of a Fund.
Certain lower-rated securities may contain call or buy-back features that
permit the issuers thereof to call or repurchase such securities. Such
securities may present risks based on prepayment expectations. If an issuer
exercises such a provision, a Fund may have to replace the called security with
a lower-yielding security, resulting in a decreased rate of return to the Fund.
YEAR 2000: Many computer systems and applications that process transactions use
two-digit date fields for the year of a transaction, rather than the full four
digits. If these systems are not modified or replaced, transactions occurring
after 1999
51
could be processed as the year "1900," which could result in processing
inaccuracies and inoperability at or after the year 2000. The Funds and its
major service providers, including Alliance, utilize a number of computer
systems and applications that have been either developed internally or licensed
from third-party suppliers. In addition, the Funds and its major service
providers, including Alliance, are dependent on third-party suppliers for
certain systems applications and for electronic receipt of information critical
to their business. Should any of the computer systems employed by the Funds or
their major service providers, including Alliance, fail to process Year 2000
related information properly, that could have a significant negative impact on
the Funds' operations and the services that are provided to the Funds'
shareholders. To the extent that the operations of issuers of securities held
by the Funds are impaired by the Year 2000 problem, the value of the Funds'
shares may be materially affected. In addition, for the Funds' investments in
foreign markets, it is possible that foreign companies and markets will not be
as prepared for Year 2000 as domestic companies and markets.
The Year 2000 issue is a high priority for the Funds and Alliance. During 1997,
Alliance began a formal Year 2000 initiative which established a structured and
coordinated process to deal with the Year 2000 issue. As part of its
initiative, Alliance established a Year 2000 project office to manage the Year
2000 initiative, focusing on both information technology and non-information
technology systems. The Year 2000 project office meets periodically with the
audit committee of the board of directors of Alliance Capital Management
Corporation, Alliance's general partner, and with Alliance's executive
management to review the status of the Year 2000 efforts. Alliance has also
retained the services of a number of consulting firms which have expertise in
advising and assisting with regard to Year 2000 issues. Alliance reports that
by June 30, 1998 it had completed its inventory and assessment of its domestic
and international computer systems and applications, identified mission
critical systems (those systems where loss of their function would result in
immediate stoppage or significant impairment to core business units) and
nonmission critical systems and determined which of these systems were not Year
2000 compliant. All third-party suppliers of mission critical computer systems
and nonmission critical systems applications have been contacted to verify
whether their systems and applications will be Year 2000 compliant and their
responses are being evaluated. Substantially all of those contacted have
responded and approximately 90% have informed Alliance that their systems and
applications are or will be Year 2000 compliant. All mission and nonmission
critical systems supplied by third parties have been tested with the exception
of those third parties not able to comply with Alliance's testing schedule.
Alliance reports that it expects that all testing will be completed before the
end of 1999.
Alliance has remediated, replaced or retired all of its non-compliant mission
critical systems and applications that can affect the Funds. All nonmission
critical systems have been remediated. After each system has been remediated,
it is tested with 19XX dates to determine if it still performs its intended
business function correctly. Next, each system undergoes a simulation test
using dates occurring after December 31, 1999. Inclusive of the replacement and
retirement of some of its systems, Alliance has completed these testing phases
for 98% of mission critical systems and 100% of nonmission critical systems.
Integrated systems tests were conducted to verify that the systems would
continue to work together. Full integration testing of all mission critical and
nonmission critical systems is complete. Testing of interfaces with third-party
suppliers has begun and will continue throughout 1999. Alliance reports that it
has completed an inventory of its facilities and related technology
applications and has begun to evaluate and test these systems. Alliance reports
that it anticipates that these systems will be fully operable in the year 2000.
Alliance has deferred certain other planned information technology projects
until after the Year 2000 initiative is completed. Such delay is not expected
to have a material adverse effect on Alliance's financial condition or results
of operations. Alliance, with the assistance of a consulting firm, is
developing Year 2000 specific contingency plans with emphasis on mission
critical functions. These plans seek to provide alternative methods of
processing in the event of a failure that is outside Alliance's control.
The estimated current cost to Alliance of the Year 2000 initiative ranges from
approximately $40 million to $45 million. These costs consist principally of
modification and testing and costs to develop formal Year 2000 specific
contingency plans. These costs, which will generally be expensed as incurred,
will be funded from Alliance's operations and the issuance of debt. Through
June 30, 1999, Alliance had incurred approximately $36.0 million of costs
related to the Year 2000 initiative. At this time, management of Alliance
believes that the costs associated with resolving the Year 2000 issue will not
have a material adverse effect on Alliance's results of operations, liquidity
or capital resources.
There are many risks associated with Year 2000 issues, including the risks that
the computer systems and applications used by the Funds and their major service
providers will not operate as intended and that the systems and applications of
third-party suppliers to the Funds and their service providers will not be Year
2000 compliant. Likewise there can be no assurance the compliance schedules
outlined above will be met or that the actual cost incurred will not exceed
current cost estimates. Should the significant computer systems and
applications used by the Funds or their major service providers, or the systems
of their important third-party suppliers, be unable to process date-sensitive
information accurately after 1999, the Funds and their service providers may be
unable to conduct their normal business operations and to provide shareholders
with required services. In addition, the Funds and their service providers may
incur unanticipated expenses, regulatory actions and legal liabilities. The
Funds and Alliance cannot determine which risks, if any, are most reasonably
likely to occur or the effects of any particular failure to be Year 2000
compliant. Certain statements provided by Alliance in this section entitled
"Year 2000", as such statements relate to Alliance, are "forward-looking
statements" within the meaning
52
of the Private Securities Litigation Reform Act of 1995. To the fullest extent
permitted by law, the foregoing Year 2000 discussion is a "Year 2000 Readiness
Disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act, 15 U.S.C. Sec. 1 (1998).
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER
Each Fund's Adviser is Alliance Capital Management, L.P., 1345 Avenue of the
Americas, New York, NY 10105. Alliance is a leading international investment
adviser supervising client accounts with assets as of September 30, 1999
totaling more than $317 billion (of which more than $143 billion represented
assets of investment companies). As of September 30, 1999, Alliance managed
retirement assets for many of the largest public and private employee benefit
plans (including 28 of the nation's FORTUNE 100 companies), for public employee
retirement funds in 31 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 52 registered
investment companies managed by Alliance, comprising 118 separate investment
portfolios, currently have more than 4.8 million shareholder accounts.
Alliance provides investment advisory services and order placement facilities
for the Funds. For these advisory services, the Funds paid Alliance as a
percentage of average daily net assets:
FEE AS A PERCENTAGE OF FISCAL
FUND AVERAGE DAILY NET ASSETS* YEAR ENDING
- -------------------------------------------------------------------------------
Alliance Premier Growth
Fund 1.00% 11/30/98
Alliance Health Care
Fund .95** 6/30/00
Alliance Growth Fund .70 10/31/98
Alliance Technology Fund 1.02 11/30/98
Alliance Quasar Fund 1.04 9/30/98
The Alliance Fund .67 11/30/98
Alliance Growth and Income
Fund .48 10/31/98
Alliance Balanced Shares
Fund .586 7/31/99
Alliance Utility Income
Fund -0- 11/30/98
Alliance Real Estate
Investment Fund .90 8/31/99
Alliance New Europe
Fund .95 7/31/99
Alliance Worldwide
Privatization Fund 1.00 6/30/99
Alliance International
Premier Growth Fund -0- 11/30/98
Alliance Global Small
Cap Fund 1.00% 7/31/99
Alliance International
Fund .81 6/30/99
Alliance Greater China
'97 Fund -0- 7/31/99
Alliance All-Asia Investment
Fund .24 10/31/98
Alliance Global Environment
Fund 1.10 10/31/98
* FEES ARE STATED NET OF ANY WAIVERS AND/OR REIMBURSEMENTS. SEE THE "FEE
TABLE" AT THE BEGINNING OF THE PROSPECTUS FOR MORE INFORMATION ABOUT FEE
WAIVERS.
** PRIOR TO ANY WAIVER BY ALLIANCE. SEE "FEE TABLE" AT THE BEGINNING OF THE
PROSPECTUS.
In connection with providing advisory services to ALLIANCE GREATER CHINA '97
FUND, Alliance has, at its expense, retained as a consultant New Alliance, a
joint venture company headquartered in Hong Kong, which was formed in 1997 by
Alliance and Sun Hung Kai Properties Limited. New Alliance provides Alliance
with ongoing, current, and comprehensive information and analysis of conditions
and developments in Greater China countries.
In connection with investments in real estate securities, Alliance has, at its
expense, retained as a consultant CB Richard Ellis, Inc. ("CBRE"). CBRE is a
publicly held company and the largest real estate services company in the
United States, comprised of real estate brokerage, property, and facilities
management, and real estate finance, and investment advisory services.
PORTFOLIO MANAGERS
The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time that
each person has been primarily responsible for the Fund, and each person's
principal occupation during the past five years.
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*
- -------------------------------------------------------------------------------
Alliance Premier Alfred Harrison; since Associated with
Growth Fund inception--Vice Chairman Alliance
of Alliance Capital
Management Corporation
(ACMC)**
Alliance Health Norman Fidel; since inception Associated with
Care Fund --Senior Vice President Alliance
of ACMC
Alliance Growth Tyler Smith; since inception Associated with
Fund --Senior Vice President Alliance
Alliance Technology Peter Anastos; since 1992 Associated with
Fund --Senior Vice President Alliance
of ACMC
Gerald T. Malone; since 1992 Associated with
--Senior Vice President Alliance
of ACMC
53
Principal Occupation
During the Past
Fund Employee; Year; Title Five (5) Years*
- -------------------------------------------------------------------------------
Alliance Quasar Alden M. Stewart; since 1994 Associated with
Fund --Executive Vice President Alliance
of ACMC
Randall E. Haase; since 1994 Associated with
--Senior Vice President Alliance
of ACMC
The Alliance Fund Alden M. Stewart; since 1997 (see above)
--(see above)
Randall E. Haase; since 1997 (see above)
--(see above)
Alliance Growth and Paul Rissman; since 1994 Associated with
Income Fund --Senior Vice President Alliance
of ACMC
Alliance Balanced Paul Rissman; since 1997 (see above)
Shares Fund --(see above)
Alliance Utility Paul Rissman; since 1996 (see above)
Income Fund --(see above)
Alliance Real Estate Daniel G. Pine; since 1996 Associated with
Investment Fund --Senior Vice President Alliance since 1996;
of ACMC prior thereto; Senior
Vice President of
Desai Capital
Management
David Kruth; since 1997 Associated with
--Vice President of ACMC Alliance since 1997;
prior thereto; Senior
Vice President of
Yarmouth Group
Alliance New Europe Steven Beinhacker; since 1997 Associated with
Fund --Senior Vice President Alliance
of ACMC
Alliance Worldwide Mark H. Breedon; since Associated with
Privatization Fund inception Vice President Alliance
of ACMC and Director
and Senior Vice President
of Alliance Capital Limited***
Alliance International Alfred Harrison; since 1998 (see above)
Premier Growth Fund --(see above)
Thomas Kamp; since 1998 Associated with
--Senior Vice President Alliance
of ACMC
Alliance Global Alden M. Stewart; since 1994 (see above)
Small Cap Fund --(see above)
Randall E. Haase; since 1994 (see above)
--(see above)
Mark D. Breedon; since 1998 (see above)
--(see above)
Alliance Nicholas D.P.Carn; since 1998 Associated with
International Fund --Senior Vice President Alliance since 1995;
of ACMC prior thereto, Chief
Investment Officer of
Draycott Partners, Ltd.
Alliance Greater Matthew W.S. Lee; since 1997 Associated with
China '97 Fund --Vice President of ACMC Alliance since 1997;
prior thereto;
associated with
National Mutual Funds
Management (Asia) and
James Capel and Co.
since prior to 1994
Alliance All-Asia Hiroshi Motoki; since 1998 Associated with
Investment Fund --Senior Vice President Alliance since 1994;
of ACMC and director of prior thereto;
Japanese/Asian Equity associated with
research Ford Motor Company
Alliance Global Linda Bolton Weiser; Associated with
Environment Fund since 1998--Vice President Alliance
of ACMC
* UNLESS INDICATED OTHERWISE, PERSONS ASSOCIATED WITH ALLIANCE HAVE BEEN
EMPLOYED IN A PORTFOLIO MANAGEMENT, RESEARCH OR INVESTMENT CAPACITY.
** THE SOLE GENERAL PARTNER OF ALLIANCE.
*** AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF ALLIANCE.
PERFORMANCE OF SIMILARLY MANAGED PORTFOLIOS. In addition to managing the assets
of ALLIANCE PREMIER GROWTH FUND, Mr. Harrison has ultimate responsibility for
the management of discretionary tax-exempt accounts of institutional clients
managed as described below without significant client-imposed restrictions
("Historical Portfolios"). These accounts have substantially the same
investment objectives and policies and are managed in accordance with
essentially the same investment strategies and techniques as those for ALLIANCE
PREMIER GROWTH FUND, except for the ability of ALLIANCE PREMIER GROWTH FUND to
use futures and options as hedging tools and to invest in warrants. The
Historical Portfolios also are not subject to certain limitations,
diversification requirements and other restrictions imposed under the 1940 Act
and the Code to which ALLIANCE PREMIER GROWTH FUND, as a registered investment
company, is subject and which, if applicable to the Historical Portfolios, may
have adversely affected the performance results of the Historical Portfolios.
Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the twenty full calendar years during which
Mr. Harrison has managed the Historical Portfolios as an employee of Alliance
and cumulatively through September 30, 1999. As of September 30, 1999, the
assets in the Historical Portfolios totaled approximately $14.3 billion and the
average size of an institutional account in the Historical Portfolio was $492
million. Each Historical Portfolio has a nearly identical composition of
investment holdings and related percentage weightings.
The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be payable by ALLIANCE
PREMIER GROWTH FUND, which are higher than the fees imposed on the Historical
Portfolio and will result in a higher expense ratio and lower returns for
ALLIANCE PREMIER GROWTH FUND. Expenses associated with the distribution of
Class A, Class B, and Class C shares of ALLIANCE PREMIER GROWTH FUND in
accordance with the plan adopted by ALLIANCE PREMIER GROWTH FUND's Board of
Directors under Commission Rule 12b-1 are also excluded. The
54
performance data has also not been adjusted for corporate or individual taxes,
if any, payable by the account owners.
Alliance has calculated the investment performance of the Historical Portfolios
on a trade-date basis. Dividends have been accrued at the end of the month and
cash flows weighted daily. Composite investment performance for all portfolios
has been determined on an asset weighted basis. New accounts are included in
the composite investment performance computations at the beginning of the
quarter following the initial contribution. The total returns set forth below
are calculated using a method that links the monthly return amounts for the
disclosed periods, resulting in a time-weighted rate of return.
As reflected below, the Historical Portfolios have over time performed
favorably when compared with the performance of recognized performance indices.
The S&P 500 Index is a widely recognized, unmanaged index of market activity
based upon the aggregate performance of a selected portfolio of publicly traded
common stocks, including monthly adjustments to reflect the reinvestment of
dividends and other distributions. The S&P 500 Index reflects the total return
of securities comprising the Index, including changes in market prices as well
as accrued investment income, which is presumed to be reinvested. The Russell
1000 universe of securities is compiled by Frank Russell Company and is
segmented into two style indices, based on the capitalization-weighted median
book-to-price ratio of each of the securities. At each reconstitution, the
Russell 1000 constituents are ranked by their book-to-price ratio. Once so
ranked, the breakpoint for the two styles is determined by the median market
capitalization of the Russell 1000. Thus, those securities falling within the
top fifty percent of the cumulative market capitalization (as ranked by
descending book-to-price) become members of the Russell Price-Driven Indices.
The Russell 1000 Growth Index is, accordingly, designed to include those
Russell 1000 securities with a greater-than-average growth orientation. In
contrast with the securities in the Russell Price-Driven Indices, companies in
the Growth Index tend to exhibit higher price-to-book and price-earnings
ratios, lower dividend yield and higher forecasted growth values.
To the extent ALLIANCE PREMIER GROWTH FUND does not invest in U.S. common
stocks or utilizes investment techniques such as futures or options, the S&P
500 Index and Russell 1000 Growth Index may not be substantially comparable to
ALLIANCE PREMIER GROWTH FUND. The S&P 500 Index and Russell 1000 Growth Index
are included to illustrate material economic and market factors that existed
during the time period shown. The S&P 500 Index and Russell 1000 Growth Index
do not reflect the deduction of any fees. If ALLIANCE PREMIER GROWTH FUND were
to purchase a portfolio of securities substantially identical to the securities
comprising the S&P 500 Index or the Russell 1000 Growth Index, ALLIANCE PREMIER
GROWTH FUND's performance relative to the index would be reduced by ALLIANCE
PREMIER GROWTH FUND's expenses, including brokerage commissions, advisory fees,
distribution fees, custodial fees, transfer agency costs and other
administrative expenses, as well as by the impact on ALLIANCE PREMIER GROWTH
FUND's shareholders of sales charges and income taxes.
The Lipper Large Cap Growth Fund Index is prepared by Lipper, Inc. and
represents a composite index of the investment performance for the 30 largest
large capitalization growth mutual funds. The composite investment performance
of the Lipper Large Cap Growth Fund Index reflects investment management and
administrative fees and other operating expenses paid by these mutual funds and
reinvested income dividends and capital gain distributions, but excludes the
impact of any income taxes and sales charges.
The following performance data is provided solely to illustrate Mr. Harrison's
performance in managing the Historical Portfolios and the ALLIANCE PREMIER
GROWTH FUND as measured against certain broad based market indices and against
the composite performance of other open-end growth mutual funds. Investors
should not rely on the following performance data of the Historical Portfolios
as an indication of future performance of ALLIANCE PREMIER GROWTH FUND. The
composite investment performance for the periods presented may not be
indicative of future rates of return. Other methods of computing investment
performance may produce different results, and the results for different
periods may vary.
SCHEDULE OF COMPOSITE INVESTMENT PERFORMANCE--HISTORICAL PORTFOLIOS*
LIPPER
RUSSELL LARGE CAP
1000 GROWTH
HISTORICAL S&P500 GROWTH FUND
PREMIER PORTFOLIOS INDEX INDEX INDEX
GROWTH TOTAL TOTAL TOTAL TOTAL
FUND RETURN** RETURN RETURN RETURN
1/1/99-
9/30/99*** 2.53% 7.35 5.37% 6.40% 7.39%
Year ended December:
1998*** 42.97 52.16% 28.60 38.71 36.47
1997*** 27.05 34.64 33.36 30.49 27.59
1996*** 18.84 22.06 22.96 23.12 20.56
1995*** 40.66 39.83 37.58 37.19 34.92
1994 (9.78) (4.82) 1.32 2.66 (0.82)
1993 5.35 10.54 10.08 2.90 10.66
1992 -- 12.18 7.62 5.00 6.89
1991 -- 38.91 30.47 41.16 37.34
1990 -- (1.57) (3.10) (0.26) (1.82)
1989 -- 38.80 31.69 35.92 32.30
1988 -- 10.88 16.61 11.27 10.84
1987 -- 8.49 5.25 5.31 3.33
1986 -- 27.40 18.67 15.36 16.75
1985 -- 37.41 31.73 32.85 32.85
1984 -- (3.31) 6.27 (.95) (4.25)
1983 -- 20.80 22.56 15.98 22.63
1982 -- 28.02 21.55 20.46 28.91
1981 -- (1.09) (4.92) (11.31) (0.06)
1980 -- 50.73 32.50 39.57 47.73
1979 -- 30.76 18.61 23.91 29.90
Cumulative total
return for
the period
January 1, 1979 to
September 30, 1999 -- 5061% 2665% 2532% 3182%
* TOTAL RETURN IS A MEASURE OF INVESTMENT PERFORMANCE THAT IS BASED UPON THE
CHANGE IN VALUE OF AN INVESTMENT FROM THE BEGINNING TO THE END OF A SPECIFIED
PERIOD AND ASSUMES REINVESTMENT OF ALL DIVIDENDS AND OTHER DISTRIBUTIONS. THE
BASIS OF PREPARATION OF THIS DATA IS DESCRIBED IN THE PRECEDING DISCUSSION.
TOTAL RETURNS FOR ALLIANCE PREMIER GROWTH FUND ARE FOR CLASS A SHARES, WITH
IMPOSITION OF THE MAXIMUM 4.25% SALES CHARGE.
55
** ASSUMES IMPOSITION OF THE MAXIMUM ADVISORY FEE CHARGED BY ALLIANCE FOR ANY
HISTORICAL PORTFOLIO FOR THE PERIOD INVOLVED.
*** DURING THIS PERIOD, THE HISTORICAL PORTFOLIOS DIFFERED FROM ALLIANCE
PREMIER GROWTH FUND IN THAT ALLIANCE PREMIER GROWTH FUND INVESTED A PORTION OF
ITS NET ASSETS IN WARRANTS ON EQUITY SECURITIES IN WHICH THE HISTORICAL
PORTFOLIOS WERE UNABLE, BY THEIR INVESTMENT RESTRICTIONS, TO PURCHASE. IN LIEU
OF WARRANTS, THE HISTORICAL PORTFOLIOS ACQUIRED THE COMMON STOCK UPON WHICH THE
WARRANTS WERE BASED.
The average annual total returns presented below are based upon the cumulative
total return as of September 30, 1999 and, for more than one year, assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.
AVERAGE ANNUAL TOTAL RETURNS
LIPPER
RUSSELL LARGE CAP
1000 GROWTH
PREMIER HISTORICAL S&P 500 GROWTH FUND
GROWTH PORTFOLIOS INDEX INDEX INDEX
One year 34.34% 41.47% 27.79% 34.85% 35.60%
Three years 31.81 35.08 25.09 26.87 25.27
Five years 29.25 29.85 25.03 26.79 24.80
Ten years 22.71+ 19.80 16.80 17.96 16.98
Since January 1,
1979 -- 20.93 17.35 17.07 18.32
+ SINCE INCEPTION ON 9/28/92
PERFORMANCE OF A SIMILARLY MANAGED FUND. Alliance is the investment adviser of
an investment company organized and operated under the laws of the Grand Duchy
of Luxembourg, ACM International Health Care Fund (the "ACM Fund"), that has
substantially the same investment objective and policies as those of ALLIANCE
HEALTH CARE FUND. The ACM Fund has been managed in accordance with
substantially the same investment strategies and techniques as are employed
with respect to ALLIANCE HEALTH CARE FUND.
Norman Fidel, the portfolio manager of ALLIANCE HEALTH CARE FUND, is also the
person who has been primarily responsible for the day-to-day management of the
ACM Fund since 1988. Mr. Fidel manages approximately $1.1 billion of Health
Care Industries assets, including approximately $320 million of assets in the
ACM Fund as of September 30, 1999.
The ACM Fund is not subject to certain limitations, diversification
requirements and other restrictions imposed under the 1940 Act and the Code to
which ALLIANCE HEALTH CARE FUND, as a registered investment company, is subject
and which, if applicable to the ACM Fund, may have adversely affected the
performance results of the ACM Fund.
Set forth below are performance data provided by Alliance relating to the Class
AX shares of the ACM Fund since 1998, when Mr. Fidel began managing that fund.
Performance data are shown annually and cumulatively through September 30, 1999.
The performance data are net of all fees imposed by the ACM Fund. The
performance data have not been adjusted to reflect the fees that are payable by
ALLIANCE HEALTH CARE FUND, which, at comparable asset levels, may be lower than
the fees imposed on the ACM Fund and may result in a lower expense ratio for
ALLIANCE HEALTH CARE FUND. Expenses associated with the distribution of Class
A, Class B and Class C shares of ALLIANCE HEALTH CARE FUND in accordance with
the plan adopted by ALLIANCE HEALTH CARE FUND's Board of Directors under
Commission Rule 12b-1 also are not reflected in the data below relating
to the ACM Fund. See "Fees and Expenses of the Funds." The performance data
have also not been adjusted for corporate or individual taxes, if any, payable
by the ACM Fund shareholders.
The following performance data are provided solely to illustrate Mr. Fidel's
performance in managing the ACM Fund. Investors should not rely on the
following performance data of the ACM Fund as an indication of future
performance of the ALLIANCE HEALTH CARE FUND. The investment performance for
the periods presented may not be indicative of future rates of return.
ACM INTERNATIONAL HEALTH CARE FUND
----------------------------------
TOTAL RETURNS
1988 21.82%
1989 46.75%
1990 25.96%
1991 83.07%
1992 -10.46%
1993 -1.38%
1994 13.84%
1995 46.49%
1996 2.18%
1997 23.07%
1998 24.29%
1999* -11.82%
AVERAGE ANNUAL TOTAL RETURN
(FOR PERIODS ENDED 9/30/99)
----------------------------
One year 2.69%
Five years 15.38%
Ten years 16.92%
Cumulative Total Return of the ACM Fund from
12/31/87 to 9/30/99: 736.69%
* THROUGH SEPTEMBER 30, 1999 (UNANNUALIZED)
The Funds' SAIs have more detailed information about Alliance and other Fund
service providers.
PURCHASE AND SALE OF SHARES
HOW THE FUNDS VALUE THEIR SHARES
The Funds' net asset value or NAV is calculated at 4 p.m. Eastern time each day
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. The Funds value their securities
at their current market value determined on the basis of market quotations, or,
if such quotations are not readily
56
available, such other methods as the Funds' directors believe accurately
reflect fair market value.
Your order for purchase, sale, or exchange of shares is priced at the next NAV
calculated after your order is received in proper form by the Fund.
HOW TO BUY SHARES
You may purchase Advisor Class shares through your financial representative at
NAV. Advisor Class shares are not subject to any initial or contingent sales
charges or distribution expenses. You may purchase and hold shares solely:
- - through accounts established under a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial intermediary and
approved by the Fund's principal underwriter, Alliance Fund Distributors, Inc.
or AFD;
- - through a self-directed defined contribution employee benefit plan (e.g.,
a 401(k) plan) that has at least 1,000 participants or $25 million in assets;
- - by investment advisory clients of, and certain other persons associated
with, Alliance and its affiliates or the Funds; and
- - through registered investment advisers or other financial intermediaries
who charge a management, consulting or other fee for their services and who
purchase shares through a broker or agent approved by AFD and clients of such
registered investment advisers or financial intermediaries whose accounts are
linked to the master account of such investment adviser or financial
intermediary on the books of such approved broker or agent.
Generally, a fee-based program must charge an asset-based or other similar fee
and must invest at least $250,000 in Advisor Class shares to be approved by AFD
for investment in Advisor Class shares. The Fund's Statement of Additional
Information has more detailed information about who may purchase and hold
Advisor Class shares.
A Fund may refuse any order to purchase Advisor Class shares. In particular,
the Funds reserve the right to restrict purchases of Advisor Class shares
(including through exchanges) when there appears to be evidence of a pattern of
frequent purchases and sales made in response to short-term considerations.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares for Advisor Class shares of other
Alliance Mutual Funds. Exchanges of Advisor Class shares are made at the
next-determined NAV, without any sales or service charge. You may request an
exchange by mail or telephone. You must call by 4:00 p.m. Eastern time to
receive that day's NAV. The Funds may change, suspend, or terminate the
exchange service on 60 days' written notice.
HOW TO SELL SHARES
You may "redeem" your shares (i.e., sell your shares to a Fund) on any day the
Exchange is open, either directly or through your financial intermediary. Your
sales price will be the next-determined NAV after the Fund receives your sales
request in proper form. Normally, proceeds will be 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). 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 representative.
- - SELLING SHARES THROUGH YOUR FINANCIAL REPRESENTATIVE
Your financial representative must receive your sales request by 4:00 p.m.,
Eastern time, and submit it to the Fund by 5:00 p.m., Eastern time, for you to
receive that day's NAV. Your financial representative is responsible for
submitting all necessary documentation to the Fund and may charge you for this
service.
- - SELLING SHARES DIRECTLY TO THE FUND
BY MAIL:
-- Send a signed letter of instruction or stock power, along with
certificates, to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07906-1520
800-221-5672
-- For your protection, a bank, a member firm of a national stock exchange,
or other eligible guarantor institution, must guarantee signatures. Stock power
forms are available from your financial intermediary, AFS, and many commercial
banks. Additional documentation is required for the sale of shares by
corporations, intermediaries, fiduciaries, and surviving joint owners. If you
have any questions about these procedures, contact AFS.
BY TELEPHONE:
-- You may redeem your shares for which no stock certificates have been
issued by telephone request. Call AFS at 800-221-5672 with instructions on how
you wish to receive your sale proceeds.
-- A telephone redemption request must be received by 4:00 p.m. Eastern time
for you to receive that day's NAV.
-- If you have selected electronic funds transfer in your Shareholder
Application, the redemption proceeds will be sent directly to your bank.
Otherwise, the proceeds will be mailed to you.
-- Redemption requests by electronic funds transfer may not exceed $100,000
per day and redemption requests by check cannot exceed $50,000 per day.
-- Telephone redemption is not available for shares held in nominee or
"street name" accounts, retirement plan accounts, or shares held by a
shareholder who has changed his or her address of record within the previous 30
calendar days.
OTHER
If you are a Fund shareholder through an account established under a fee-based
program, your fee-based program may impose
57
requirements with respect to the purchase, sale, or exchange of Advisor Class
shares of a Fund that are different from those described in this prospectus. A
transaction, service, administrative or other similar fee may be charged by
your broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of Advisor Class
shares made through such financial representative. Such financial
intermediaries may also impose requirements with respect to the purchase, sale
or exchange of shares that are different from, or in addition to, those imposed
by a Fund, including requirements as to the minimum initial and subsequent
investment amounts.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund's income dividends and capital gains distributions, if any, declared
by a Fund on its outstanding shares will, at the election of each shareholder,
be paid in cash or in additional shares of the same class of shares of that
Fund. If paid in additional shares, the shares will have an aggregate NAV as of
the close of business on the day following the declaration date of the dividend
or distribution equal to the cash amount of the dividend or distribution. You
may make an election to receive dividends and distributions in cash or in
shares at the time you purchase shares. Your 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. Cash dividends may be paid in check, or at your election,
electronically via the ACH network. There is no sales or other charge on the
reinvestment of Fund dividends and distributions.
If you receive an income dividend or capital gains distribution in cash you
may, within 120 days following the date of its payment, reinvest the dividend
or distribution in additional shares of that Fund without charge by returning
to Alliance, with appropriate instructions, the check representing the dividend
or distribution. Thereafter, unless you otherwise specify, you will be deemed
to have elected to reinvest all subsequent dividends and distributions in
shares of that Fund.
For federal income tax purposes, the Fund's dividend distributions of net
income (or short-term taxable gains) will be taxable to you as ordinary income.
Distributions of long-term capital gains generally will be taxable to you
as long-term capital gains. A Fund's distributions also may be subject to
certain state and local taxes.
While it is the intention of each Fund 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 a Fund will
pay any dividends or realize any capital gains. Since REITs pay distributions
based on cash flow, without regard to depreciation and amortization, it is
likely that a portion of the distributions paid to ALLIANCE REAL ESTATE
INVESTMENT FUND and subsequently distributed to shareholders may be a
nontaxable return of capital. The final determination of the amount of a Fund's
return of capital distributions for the period will be made after the end of
each calendar year.
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such foreign taxes), but
there can be no assurance that any Fund will be able to do so. Furthermore, a
shareholder's ability to claim a foreign tax credit or deduction for foreign
taxes paid by a Fund may be subject to certain limitations imposed by the Code,
as a result of which a shareholder may not be permitted to claim a credit or
deduction for all or a portion of the amount of such taxes.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of a Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant), any further returns of capital will be taxable as capital gain.
See the Fund's SAI for a further explanation of these tax issues.
If you buy shares just before a Fund deducts a distribution from its NAV, you
will pay the full price for the shares and then receive a portion of the price
back as a taxable distribution.
The sale or exchange of Fund shares is a taxable transaction for Federal income
tax purposes.
Each year shortly after December 31, the Funds will send you tax information
stating the amount and type of all its distributions for the year. Consult your
tax adviser about the federal, state, and local tax consequences in your
particular circumstances.
58
CONVERSION FEATURE
CONVERSION
As described above, Advisor Class shares may be held solely through certain
fee-based program accounts, employee benefit plans and registered investment
advisory or other financial intermediary relationships, and by investment
advisory clients of, and certain persons associated with, Alliance and its
affiliates or the Funds. If a holder of Advisor Class shares (i) ceases to
participate in the fee-based program or plan, or to be associated with an
eligible investment advisor or financial intermediary or (ii) is otherwise no
longer eligible to purchase Advisor Class shares (each a "Conversion Event"),
then all Advisor Class shares held by the shareholder will convert
automatically to Class A shares of the same Fund. The Fund will provide the
shareholder with at least 30 days advance notice of such conversion. The
failure of a shareholder or a fee-based program to satisfy the minimum
investment requirements to purchase Advisor Class shares will not constitute a
Conversion Event. The conversion would occur on the basis of the relative NAV
of the two classes and without the imposition of any sales load, fee or other
charge.
DESCRIPTION OF CLASS A SHARES
The Class A shares of each Fund have a distribution fee of .30% under the
Fund's Rule 12b-1 plan that allows the Fund to pay distribution and service
fees for the distribution and sale of its shares. Because this fee is paid out
of the Fund's assets, Class A shares have a higher expense ratio and may pay
lower dividends and may have a lower NAV than Advisor Class shares.
GENERAL INFORMATION
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by federal securities law. The
Funds reserve the right to close an account that through redemption has
remained below $200 for 90 days. Shareholders will receive 60 days' written
notice to increase the account value before the account is closed.
During drastic economic or market developments, you might have difficulty in
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephone requests to
purchase, sell, or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephone requests. The telephone
service may be suspended or terminated at any time without notice.
59
60
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations). 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 has been audited by PricewaterhouseCoopers LLP, the
independent accountants for THE ALLIANCE FUND, ALLIANCE GROWTH FUND, ALLIANCE
PREMIER GROWTH FUND, ALLIANCE INTERNATIONAL PREMIER GROWTH FUND, ALLIANCE
BALANCED SHARES, ALLIANCE UTILITY INCOME FUND, ALLIANCE WORLDWIDE PRIVATIZATION
FUND, and ALLIANCE GROWTH AND INCOME FUND, and by Ernst & Young LLP, the
independent accountants for ALLIANCE ALL-ASIA INVESTMENT FUND, ALLIANCE
TECHNOLOGY FUND, ALLIANCE QUASAR FUND, ALLIANCE INTERNATIONAL FUND, ALLIANCE
NEW EUROPE FUND, ALLIANCE GLOBAL SMALL CAP FUND, ALLIANCE GLOBAL ENVIRONMENT
FUND, ALLIANCE GREATER CHINA '97 FUND and ALLIANCE REAL ESTATE INVESTMENT FUND,
whose reports, along with each Fund's financial statements, are included in the
SAI, which is available upon request.
61
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
-------------------------------------- ---------------------------------------
NET GAINS
OR LOSSES ON
SECURITIES DISTRIBUTIONS
NET ASSET NET (BOTH DIVIDENDS IN EXCESS DISTRIBUTIONS
VALUE, INVESTMENT REALIZED TOTAL FROM FROM NET OF NET FROM
BEGINNING INCOME AND INVESTMENT INVESTMENT INVESTMENT CAPITAL
FISCAL YEAR OR PERIOD OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME INCOME GAINS
- ---------------------------- ---------- --------- ----------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE PREMIER GROWTH FUND
12/1/98 to 5/31/99++ $27.71 $ (.07)(b) $ 4.62 $ 4.55 $ 0.00 $ 0.00 $ (.61)
Year ended 11/30/98 22.10 (.07)(b) 7.14 7.07 0.00 0.00 (1.46)
Year ended 11/30/97 17.99 (.06)(b) 5.25 5.19 0.00 0.00 (1.08)
10/2/96+ to 11/30/96 15.94 (.01)(b) 2.06 2.05 0.00 0.00 0.00
ALLIANCE GROWTH FUND
11/1/98 to 4/30/99++ $47.47 $ .01(b) $10.87 $10.88 $ 0.00 $ 0.00 $ (3.71)
Year ended 10/31/98 44.08 .08(b) 6.22 6.30 0.00 0.00 (2.91)
Year ended 10/31/97 34.91 (.05)(b) 10.25 10.20 0.00 0.00 (1.03)
10/2/96+ to 10/31/96 34.14 0.00(b) .77 .77 0.00 0.00 0.00
ALLIANCE TECHNOLOGY FUND
12/1/98 to 5/31/99++ $69.04 $ (.25)(b) $18.86 $18.61 $ 0.00 $ 0.00 $ (5.17)
Year ended 11/30/98 54.63 (.50)(b) 15.49 14.99 0.00 0.00 (.58)
Year ended 11/30/97 51.17 (.45)(b) 4.33 3.88 0.00 0.00 (.42)
10/2/96+ to 11/30/96 47.32 (.05)(b) 3.90 3.85 0.00 0.00 0.00
ALLIANCE QUASAR FUND
10/1/98 to 3/31/99++ $22.37 $ (.05)(b) $ 2.07 $ 2.02 $ 0.00 $ 0.00 $ (1.01)
Year ended 9/30/98 30.42 (.09)(b) (6.73) (6.82) 0.00 0.00 (1.23)
10/2/96+ TO 9/30/97 27.82 (.17)(b) 6.88 6.71 0.00 0.00 (4.11)
THE ALLIANCE FUND
12/1/98 to 5/31/99++ $ 5.98 $ (.01)(b) $ 1.42 $ 1.41 $ 0.00 $ 0.00 $ (.39)
Year ended 11/30/98 8.69 (.01)(b) (.53) (.54) 0.00 0.00 (2.17)
Year ended 11/30/97 7.71 (.02)(b) 2.10 2.08 (.04) 0.00 (1.06)
10/2/96+ to 11/30/96 6.99 0.00 .72 .72 0.00 0.00 0.00
ALLIANCE GROWTH AND
INCOME FUND
11/1/98 to 4/30/99++ $ 3.44 $ .02(b) $ .72 $ .74 $ (.02) $ 0.00 $ (.35)
Year ended 10/31/98 3.48 .04(b) .43 .47 (.05) 0.00 (.46)
Year ended 10/31/97 3.00 .05(b) .87 .92 (0.06) 0.00 (.38)
10/2/96+ to 10/31/96 2.97 0.00 .03 .03 0.00 0.00 0.00
ALLIANCE BALANCED SHARES
Year ended 7/31/99 $15.98 $ .39(b) $ 1.29 $ 1.68 $ (.37) $ 0.00 $(1.65)
Year ended 7/31/98 16.17 .37(b) 1.87 2.24 (.36) 0.00 (2.07)
10/2/96+ to 7/31/97 14.79 .23(b) 3.22 3.45 (.27) 0.00 (1.80)
ALLIANCE UTILITY INCOME FUND
12/1/98 to 5/31/99++ $14.70 $ .20(b)(c) $ 2.36 $ 2.56 $ (.17) $ 0.00 $ (.34)
Year ended 11/30/98 12.49 .37(b)(c) 2.66 3.03 (.35) 0.00 (.47)
Year ended 11/30/97 10.59 .36(b)(c) 2.04 2.40 (.37) 0.00 (.13)
10/2/96+ to 11/30/96 9.95 .03(b)(c) .61 .64 0.00 0.00 0.00
ALLIANCE REAL ESTATE
INVESTMENT FUND
Year ended 8/31/99 $10.48 $ .48(b) $ (.05) $ .43 $ (.50)(f) $ (.11) $ (.10)
Year ended 8/31/98 12.82 .55(b) (2.34) (1.79) (.54) 0.00 (.01)
10/1/96+ to 8/31/97 10.00 .35(b) 2.88 3.23 (.41)(f) 0.00 0.00
ALLIANCE NEW EUROPE FUND
Year ended 7/31/99 $21.79 $ .13(b) $ (.78) $ (.65) $ 0.00 $ 0.00 $ (2.56)
Year ended 7/31/98 18.57 .08(b) 5.28 5.36 0.00 (.09) (2.05)
10/2/96+ to 7/31/97 16.25 .11(b) 3.76 3.87 (.09) (.14) (1.32)
ALLIANCE WORLDWIDE
PRIVATIZATION FUND
Year ended 6/30/99 $12.63 $ .02(b) $ .93 $ .95 $ (.17) $ 0.00 $ (1.64)
Year ended 6/30/98 13.23 .19(b) .80 .99 (.23) 0.00 (1.36)
10/2/96+ to 6/30/97 12.14 .18(b) 2.52 2.70 (.19) 0.00 (1.42)
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND
12/1/98 to 5/31/99++ $ 9.64 $ (.04)(b)(c) $ .68 $ .64 $ 0.00 $ 0.00 $ 0.00
3/3/98+ to 11/30/98 10.00 .01(b)(c) (.37) (.36) 0.00 0.00 0.00
ALLIANCE GLOBAL
SMALL CAP FUND
Year ended 7/31/99 $12.20 $ (.07)(b) $ .77 $ .70 $ 0.00 $ 0.00 $ (1.16)
Year ended 7/31/98 12.89 (.07)(b) .37 .30 0.00 0.00 (.99)
10/2/96+ to 7/31/97 12.56 (.08)(b) 1.97 1.89 0.00 0.00 (1.56)
ALLIANCE INTERNATIONAL FUND
Year ended 6/30/99 $18.54 $ .01(b)(c) $ (.75) $ (.74) $ (.01) $ (.51) $ (1.04)
Year ended 6/30/98 18.67 .02(b)(c) 1.13 1.15 (.02) (.05) (1.21)
10/2/96+ to 6/30/97 17.96 .16(b) 1.78 1.94 (.15) 0.00 (1.08)
ALLIANCE GREATER
CHINA '97 FUND
Year ended 7/31/99 $ 4.85 $ .04(b)(c) $ 3.35 $ 3.39 $ 0.00 $ 0.00 $ 0.00
9/3/97+ to 7/31/98 10.00 .10(b)(c) (5.18) (5.08) (.07) 0.00 0.00
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
------------------ ------------------------------------------------------
NET ASSETS, RATIO OF
TOTAL NET ASSET END OF RATIO OF NET INCOME
DIVIDENDS VALUE, PERIOD EXPENSES (LOSS) TO PORTFOLIO
AND END OF TOTAL (000'S TO AVERAGE AVERAGE TURNOVER
DISTRIBUTIONS PERIOD RETURN (A) OMITTED) NET ASSETS NET ASSETS RATE
---------- --------- ----------- ----------- ---------- ---------- -------------
<C> <C> <C> <C> <C> <C> <C>
$ (.61) $31.65 16.72% $427,542 1.15%* (.46)%* 39%
(1.46) 27.71 34.31 271,661 1.26(e) (.28) 82
(1.08) 22.10 30.98 53,459 1.25 (.28) 76
0.00 17.99 12.86 1,922 1.50 (.48) 95
$(3.71) $54.64 24.00% $212,589 .88%* .06%* 35%
(2.91) 47.47 14.92 174,745 .93(e) .17 61
(1.03) 44.08 29.92 101,205 .98(e) (.12) 48
0.00 34.91 2.26 946 1.26* 0.50 46
$(5.17) $82.48 28.36% $279,264 1.27%* (.62)%* 27%
(.58) 69.04 27.73 230,295 1.37(e) (.84) 67
(.42) 54.63 7.65 167,120 1.39(e) (.81) 51
0.00 51.17 8.14 566 1.75* (1.21)* 30
$(1.01) $23.38 9.22% $215,234 1.40%* (.41)%* 49%
(1.23) 22.37 (23.24) 175,037 1.38(e) (.32) 109
(4.11) 30.42 28.47 62,455 1.58* (.74)* 135
$ (.39) $ 7.00 25.28% $ 11,642 .87%* (.19)%* 53%
(2.17) 5.98 (8.19) 11,305 .83 (.16) 106
(1.10) 8.69 32.00 10,275 .83 (.21) 158
0.00 7.71 10.30 1,083 .89* 0.38* 80
$ (.37) $ 3.81 23.50% $ 33,920 .71%* 1.16%* 29%
(.51) 3.44 14.96 22,786 .76(e) 1.14 89
(.44) 3.48 33.61 3,207 .71(e) 1.42 88
0.00 3.00 1.01 87 0.37* 3.40* 88
$(2.02) $15.64 11.71% $ 2,627 .97%(e) 2.56% 105%
(2.43) 15.98 15.32 2,079 1.06(e) 2.33 145
(2.07) 16.17 25.96 1,565 1.30*(e) 2.15* 207
$ (.51) $16.75 17.94% $ 1,327 1.21%* 2.55% 4%
(.82) 14.70 25.34 523 1.20(d) 2.83 16
(.50) 12.49 23.57 42 1.20(d) 3.28 37
0.00 10.59 6.33 33 1.20(d) 4.02 98
$ (.71) $10.20 4.18% $ 2,270 1.30% 4.75% 29%
(.55) 10.48 (14.74) 2,899 1.25 4.08 23
(.41) 12.82 32.72 2,313 1.45*(d)(e) 3.07* 20
$(2.56) $18.58 (2.54)% $ 4,778 1.51%(e) .68% 89%
(2.14) 21.79 32.55 3,143 1.56(e) .39 99
(1.55) 18.57 25.76 4,130 1.71* .77* 89
$(1.81) $11.77 10.12% $ 1,610 1.62%(e) .37% 58%
(1.59) 12.63 9.48 1,716 1.45 1.48 53
(1.61) 13.23 25.24 374 1.96* 2.97* 48
$ 0.00 $10.28 6.64% $ 1,583 2.22%* (.83)%* 121%
0.00 $ 9.64 (3.60) 1,386 2.20(d)* .13* 151
$(1.16) $11.74 7.63% $ 189 2.13(e) (.63)% 120%
(.99) 12.20 2.82 392 1.87(e) (.57) 113
(1.56) 12.89 17.08 333 2.05*(e) (.84)* 129
$(1.56) $16.24 (3.62)% $ 33,949 1.57%(e) .04%(c) 178%
(1.28) 18.54 6.98 47,154 1.47(d) .13 121
(1.23) 18.67 11.57 8,697 1.69(d)* 1.47* 94
$ 0.00 $ 8.24 69.90% $ 161 2.22%(d)(e) .58% 94%
(.07) 4.85 (51.06) 60 2.22(d)(e)* 1.51* 58
</TABLE>
PLEASE REFER TO FOOTNOTES ON PAGE 64.
62
63
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS LESS DIVIDENDS AND DISTRIBUTIONS
-------------------------------------- ---------------------------------------
NET GAINS
OR LOSSES ON
SECURITIES DISTRIBUTIONS
NET ASSET NET (BOTH DIVIDENDS IN EXCESS DISTRIBUTIONS
VALUE, INVESTMENT REALIZED TOTAL FROM FROM NET OF NET FROM
BEGINNING INCOME AND INVESTMENT INVESTMENT INVESTMENT CAPITAL
FISCAL YEAR OR PERIOD OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME INCOME GAINS
- ---------------------------- ---------- --------- ----------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE ALL-ASIA
INVESTMENT FUND
11/1/98 to 4/30/99++ $ 5.90 $ (.06)(b)(c)$ 1.89 $ 1.83 $ 0.00 $ 0.00 $ 0.00
Year ended 10/31/98 7.56 (.08)(b)(c) (1.58) (1.66) 0.00 0.00 0.00
Year ended 10/31/97 11.04 (.15)(b)(c) (2.99) (3.14) 0.00 0.00 (.34)
10/2/96+ to 10/31/96 11.65 0.00(c) (.61) (.61) 0.00 0.00 0.00
ALLIANCE GLOBAL
ENVIRONMENT FUND
11/1/98 to 4/30/99++ $ 8.37 $ (.10)(b)(c)$ 1.46 $ 1.36 $ 0.00 $ 0.00 $ (3.10)
12/29/97+ to 10/31/98 9.15 (.20) (.58) (.78) 0.00 0.00 0.00
<CAPTION>
LESS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
------------------ ------------------------------------------------------
NET ASSETS, RATIO OF
TOTAL NET ASSET END OF RATIO OF NET INCOME
DIVIDENDS VALUE, PERIOD EXPENSES (LOSS) TO PORTFOLIO
AND END OF TOTAL (000'S TO AVERAGE AVERAGE TURNOVER
DISTRIBUTIONS PERIOD RETURN (A) OMITTED) NET ASSETS NET ASSETS RATE
---------- --------- ----------- ----------- ---------- ---------- -------------
<C> <C> <C> <C> <C> <C> <C>
$ 0.00 $ 7.73 31.02% $ 2,200 2.74%* (1.93)% 210%
0.00 5.90 (21.96) 2,012 3.46(d)(e) 1.22 93
(.34) 7.56 (29.42) 1,338 3.21(d) (1.51) 70
0.00 11.04 (5.24) 27 4.97*(d) 1.63 66
$(3.10) $ 6.63 25.94% $ 6 3.73%* (3.16)% 86%
0.00 8.37 (8.52) 5 3.04*(e) (2.39)* 205
</TABLE>
+ COMMENCEMENT OF DISTRIBUTION.
++ UNAUDITED
* ANNUALIZED.
(A) 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 THE NET ASSET VALUE DURING THE PERIOD, AND A
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 INVESTMENT RETURNS CALCULATED FOR PERIODS OF LESS THAN ONE YEAR
ARE NOT ANNUALIZED.
(B) BASED ON AVERAGE SHARES OUTSTANDING.
(C) NET OF FEE WAIVER AND EXPENSE REIMBURSEMENT.
(D) NET OF EXPENSES ASSUMED AND/OR WAIVED/REIMBURSED. IF THE FOLLOWING FUNDS
HAD BORNE ALL EXPENSES IN THEIR MOST RECENT FIVE FISCAL YEARS, THEIR EXPENSE
RATIOS, WITHOUT GIVING EFFECT TO THE EXPENSE OFFSET ARRANGEMENT DESCRIBED IN
(E) BELOW, WOULD HAVE BEEN AS FOLLOWS:
1996 1997 1998 1999
- -------------------------------------------------------------------------------
ALLIANCE ALL-ASIA
INVESTMENT FUND
ADVISOR CLASS 5.54%* 3.43% 4.39% --
ALLIANCE UTILITY
INCOME FUND
ADVISOR CLASS 3.48%* 3.29% 2.21% --
ALLIANCE REAL ESTATE
INVESTMENT FUND
ADVISOR CLASS -- 1.47%* -- --
ALLIANCE INTERNATIONAL
PREMIER GROWTH FUND
ADVISOR CLASS -- -- 6.28% 3.48%*
1997 1998 1999
- -------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL FUND
ADVISOR CLASS -- 1.62% 1.70%
ALLIANCE GREATER CHINA '97 FUND
ADVISOR CLASS -- 18.13%* 19.01%
(E) AMOUNTS DO NOT REFLECT THE IMPACT OF EXPENSE OFFSET ARRANGEMENTS WITH THE
TRANSFER AGENT. TAKING INTO ACCOUNT SUCH EXPENSE OFFSET ARRANGEMENTS, THE RATE
OF EXPENSES TO AVERAGE NET ASSETS ASSUMING THE ASSUMPTION AND/OR WAIVED
REIMBURSEMENT OF EXPENSES DESCRIBED IN NOTE (D) ABOVE WOULD HAVE BEEN AS
FOLLOWS:
1997 1998 1999
- -------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL FUND
ADVISOR CLASS 1.69%* -- 1.55%
ALLIANCE GLOBAL SMALL CAP FUND
ADVISOR CLASS 2.04%* 1.84% 2.10%
ALLIANCE NEW EUROPE FUND
ADVISOR CLASS 1.71%* 1.54% 1.50%
ALLIANCE ALL-ASIA INVESTMENT FUND
ADVISOR CLASS -- 3.41% --
ALLIANCE BALANCED SHARES
ADVISOR CLASS 1.29%* 1.05% .96%
ALLIANCE WORLDWIDE PRIVATIZATION FUND
ADVISOR CLASS -- -- 1.61%
ALLIANCE QUASAR FUND
ADVISOR CLASS -- 1.37% --
ALLIANCE REAL ESTATE INVESTMENT
FUND
ADVISOR CLASS 1.44%* -- --
ALLIANCE GROWTH AND INCOME
FUND
ADVISOR CLASS .70% .75% --
ALLIANCE GROWTH FUND
ADVISOR CLASS .96% .92% --
ALLIANCE TECHNOLOGY FUND
ADVISOR CLASS 1.38% 1.36% --
ALLIANCE GREATER CHINA '97 FUND
ADVISOR CLASS -- 2.20%* 2.20%
ALLIANCE PREMIER GROWTH FUND
ADVISOR CLASS -- 1.25% --
ALLIANCE GLOBAL ENVIRONMENT FUND
ADVISOR CLASS -- 3.03% --
(F) DISTRIBUTIONS FROM NET INVESTMENT INCOME FOR THE YEARS ENDED 1999 AND
1997 INCLUDE A TAX RETURN OF CAPITAL OF $.02 AND $.03 RESPECTIVELY.
64
65
66
APPENDIX A
The following is additional information about the United Kingdom, Japan and
Greater China countries.
INVESTMENT IN UNITED KINGDOM ISSUERS. Investment in securities of United
Kingdom issuers involves certain considerations not present with investment in
securities of U.S. issuers. As with any investment not denominated in the U.S.
Dollar, the U.S. dollar value of the Fund's investment denominated in the
British pound sterling will fluctuate with pound sterling-dollar exchange rate
movements. Between 1972, when the pound sterling was allowed to float against
other currencies, and the end of 1992, the pound sterling generally depreciated
against most major currencies, including the U.S. Dollar. Between September and
December 1992, after the United Kingdom's exit from the Exchange Rate Mechanism
of the European Monetary System, the value of the pound sterling fell by almost
20% against the U.S. Dollar. The pound sterling has since recovered due to
interest rate cuts throughout Europe and an upturn in the economy of the United
Kingdom. The average exchange rate of the U.S. Dollar to the pound sterling was
1.50 in 1993 and 1.66 in 1998. On October 25, 1999 the U.S. dollar-pound
sterling exchange rate was 1.66.
The United Kingdom's largest stock exchange is the London Stock Exchange, which
is the third largest exchange in the world. As measured by the FT-SE 100 index,
the performance of the 100 largest companies in the United Kingdom reached
5,882.6 at the end of 1998, up approximately 15% from the end of 1997. The
FT-SE 100 index closed at 6009.40 on October 25, 1999.
The Economic and Monetary Union ("EMU") became effective on January 1, 1999.
When fully implemented in 2002, the EMU will establish a common currency for
European countries that meet the eligibility criteria and choose to
participate. Although the United Kingdom meets the eligibility criteria, the
government has not taken any action to join the EMU.
From 1979 until 1997 the Conservative Party controlled Parliament. In the May
1, 1997 general elections, however, the Labour Party, led by Tony Blair, won a
majority in Parliament, gaining 418 of 659 seats in the House of Commons. Mr.
Blair, who was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy framework intended to
protect monetary policy from political forces by vesting responsibility for
setting interest rates in a new Monetary Policy Committee headed by the
Governor of the Bank of England, as opposed to the Treasury. Prime Minister
Blair has also undertaken a comprehensive restructuring of the regulation of
the financial services industry. For further information regarding the United
Kingdom, see the SAI of New Europe Fund.
INVESTMENT IN JAPANESE ISSUERS. Investment in securities of Japanese issuers
involves certain considerations not present with investment in securities of
U.S. issuers. As with any investment not denominated in the U.S. Dollar, the
U.S. Dollar value of each Fund's investments denominated in the Japanese yen
will fluctuate with yen-dollar exchange rate movements. Between 1985 and 1995,
the Japanese yen generally appreciated against the U.S. dollar. Thereafter, the
Japanese yen generally depreciated against the U.S. Dollar until mid-1998, when
it began to appreciate. In September 1999 the Japanese yen reached a 43-month
high against the U.S. Dollar.
Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section
of which is reserved for larger, established companies. As measured by the
TOPIX, a capitalization-weighted composite index of all common stocks listed in
the First Section, the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 50% through the end of 1997. On
December 31, 1998 the TOPIX closed at 1086.99, down approximately 7% from the
end of 1997. On October 25, 1999 the TOPIX closed at 1534.27 up approximately
41% from the end of 1998.
Since the early 1980s, Japan has consistently recorded large current account
trade surpluses with the U.S. that have caused difficulties in the relations
between the two countries. On October 1, 1994, the U.S. and Japan reached an
agreement that was expected to to more open Japanese markets with respect to
trade in certain goods and services. Since then, the two countries have agreed
in principle to increase Japanese imports of American automobiles and
automotive parts, as well as other goods and services. Nevertheless, the
surpluses have persisted and it is expected that the friction between the U.S.
and Japan with respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers will be subject to uncertainty
resulting from the instability of recent Japanese ruling coalitions. From 1955
to 1993, Japan's government was controlled by a single political party. Between
August 1993 and October 1996, Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20, 1996, however,
Japan returned to a single-party government led by Ryutaro Hashimoto, a member
of the Liberal Democratic Party ("LDP"). While the LDP does not control a
majority of the seats in the parliament, subsequent to the 1996 elections it
established a majority in the House of Representatives as individual members
joined the ruling party. The popularity of the LDP declined, however, due to
the dissatisfaction with Mr. Hashimoto's leadership. In the July 1998 House of
Councillors election, the LDP's representation fell to 103 seats from 120
seats. As a result of the LDP's defeat, Mr. Hashimoto resigned as prime
minister and leader of the LDP. Mr. Hashimoto was replaced by Keizo Obuchi. On
January 14, 1999, the LDP formed a coalition government with a major opposition
party. As a result, Mr. Obuchi's administration strengthened its position in
the parliament, where it increased its majority in the House of Representatives
and reduced its shortfall in the House of Councillors. The LDP formed a new
three-party coalition government on October 5, 1999 that further strengthens
the position of Mr. Obuchi's administration in the parliament. For the past
several years, Japan's banking industry
67
has been weakened by a significant amount of problem loans. Japan's banks also
have had significant exposure to the recent financial turmoil in other Asian
markets. Following the insolvency of one of Japan's largest banks in November
1997, the government proposed several plans designed to strengthen the weakened
banking sector. In October 1998, the Japanese parliament approved several new
laws that made $508 billion in public funds available to increase the capital
of Japanese banks, to guarantee depositors' accounts and to nationalize the
weakest banks. It is unclear whether these laws will achieve their intended
effect. For further information regarding Japan, see the SAIs of ALLIANCE
INTERNATIONAL FUND and ALLIANCE ALL-ASIA INVESTMENT FUND.
INVESTMENT IN GREATER CHINA ISSUERS. China, in particular, but Hong Kong and
Taiwan, as well, in significant measure because of their existing and
increasing economic, and now in the case of Hong Kong, direct political ties
with China, may be subject to a greater degree of economic, political and
social instability than is the case in the United States.
China's economy is very much in transition. While the government still controls
production and pricing in major economic sectors, significant steps have been
taken toward capitalism and China's economy has become increasingly market
oriented. China's strong economic growth and ability to attract significant
foreign investment in recent years stem from the economic liberalization
initiated by Deng Xiaoping, who assumed power in the late 1970s. The economic
growth, however, has not been smooth and has been marked by extremes in many
respects of inordinate growth, which has not been tightly controlled, followed
by rigid measures of austerity.
The rapidity and erratic nature of the growth have resulted in inefficiencies
and dislocations, including at times high rates of inflation.
China's economic development has occurred notwithstanding the continuation of
the power of China's Communist Party and China's authoritarian government
control, not only of centrally planned economic decisions, but of many aspects
of the social structure. While a significant portion of China's population has
benefited from China's economic growth, the conditions of many leave much room
for improvement. Notwithstanding restrictions on freedom of expression and the
absence of a free press, and notwithstanding the extreme manner in which past
unrest has been dealt with, the 1989 Tianamen Square uprising being a recent
reminder, the potential for renewed popular unrest associated with demands for
improved social, political and economic conditions cannot be dismissed.
Following the death of Deng Xiaoping in February 1997, Jiang Zemin became the
leader of China's Communist Party. The transfer of political power has
progressed smoothly and Jiang's popularity and credibility have gradually
increased. Jiang continues to consolidate his power, but as of yet does not
appear to have the same degree of control as did Deng Xiaoping. Jiang has
continued the market-oriented policies of Deng. Currently, China's major
economic challenge centers on reforming or eliminating inefficient state-owned
enterprises without creating an unacceptable level of unemployment. Recent
capitalistic policies have in many respects effectively outdated the Communist
Party and the governmental structure, but both remain entrenched. The Communist
Party still controls access to governmental positions and closely monitors
governmental action.
In addition to the economic impact of China's internal political uncertainties,
the potential effect of China's actions, not only on China Itself, but on Hong
Kong and Taiwan as well, could also be significant.
China is heavily dependent on foreign trade, particularly with Hong Kong,
Japan, the U.S., South Korea and Taiwan. Political developments adverse to its
trading partners, as well as political and social repression, could cause the
U.S. and others to alter their trading policy towards China. For example, in
the U.S. the continued extension of normal trade relations (formerly known as
most favored nation trading status) with China, which is reviewed regularly and
was reviewed in 1999, is an issue of significant controversy. Loss of that
status would clearly hurt China's economy by reducing its exports. With much of
China's trading activity being funneled through Hong Kong and with trade
through Taiwan becoming increasingly significant, any sizable reduction in
demand for goods from China would have negative implications for both
countries. China is believed to be the largest investor in Hong Kong and its
markets and an economic downturn in China would be expected to reverberate
through Hong Kong's markets as well.
China has committed by treaty to preserve Hong Kong's autonomy and its
economic, political and social freedoms for fifty years from the July 1, 1997
transfer of sovereignty from Great Britain to China. Hong Kong is headed by a
chief executive, appointed by the central government of China, whose power is
checked by both the government of China and a Legislative Council. Although
Hong Kong voters voted overwhelmingly for pro-democracy candidates in the
recent election, it remains possible that China could exert its authority so as
to alter the economic structure, political structure or existing social policy
of Hong Kong. Investor and business confidence in Hong Kong can be
significantly affected by such developments, which in turn can affect markets
and business performance. In this connection, it is noted that a substantial
portion of the companies listed on the Hong Kong Stock Exchange are involved in
real estate-related activities. The securities markets of China and to a lesser
extent Taiwan, are relatively small, with the majority of market capitalization
and trading volume concentrated in a limited number of companies representing a
small number of industries. Consequently, ALLIANCE GREATER CHINA '97 FUND may
experience greater price volatility and significantly lower liquidity than a
portfolio invested solely in equity securities of U.S. companies. These markets
may be subject to greater influence by adverse events generally affecting the
market, and by large investors trading significant blocks of securities, than
is usual in the U.S. Securities settlements may in some instances be subject to
delays and related administrative uncertainties.
68
Foreign investment in the securities markets of China and Taiwan is restricted
or controlled to varying degrees. These restrictions or controls, which apply
to the ALLIANCE GREATER CHINA '97 FUND, may at times limit or preclude
investment in certain securities and may increase the cost and expenses of the
Fund. China and Taiwan require governmental approval prior to investments by
foreign persons or limit investment by foreign persons to only a specified
percentage of an issuer's outstanding securities or a specific class of
securities which may have less advantageous terms (including price) than
securities of the company available for purchase by nationals. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from China and Taiwan is controlled under regulations, including in
some cases the need for certain advance government notification or authority,
and if a deterioration occurs in a country's balance of payments, the country
could impose restrictions on foreign capital remittances.
ALLIANCE GREATER CHINA '97 FUND could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for repatriation, as well
as by the application to it of other restrictions on investment. The liquidity
of the Fund's investments in any country in which any of these factors exists
could be affected by any such factor or factors on the Fund's investments. The
limited liquidity in certain Greater China markets is a factor to be taken into
account in the Fund's valuation of portfolio securities in this category and
may affect the Fund's ability to dispose of securities in order to meet
redemption requests at the price and time it wishes to do so. It is also
anticipated that transaction costs, including brokerage commissions for
transactions both on and off the securities exchanges in Greater China
countries, will be higher than in the U.S.
Issuers of securities in Greater China countries are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as timely disclosure of information, insider trading rules, restrictions on
market manipulation and shareholder proxy requirements. Reporting, accounting
and auditing standards of Greater China countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in securities of Greater China country issuers
than to investors in securities of U.S. issuers.
Investment in Greater China companies that are in the initial stages of their
development involves greater risk than is customarily associated with
securities of more established companies. The securities of such companies may
have relatively limited marketability and may be subject to more abrupt or
erratic market movements than securities of established companies or broad
market indices.
69
For more information about the Funds, the following documents are available
upon request:
- - ANNUAL/SEMI-ANNUAL REPORTS TO SHAREHOLDERS
The Funds' annual and semi-annual reports to shareholders contain additional
information on the Funds' investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that
significantly affected a Fund's performance during its last fiscal year.
- - STATEMENT OF ADDITIONAL INFORMATION (SAI)
Each Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Funds' SAIs are
incorporated by reference into (and are legally part of) this prospectus.
You may request a free copy of the current annual/semi-annual report or the
SAI, or make inquiries concerning the Funds, by contacting your broker or other
financial intermediary, or by contacting Alliance:
BY MAIL: c/o Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07096-1520
BY PHONE: For Information: (800) 221-5672
For Literature: (800) 227-4618
Or you may view or obtain these documents from the Commission:
o Call the SEC at 1-202-942-8090 for information on the operation of the
Public Reference Room.
o Reports and other information about the Fund are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov
o Copies of the information may be obtained, after paying a duplicating fee,
by electronic request at [email protected], or by writing the
Commission's Public Reference Section, Wash. DC 20549-0102
You also may find more information about Alliance and the Funds on the internet
at www.Alliancecapital.com
Fund SEC File No.
- ------------------------------------------------------------------------------
Alliance Premier Growth Fund 811-06730
Alliance Health Care Fund 811-09329
Alliance Growth Fund 811-05088
Alliance Technology Fund 811-03131
Alliance Quasar Fund 811-01716
The Alliance Fund 811-00204
Alliance Growth & Income 811-00126
Alliance Balanced Shares 811-00134
Alliance Utility Income Fund 811-07916
Alliance Real Estate Investment Fund 811-07707
Alliance New Europe Fund 811-06028
Alliance Worldwide Privatization Fund 811-08426
Alliance International Premier Growth Fund 811-08527
Alliance Global Small Cap Fund 811-01415
Alliance International Fund 811-03130
Alliance Greater China '97 Fund 811-08201
Alliance All-Asia Investment Fund 811-08776
Alliance Global Environment Fund 811-05993
70
71
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(LOGO)
ALLIANCE REAL ESTATE
INVESTMENT FUND, INC.
_______________________________________________________________
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
_______________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1999
_______________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for the Alliance Real Estate Investment Fund, Inc.
(the "Fund") that offers Class A, Class B and Class C shares of
the Fund and the current Prospectus for the Fund that offers the
Advisor Class shares of the Fund (the "Advisor Class Prospectus"
and, together with the Prospectus for the Fund that offers the
Class A, Class B and Class C shares of the Fund, the
"Prospectus"). Copies of such Prospectuses may be obtained by
contacting Alliance Fund Services, Inc. at the address or the
"For Literature" telephone number shown above.
TABLE OF CONTENTS
Page
Description of the Fund..................................
Management of the Fund...................................
Expenses of the Fund.....................................
Purchase of Shares.......................................
Redemption and Repurchase of Shares......................
Shareholder Services.....................................
Net Asset Value..........................................
Dividends, Distributions and Taxes.......................
Portfolio Transactions...................................
General Information......................................
Report of Independent Auditors and Financial Statements..
Appendix A: Certain Employee Benefit Plans.............. A-1
_____________________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
_______________________________________________________________
DESCRIPTION OF THE FUND
_______________________________________________________________
Alliance Real Estate Investment Fund, Inc. (the "Fund")
is a diversified, open-end investment company. The Fund's
investment objective is "fundamental" and cannot be changed
without a shareholder vote. Except as noted, the Fund's
investment policies are not fundamental and thus can be changed
without a shareholder vote. The Fund will not change these
policies without notifying its shareholders. There is no
guarantee that the Fund will achieve its investment objective.
Investment Objective
The Fund's investment objective is to seek a total
return on its assets from long-term growth of capital and from
income principally through investing in a portfolio of equity
securities of issuers that are primarily engaged in or related to
the real estate industry.
Investment Policies
Under normal circumstances, at least 65% of the Fund's
total assets will be invested in equity securities of real estate
investment trusts ("REITs") and other real estate industry
companies. A "real estate industry company" is a company that
derives at least 50% of its gross revenues or net profits from
the ownership, development, construction, financing, management
or sale of commercial, industrial or residential real estate or
interests therein. The equity securities in which the Fund will
invest for this purpose consist of common stock, shares of
beneficial interest of REITs and securities with common stock
characteristics, such as preferred stock or convertible
securities ("Real Estate Equity Securities").
The Fund may invest up to 35% of its total assets in
(a) securities that directly or indirectly represent
participations in, or are collateralized by and payable from,
mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real
estate mortgage investment conduit ("REMIC") certificates and
collateralized mortgage obligations ("CMOs") and (b) short-term
investments. These instruments are described below. The risks
associated with the Fund's transactions in REMICs, CMOs and other
types of mortgage-backed securities, which are considered to be
derivative securities, may include some or all of the following:
market risk, leverage and volatility risk, correlation risk,
credit risk and liquidity and valuation risk. See "Risk
Considerations--Risk Factors Associated with the Real Estate
2
<PAGE>
Industry" in the Prospectus for a description of these and other
risks.
As to any investment in Real Estate Equity Securities,
the analysis of Alliance Capital Management L.P., the Fund's
investment adviser (the "Adviser") will focus on determining the
degree to which the company involved can achieve sustainable
growth in cash flow and dividend paying capability. The Adviser
believes that the primary determinant of this capability is the
economic viability of property markets in which the company
operates and that the secondary determinant of this capability is
the ability of management to add value through strategic focus
and operating expertise. The Fund will purchase Real Estate
Equity Securities when, in the judgment of the Adviser, their
market price does not adequately reflect this potential. In
making this determination, the Adviser will take into account
fundamental trends in underlying property markets as determined
by proprietary models, site visits conducted by individuals
knowledgeable in local real estate markets, price-earnings ratios
(as defined for real estate companies), cash flow growth and
stability, the relationship between asset value and market price
of the securities, dividend payment history, and such other
factors which the Adviser may determine from time to time to be
relevant. The Adviser will attempt to purchase for the Fund Real
Estate Equity Securities of companies whose underlying portfolios
are diversified geographically and by property type.
The Fund may invest without limitation in shares of
REITs. 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 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. The Fund may invest up to 5% of its total assets in Real
Estate Equity Securities of non-U.S. issuers.
The Fund's investment strategy with respect to Real
Estate Equity Securities is based on the premise that property
market fundamentals are the primary determinant of growth
underlying the performance of Real Estate Equity Securities.
3
<PAGE>
Value and management further distinguishes the most attractive
Real Estate Equity Securities. The Fund's research and
investment process is designated to identify those companies with
strong property fundamentals and strong management teams. This
process is comprised of real estate market research, specific
property inspection, and securities analysis. Alliance believes
that this process will result in a portfolio that will consist of
Real Estate Equity Securities of companies that own assets in the
most desirable markets across the country, diversified
geographically and by property type.
To implement the Fund's research and investment process,
Alliance has retained the consulting services of CB Richard
Ellis, Inc. ("CBRE"), a publicly held company and the largest
real estate services company in the United States. CBRE's
business includes real estate brokerage, property and facilities
management, and real estate finance and investment advisory
activities. The universe of property owning real estate industry
firms consists of approximately 142 companies of sufficient size
and quality to merit consideration for investment by the Fund.
As consultant to Alliance, CBRE provides access to its
proprietary model, REIT-Score, which analyzes the approximately
18,000 properties owned by these 142 companies. Using
proprietary databases and algorithms, CBRE analyzes local market
rent, expenses, occupancy trends, market specific transaction
pricing, demographic and economic trends, and leading indicators
of real estate supply such as building permits. Over 1,000
asset-type specific geographic markets are analyzed and ranked on
a relative scale by CBRE in compiling its REIT-Score database.
The relative attractive of these real estate industry companies
is similarly ranked based on the composite rankings of the
properties they own.
Once the universe of real estate industry companies has
been distilled through the market research process, CBRE's local
market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific
location, condition, and sub-market trends. CBRE's use of
locally based real estate professionals provides Alliance with a
window on the operations of the portfolio companies as
information can immediately be put in the context of local market
events. Only those companies whose specific property portfolios
reflect the promise of their general markets will be considered
for investment by the Fund.
The Fund may invest in illiquid securities including up
to 15% of its total assets in non-publicly traded securities.
4
<PAGE>
Additional Investment Policies and Practices
To the extent not described in the Prospectus, set forth
below is additional information regarding the Fund's investment
policies and practices. Except as otherwise noted, the Fund's
investment policies are not designated "fundamental policies"
within the meaning of the Investment Company Act of 1940, as
amended (the "1940 Act") and, therefore, may be changed by the
Directors of the Fund without a shareholder vote. However, the
Fund will not change its investment policies without
contemporaneous written notice to shareholders.
Convertible Securities. The Fund may invest up to 15%
of its total assets in convertible securities of issuers whose
common stocks are eligible for purchase by the Fund under the
investment policies described above. 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 which 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 decline as interest
rates increase 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 do enable the investor to benefit from increases in
the market price of the underlying common stock.
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.
Forward Commitments. No forward commitments will be
made by the Fund if, as a result, the Fund's aggregate
commitments under such transactions would be more than 30% of the
then current value of the Fund's total assets. 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
5
<PAGE>
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's
right to receive or deliver a security under a forward commitment
may be sold prior to the settlement date, but the Fund will enter
into forward commitments only with the intention of actually
receiving or delivering the securities, as the case may be. To
facilitate such transactions, the Fund's custodian will maintain,
in a segregated account of the Fund, liquid assets having value
equal to, or greater than, any commitments to purchase securities
on a forward commitment basis and, with respect to forward
commitments to sell portfolio securities of the Fund, the
portfolio securities themselves. If the Fund, however, chooses
to dispose of the right to receive or deliver a security subject
to a forward commitment prior to the settlement date of the
transaction, it may incur a gain or loss. In the event the other
party to a forward commitment transaction were to default, the
Fund might lose the opportunity to invest money at favorable
rates or to dispose of securities at favorable prices.
Standby Commitment Agreements. 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 net asset value. 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. 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.
Repurchase Agreements. The Fund may enter into
repurchase agreements pertaining to U.S. Government Securities
with member banks of the Federal Reserve System or "primary
dealers" (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
6
<PAGE>
its custodian and such primary dealers. A repurchase agreement
arises when a buyer purchases a security and simultaneously
agrees to resell it to the vendor at an agreed-upon future date,
normally one day or a few days later. The resale price is
greater than the purchase price, reflecting an agreed-upon
interest rate which 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 rather than the coupon rate on the
purchased security. This results in a fixed rate of return
insulated from market fluctuations during such period. Such
agreements permit the Fund to keep all of its assets at work
while retaining "overnight" flexibility in pursuit of investments
of a longer-term nature. The Fund requires continual maintenance
by its custodian for its account in the Federal Reserve/Treasury
Book Entry System of collateral in an amount equal to, or in
excess of, the resale price. In the event a vendor defaulted on
its repurchase obligation, the Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral were
less than the repurchase price. In the event of a vendor's
bankruptcy, the Fund might be delayed in, or prevented from,
selling the collateral for its benefit. 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.
Repurchase agreements may exhibit the characteristics of
loans by the Fund. During the term of the repurchase agreement,
the Fund retains the security subject to the repurchase agreement
as collateral securing the seller's repurchase obligation,
continually monitors on a daily basis the market value of the
security subject to the agreement and requires the seller to
deposit with the Fund collateral equal to any amount by which the
market value of the security subject to the repurchase agreement
falls below the resale amount provided under the repurchase
agreement.
Short Sales. When engaging in a short sale, in addition
to depositing collateral with a broker-dealer, the Fund is
currently required under the 1940 Act to establish a segregated
account with its custodian and to maintain therein liquid assets
in an amount that, when added to cash or securities deposited
with the broker-dealer, will at all times equal at least 100% of
the current market value of the security sold short.
Illiquid Securities. Historically, illiquid securities
have included securities subject to contractual or legal
restrictions on resale because they have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and
repurchase agreements having a maturity of longer than seven
7
<PAGE>
days. Securities which have not been registered under the
Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted 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 might also have to register such restricted
securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.
The Fund may invest in restricted securities issued
under Section 4(2) of the Securities Act, which exempts from
registration "transactions by an issuer not involving any public
offering." Section 4(2) instruments are restricted in the sense
that they can only be resold through the issuing dealer to
institutional investors and in private transactions; they cannot
be resold to the general public without registration.
Rule 144A under 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. Rule 144A has already produced enhanced liquidity for
many restricted securities, and market liquidity for such
securities may continue to expand as a result of this regulation
and the consequent inception of the PORTAL System, an automated
system for the trading, clearance and settlement of unregistered
8
<PAGE>
securities of domestic and foreign issuers sponsored by the
National Association of Securities Dealers, Inc.
The Adviser, under the supervision of the Board of
Directors, will monitor the liquidity of restricted securities in
the Fund's portfolio. In reaching liquidity decisions, the
Adviser will consider, among other factors, the following:
(1) the frequency of trades and quotes for the security; (2) the
number of dealers making 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 Securities and Exchange Commission (the
"Commission") interpretation or position with respect to such
type of security.
Defensive Position. For temporary defensive purposes,
the Fund may vary from its investment objectives during periods
in which conditions in securities markets or other economic or
political conditions warrant. During such periods, the Fund may
increase without limit its position in short-term, liquid, high-
grade debt securities, which may include securities issued by the
U.S. government, its agencies and, instrumentalities ("U.S.
Government Securities"), bank deposits, money market instruments,
short-term (for this purpose, securities with a remaining
maturity of one year or less) debt securities, including notes
and bonds, and short-term foreign currency denominated debt
securities rated A or higher by Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Services ("S&P"), Duff &
Phelps Credit Rating Co. ("Duff & Phelps") or Fitch Investors
Service, Inc. ("Fitch") or, if not so rated, of equivalent
investment quality as determined by the Adviser.
Subject to its policy of investing at least 65% of its
total assets in equity securities of real estate investment
trusts and other real estate industry companies, the Fund may
also at any time temporarily invest funds awaiting reinvestment
or held as reserves for dividends and other distributions to
shareholders in money market instruments referred to above.
Portfolio Turnover. Generally, the Fund's policy with
respect to portfolio turnover is to sell any security whenever,
in the judgment of the Adviser, its appreciation possibilities
have been substantially realized or the business or market
prospects for such security have deteriorated, irrespective of
the length of time that such security has been held. The Adviser
anticipates that the Fund's annual rate of portfolio turnover
will not exceed 100%. A 100% annual turnover rate would occur if
9
<PAGE>
all the securities in the Fund's portfolio were replaced once
within a period of one year. The turnover rate has a direct
effect on the transaction costs to be borne by the Fund, and as
portfolio turnover increases it is more likely that the Fund will
realize short-term capital gains or losses.
Certain Fundamental Investment Policies
The following restrictions, which supplement those set
forth in the Fund's Prospectus, may not be changed without
approval by the vote of a majority of the Fund's outstanding
voting securities, which means the affirmative vote of the
holders of (i) 67% or more or the shares represented at a meeting
at which more than 50% of the outstanding shares are represented,
or (ii) more than 50% of the outstanding shares, whichever is
less.
To reduce investment risk, as a matter of fundamental
policy the Fund may not:
(i) with respect to 75% of its total assets,
have such assets represented by other than: (a) cash and
cash items, (b) U.S. Government securities, or (c)
securities of any one issuer (other than the U.S.
Government and its agencies or instrumentalities) not
greater in value than 5% of the Fund's total assets, and
not more than 10% of the outstanding voting securities
of such issuer;
(ii) purchase the securities of any one issuer,
other than the U.S. Government and its agencies or
instrumentalities, if as a result (a) the value of the
holdings of the Fund in the securities of such issuer
exceeds 25% of its total assets, or (b) the Fund owns
more than 25% of the outstanding securities of any one
class of securities of such issuer;
(iii) invest 25% or more of its total assets in
the securities of issuers conducting their principal
business activities in any one industry, other than the
real estate industry in which the Fund will invest at
least 25% or more of its total assets, except that this
restriction does not apply to U.S. Government
securities;
(iv) purchase or sell real estate, except that it
may purchase and sell securities of companies which deal
in real estate or interests therein, including Real
Estate Equity Securities;
10
<PAGE>
(v) borrow money except for temporary or
emergency purposes or to meet redemption requests, in an
amount not exceeding 5% of the value of its total assets
at the time the borrowing is made;
(vi) pledge, hypothecate, mortgage or otherwise
encumber its assets, except to secure permitted
borrowings;
(vii) make loans except through (a) the purchase
of debt obligations in accordance with its investment
objectives and policies; (b) the lending of portfolio
securities; or (c) the use of repurchase agreements;
(viii) participate on a joint or joint and several
basis in any securities trading account;
(ix) invest in companies for the purpose of
exercising control;
(x) issue any senior security within the meaning
of the 1940 Act;
(xi) make short sales of securities or maintain a
short position, unless at all times when a short
position is open not more than 25% of the Fund's net
assets (taken at market value) is held as collateral for
such sales at any one time; or
(xii) (a) purchase or sell commodities or
commodity contracts including futures contracts;
(b) invest in interests in oil, gas, or other mineral
exploration or development programs; (c) purchase
securities on margin, except for such short-term credits
as may be necessary for the clearance of transactions;
and (d) 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.
In connection with the qualification or registration of
the Fund's shares for sale under the securities laws of certain
states, the Fund has agreed, in addition to the foregoing
investment restrictions, and as a matter of non-fundamental
investment policy, that it will not (i) invest more than 5% of
its total assets in warrants, except for warrants acquired by the
Fund as a part of a unit or attached to securities, provided that
not more than 2% of the Fund's net assets may be invested in
warrants that are not listed on the New York Stock Exchange or
American Stock Exchange; (ii) purchase or sell real property
11
<PAGE>
(excluding REITs and readily marketable securities of companies
which invest in real estate); or (iii) invest more than 10% of
its total assets in restricted securities (excluding securities
that may be resold pursuant to Rule 144A under the Securities
Act).
_______________________________________________________________
MANAGEMENT OF THE FUND
_______________________________________________________________
Adviser
Alliance Capital Management L.P., a Delaware limited
partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision of the Fund's Board of Directors (see "Management of
the Fund" in the Prospectus).
The Adviser is a leading international adviser managing
client accounts with assets as of September 30, 1999 totaling
more than $317 billion (of which more than $143 billion
represented assets of investment companies). As of September 30,
1999, the Adviser managed retirement assets for many of the
largest public and private employee benefit plans (including 28
of the nation's FORTUNE 100 companies), for public employee
retirement funds in 31 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide.
The 52 registered investment companies managed by the Adviser,
comprising 118 separate investment portfolios, currently have
approximately 4.8 million shareholder accounts.
Alliance Capital Management Corporation ("ACMC") is the
general partner of the Adviser. As of September 30, 1999, The
Equitable Life Assurance Society of the United States
("Equitable"), ACMC, Inc. and Equitable Capital Management
Corporation ("ECMC") were the beneficial owners of approximately
56% of the outstanding Units of the Adviser. ACMC, ECMC and
ACMC, Inc. are wholly owned subsidiaries of Equitable, one of the
largest life insurance companies in the United States. ECMC is a
registered investment adviser and ACMC, Inc. is a holding company
for Units of the Adviser. Equitable is a wholly owned subsidiary
of AXA Financial, Inc. ("AXA Financial"), a Delaware corporation
whose shares are traded on the New York Stock Exchange. AXA
Financial serves as the holding company for the Adviser,
Equitable and Donaldson, Lufkin & Jenrette, Inc., a broker-dealer
holding company. As of September 30, 1999, AXA, a French
12
<PAGE>
insurance holding company, owned approximately 56% of the issued
and outstanding shares of the common stock of AXA Financial.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Directors and officers of
the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnishes the Fund, without charge,
management supervision and assistance and office facilities and
provides persons satisfactory to the Fund's Board of Directors to
serve as the Fund's officers.
The Advisory Agreement is terminable without penalty by
a vote of a majority of the Fund's outstanding voting securities
or by a vote of a majority of the Fund's Directors on 60 days'
written notice, or by the Adviser on 60 days' written notice, and
will automatically terminate in the event of its assignment. The
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 became effective on August 27,
1996. The Advisory Agreement was approved for the current year
ending July 31, 2000 at a meeting of the Board of Directors on
July 14, 1999, and thereafter continues in effect for successive
twelve-month periods (computed from each August 1), provided,
however, 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 of Directors, including in
either case approval by a majority of the Directors who are not
parties to the Advisory Agreement or interested persons of any
such party as defined by the 1940 Act.
Under the Advisory Agreement, the Adviser furnishes
investment advice and recommendations to the Fund and provides
office space in New York, order placement facilities and persons
satisfactory to the Fund's Board of Directors to act as officers
of the Fund. Such officers, as well as certain Directors of the
Fund, may be employees of the Adviser or directors, officers or
employees of its affiliates. For the Adviser's services under the
Advisory Agreement, the Fund pays the Adviser a monthly fee at an
annualized rate of .90% of the value of the Fund's average daily
net assets. For the fiscal years ended in August 31, 1997, 1998
and 1999, the Adviser received from the Fund advisory fees of
$1,077,321, $3,938,272 and $2,889,075, respectively.
The Fund has, under the Advisory Agreements, assumed the
obligation for payment of all its other expenses. As to the
obtaining of services other than those specifically provided to
13
<PAGE>
the Fund by the Adviser, the Fund may employ its own personnel.
For such services, it also may 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 must be
specifically approved by the Fund's Directors. For the fiscal
year ended August 31, 1999, the Fund paid in respect of such
services a total of $124,000.
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The Adviser
may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients
simultaneously with the Fund. If transactions on behalf of more
than one client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is
the policy of the Adviser to allocate advisory recommendations
and the placing of orders in a manner which is deemed equitable
by the Adviser to the accounts involved, including the Fund.
When two or more of the clients of the Adviser (including the
Fund) are purchasing or selling the same security on a given day
from the same broker-dealer, such transactions may be averaged as
to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following registered investment
companies: AFD Exchange Reserves, Inc., Alliance All-Asia
Investment Fund, Inc., Alliance Balanced Shares, Inc., Alliance
Bond Fund, Inc., Alliance Capital Reserves, Alliance Global
Dollar Government Fund, Inc., Alliance Global Environment Fund,
Inc., Alliance Global Small Cap Fund, Inc., Alliance Global
Strategic Income Trust, Inc., Alliance Government Reserves,
Alliance Greater China '97 Fund, Inc., Alliance Growth and Income
Fund, Inc., Alliance Health Care Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Institutional Funds, Inc., Alliance
Institutional Reserves, Inc., Alliance International Fund,
Alliance International Premier Growth Fund, Inc., Alliance
Limited Maturity Government Fund, Inc., Alliance Money Market
Fund, Alliance Mortgage Securities Income Fund, Inc., Alliance
Multi-Market Strategy Trust, Inc., Alliance Municipal Income
Fund, Inc., Alliance Municipal Income Fund II, Alliance Municipal
Trust, Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance Select Investor Series, Inc., Alliance
Technology Fund, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance Worldwide
Privatization Fund, Inc., The Alliance Fund, Inc., The Alliance
Portfolios, and The Hudson River Trust, all registered open-end
investment companies; and to ACM Government Income Fund, Inc.,
14
<PAGE>
ACM Government Securities Fund, Inc., ACM Government Spectrum
Fund, Inc., ACM Government Opportunity Fund, Inc., ACM Managed
Income Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM
Municipal Securities Income Fund, Inc., Alliance All-Market
Advantage Fund, Inc., Alliance World Dollar Government Fund,
Inc., Alliance World Dollar Government Fund II, Inc., The Austria
Fund, Inc., The Korean Investment Fund, Inc., The Southern Africa
Fund, Inc. and The Spain Fund, Inc., all registered closed-end
investment companies.
Directors and Officers
The Directors and principal officers of the Fund, their
ages and their principal occupations during the past five years
are set forth below. Unless otherwise specified, the address of
each of the following persons is 1345 Avenue of the Americas, New
York, New York 10105.
Directors
JOHN D. CARIFA,* 54, Chairman of the Board, is the
President, Chief Operating Officer and a Director of Alliance
Capital Management Corporation ("ACMC"), with which he has been
associated since prior to 1994.
RUTH BLOCK, 68, was formerly an Executive Vice President
and Chief Insurance Officer of Equitable. She is a Director of
Ecolab Incorporated (specialty chemicals) and BP Amoco
Corporation (oil and gas). Her address is P.O. Box 4623
Stamford, Connecticut 06903.
DAVID H. DIEVLER, 70, is an independent consultant. He
was formerly a Senior Vice President of ACMC until December 1994.
His address is P.O. Box 167, Spring Lake, New Jersey 07762.
JOHN H. DOBKIN, 57, has been the President of Historic
Hudson Valley (historic preservation) since prior to 1994. His
address is 150 White Plains Road, Tarrytown, New York 10019.
WILLIAM H. FOULK, JR., 67, is an Investment Adviser and
an independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he has been associated since prior to 1994. His address is
Room 100, 2 Greenwich Plaza, Greenwich, Connecticut 06830.
HOWARD E. HASSLER, 70, is currently a consultant
specializing in retailing, finance and real estate. Former
____________________
* An interested person of the Fund as defined in the 1940
Act.
15
<PAGE>
Chairman and Chief Executive Officer of Brooks Fashion Stores,
Inc. (specialty clothing stores); Former Chairman, President and
Chief Operating Officer of Allied Stores Corporation (department
and specialty stores), 1987; Executive Vice President and
Director, Allied Stores Corporation from June 1984 to June 1987.
His address is 25 Sutton Place South, New York, New York 10022.
DR. JAMES M. HESTER, 75, has been President of the Harry
Frank Guggenheim Foundation, with which he has been associated
since prior to 1994. He was formerly President of New York
University, the New York Botanical Garden and Rector of the
United Nations University. His address is 25 Cleveland Lane,
Princeton, New Jersey 08540.
CLIFFORD L. MICHEL, 60, is a member of the law firm of
Cahill Gordon & Reindel, with which he has been associated since
prior to 1994. He is President and Chief Executive Officer of
Wenonah Development Company (investments) and a Director of
Placer Dome, Inc. (mining). His address is St. Bernard's Road,
Gladstone, New Jersey 07934.
DONALD J. ROBINSON, 65, is Senior Counsel to the law
firm of Orrick, Herrington & Sutcliffe and was formerly a senior
partner and a member of the Executive Committee of that firm. He
was also a Trustee of the Museum of the City of New York from
1977 to 1995. His address is 98 Hell's Peak Road, Weston,
Vermont 05161.
Officers
JOHN D. CARIFA, President, see biography above.
KATHLEEN A. CORBET, 39, Senior Vice President, is an
Executive Vice President of ACMC, with which she has been
associated since prior to 1994.
DANIEL G. PINE, 47, Senior Vice President, is a Senior
Vice President of ACMC with which he has been associated since
prior to 1996. Previously, he was a Senior Vice President of
Desai Capital Management since prior to 1994.
THOMAS BARDONG, 54, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1994.
DAVID A. KRUTH, 35, Vice President, is a Vice President
of ACMC, with which he has been associated since 1997. Prior
thereto, he was a Senior Vice President of Yarmouth Group.
EDMUND P. BERGAN, JR., 49, Secretary, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
16
<PAGE>
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS"), with which
he has been associated since prior to 1994.
ANDREW L. GANGOLF, 45, Assistant Secretary, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since December 1994. Prior thereto, he was a
Vice President and Assistant Secretary of Delaware Management
Co., Inc.
DOMENICK PUGLIESE, 38, Assistant Secretary, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since May 1995. Prior thereto, he was a Vice
President and Counsel of Concord Holding Corporation since prior
to 1994.
EMILIE D. WRAPP, 43, Assistant Secretary, is a Vice
President and Assistant General Counsel of AFD, with which she
has been associated since prior to 1994.
MARK D. GERSTEN, 49, Treasurer and Chief Financial
Officer, is a Senior Vice President of AFS and a Vice President
of AFD, with which he has been associated since prior to
1994.
VINCENT S. NOTO, 34, Controller, is a Vice President of
AFS, with which he has been associated since prior to 1994.
The aggregate compensation to be paid by the Fund to
each of the Directors during its fiscal year ended August 31,
1999, and the aggregate compensation paid to each of the
Directors during calendar year 1998 by all of the registered
investment companies to which the Adviser provides investment
advisory services (collectively, the "Alliance Fund Complex"),
and the total number of registered investment companies (and
separate investment portfolios within those companies) in the
Alliance Fund Complex with respect to which each of the Directors
serves as a director or trustee, are set forth below. Neither
the Fund nor any other fund in the Alliance Fund Complex provides
compensation in the form of pensions or retirement benefits to
any of its directors or trustees. Certain of the Directors is a
director or trustee of one or more other registered investment
companies in the Alliance Fund Complex.
17
<PAGE>
Total Number
of Investment
Total Number Portfolios
of Funds in Within the
the Alliance Alliance Fund
Total Fund Complex, Complex,
Compensation Including the Including
From the Fund, as to the Fund, as
Alliance Fund which the to which the
Aggregate Complex, Director is a Director is
Compensation Including the Director or a Director
Name of Director From the Fund Fund Trustee or Trustee
________________ _____________ _____________ ______________ _____________
John D. Carifa $ $-0- 50 116
Ruth Block $3,467 $180,763 37 79
David H. Dievler $3,584 $216,288 44 86
John H. Dobkin $3,586 $185,363 42 97
William H. Foulk, Jr. $3,587 $241,003 45 111
Howard E. Hassler $3,000 $ 85,250 2 15
Dr. James M. Hester $3,589 $172,913 38 80
Clifford L. Michel $3,589 $187,763 39 96
Donald J. Robinson $2,833 $193,709 41 105
As of October 8, 1999, the Directors and officers of the
Fund as a group owned less than 1% of the shares the Fund.
_______________________________________________________________
EXPENSES OF THE FUND
_______________________________________________________________
Distribution Services Agreement
The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Principal Underwriter to distribute
the Fund's shares and to permit the Fund to pay distribution
services fees to defray expenses associated with the distribution
of its Class A shares, Class B shares and Class C shares in
accordance with a plan of distribution which is included in the
Agreement and has been duly adopted and approved in accordance
with Rule 12b-1 under the 1940 Act (the "Rule 12b-1 Plan").
During the Fund's fiscal year ended August 31, 1999, the
Fund paid distribution services fees for expenditures under the
Agreement, with respect to Class A shares, in amounts aggregating
$125,363 which constituted 0.30%, annualized, of the Fund's
aggregate average daily net assets attributable to Class A shares
during the period, and the Adviser made payments from its own
18
<PAGE>
resources as described above aggregating $383,071. Of the
$508,434 paid by the Fund and the Adviser under the Rule 12b-1
Plan with respect to the Class A shares, $36,421 was spent on
advertising, $11,896 on the printing and mailing of prospectuses
for persons other than current shareholders, 252,098 for
compensation to broker-dealers and other financial intermediaries
(including, $94,183 to the Fund's Principal Underwriters),
$35,352 for compensation to sales personnel, $172,667 was spent
on printing of sales literature, travel, entertainment, due
diligence and other promotional expenses.
During the Fund's fiscal year ended August 31, 1999, the
Fund paid distribution services fees for expenditures under the
Agreement, with respect to Class B shares, in amounts aggregating
$2,206,739, which constituted 1.00%, annualized, of the Fund's
aggregate average daily net assets attributable to Class B shares
during the period, and the Adviser made payments from its own
resources as described above aggregating $-0-. Of the $2,206,739
paid by the Fund and the Adviser under the Rule 12b-1 Plan with
respect to the Class B shares, $62,783 was spent on advertising,
$32,088 on the printing and mailing of prospectuses for persons
other than current shareholders, $260,466 for compensation to
broker-dealers and other financial intermediaries (including,
$170,628 to the Fund's Principal Underwriters), $20,629 for
compensation to sales personnel, $287,627 was spent on printing
of sales literature, travel, entertainment, due diligence and
other promotional expenses, $439,449 was spent on interest on
Class B shares financing and $1,103,697 was used to offset the
distribution service fees paid in prior years.
During the Fund's fiscal year ended August 31, 1999, the
Fund paid distribution services fees for expenditures under the
Agreement, with respect to Class C shares, in amounts aggregating
$560,012, which constituted 1.00%, annualized of the Fund's
aggregate average daily net assets attributable to Class C shares
during the period, and the Adviser made payments from its own
resources as described above aggregating $-0-. Of the $560,012
paid by the Fund and the Adviser under the Rule 12b-1 Plan with
respect to the Class C shares, $$24,438 was spent on advertising,
$9,670 on the printing and mailing of prospectuses for persons
other than current shareholders, $342,137 for compensation to
broker-dealers and other financial intermediaries (including,
$67,506 to the Fund's Principal Underwriters), $7,751 for
compensation to sales personnel, $115,868 was spent on printing
of sales literature, travel, entertainment, due diligence and
other promotional expenses, $27,270 was spent on interest on
Class C shares financing and $32,878 was used to offset the
distribution service fees paid in prior years.
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
19
<PAGE>
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge and at the same time to permit the Principal
Underwriter to compensate broker-dealers in connection with the
sale of such shares. In this regard, the purpose and function of
the combined contingent deferred sales charge and distribution
services fee on the Class B shares and Class C shares are the
same as those of the initial sales charge and distribution
services fee with respect to the Class A shares in that in each
case the sales charge and distribution services fee provide for
the financing of the distribution of the relevant class of the
Fund's shares.
With respect to Class A shares of the Fund, distribution
expenses accrued by AFD in one fiscal year may not be paid from
distribution services fees received from the Fund in subsequent
fiscal years. AFD's compensation with respect to Class B and
Class C shares for any given year, however, will probably exceed
the distribution services fee payable under the Rule 12b-1 Plan
with respect to the class involved and, in the case of Class B
and Class C shares, payments received from contingent deferred
sales charges ("CDSCs"). The excess will be carried forward by
AFD and reimbursed from distribution services fees payable under
the Rule 12b-1 Plan with respect to the class involved and, in
the case of Class B and Class C shares, payments subsequently
received through CDSCs, so long as the Rule 12b-1 Plan is in
effect.
Unreimbursed distribution expenses incurred as of
the end of the Fund's most recently completed fiscal year, and
carried over for reimbursement in future years in respect of the
Class B and Class C shares for the Fund were, respectively,
$11,892,181 (7.05% of the net assets of Class B) and $666,846
(1.49% of the net assets of Class C).
The Rule 12b-1 Plan is in compliance with rules of the
National Association of Securities Dealers, Inc. which
effectively limit the annual asset-based sales charges and
service fees that a mutual fund may pay on a class of shares to
.75% and .25%, respectively, of the average annual net assets
attributable to that class. The rules also limit the aggregate
of all front-end, deferred and asset-based sales charges imposed
with respect to a class of shares by a mutual fund that also
charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per
annum.
In approving the 12b-1 Plan, the Directors of the Fund
determined that there was a reasonable likelihood that the Rule
12b-1 Plan would benefit the Fund and its shareholders. The
20
<PAGE>
distribution services fee of a particular class will not be used
to subsidize the provision of distribution services with respect
to any other class.
The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.
The Agreement will continue in effect for successive
twelve-month periods (computed from each November 1), provided,
however, that such continuance is specifically approved at least
annually by the Directors of the Fund or by vote of the holders
of a majority of the outstanding voting securities (as defined in
the 1940 Act) of that class, and, in either case, by a majority
of the Directors of the Fund who are not parties to the Agreement
or interested persons, as defined in the 1940 Act, of any such
party (other than as directors of the Fund) and who have no
direct or indirect financial interest in the operation of the
Rule 12b-1 Plan or any agreement related thereto. Most recently
the continuance of the Agreement until October 31, 2000 was
approved by a vote, cast in person, of the Directors, including a
majority of the Directors who are not "interested persons," as
defined in the 1940 Act, at their meeting held on July 14,
1999.
In the event that the Rule 12b-1 Plan is terminated or
not continued with respect to the Class A shares, Class B shares
or Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class, and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.
The Glass-Steagall Act and other applicable laws may
limit the ability of a bank or other depository institution to
become an underwriter or distributor of securities. However, in
the opinion of the Fund's management, based on the advice of
counsel, these laws do not prohibit such depository institutions
from providing services for investment companies such as the
administrative, accounting and other services referred to in the
Agreement. In the event that a change in these laws prevented a
bank from providing such services, it is expected that other
services arrangements would be made and that shareholders would
not be adversely affected.
21
<PAGE>
Transfer Agency Agreement
AFS, an indirect wholly-owned subsidiary of the Adviser
located at 500 Plaza Drive, Secaucus, New Jersey 07094, receives
a transfer agency fee per account holder of each of the Class A
shares, Class B shares, Class C Shares and Advisor Class shares
of the Fund, plus reimbursement for out-of-pocket expenses. The
transfer agency fee with respect to the Class B shares and
Class C shares is higher than the transfer agency fee with
respect to the Class A shares and Advisor Class shares,
reflecting the additional costs associated with the Class B and
Class C contingent deferred sales charge. For the fiscal year
ended August 31, 1999, the Fund paid AFS $395,473 for transfer
agency services.
_______________________________________________________________
PURCHASE OF SHARES
_______________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How To Buy Shares."
General
Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge and, as long as the shares are held for one
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
Class shares, without any initial, contingent deferred or asset-
based sales charge, in each case as described below. Shares of
the Fund that are offered subject to a sales charge are offered
through (i) investment dealers that are members of the National
Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Principal Underwriter
("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered
into selected agent agreements with the Principal Underwriter
("selected agents"), and (iii) the Principal Underwriter.
Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, (ii) through self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that have at least
1,000 participants or $25 million in assets, (iii) by the
22
<PAGE>
categories of investors described in clauses (i) through (v)
below under "--Sales at Net Asset Value" (other than officers,
directors and present and full-time employees of selected dealers
or agents, or relatives of such person, or any trust, individual
retirement account or retirement plan account for the benefit of
such relative, none of whom is eligible on the basis solely of
such status to purchase and hold Advisor Class Shares), (iv) by
institutional investors introduced to the Adviser by CB Richard
Ellis, Inc. ("CBRE") or (v) by directors and present or retired
full-time employees of CBRE.
Generally, a fee-based program must charge an asset-
based or other similar fee and must invest at least $250,000 in
Advisor Class shares of the Fund in order to be approved by the
Principal Underwriter for investment in Advisor Class shares.
Investors may purchase shares of the Fund either through
selected broker-dealers, agents, financial intermediaries or
other financial representatives, or directly through the
Principal Underwriter. A transaction, service, administrative or
other similar fee may be charged by your broker-dealer, agent,
financial intermediary or other financial representative with
respect to the purchase, sale or exchange of Class A, Class B,
Class C or Advisor Class shares made through such financial
representative. Such financial representative may also impose
requirements with respect to the purchase, sale or exchange of
shares that are different from, or in addition to, those imposed
by the Fund, including requirements as to the minimum initial and
subsequent investment amounts. Sales personnel of selected
dealers and agents distributing the Fund's shares may receive
differing compensation for selling Class A, Class B, Class C or
Advisor Class shares.
The Fund may refuse any order for the purchase of
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 public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below under
"Class A Shares." On each Fund business day on which a purchase
or redemption order is received by the Fund and trading in the
types of securities in which the Fund invests might materially
affect the value of Fund shares, the per share net asset value is
computed in accordance with the Fund's Articles of Incorporation
and By-Laws as of the next close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern
time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
23
<PAGE>
A Fund business day is any day on which the Exchange is open for
trading. For purposes of this computation, Exchange-listed
securities and over-the-counter securities admitted to trading on
the NASDAQ National List are valued at the last quoted sale or,
if there is no such sale, at the mean of closing bid and asked
prices and portfolio bonds are presently valued by a recognized
pricing service. If accurate quotations are not available,
securities will be valued at fair value determined in good faith
by the Board of Directors.
The respective per share net asset values of the
Class A, Class B, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and
Class C shares may be lower than the per share net asset values
of the Class A and Advisor Class shares, as a result of the
differential daily expense accruals of the distribution and
transfer agency fees applicable with respect to those classes of
shares. Even under those circumstances, the per share net asset
values of the four classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes.
The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchases of shares placed through
selected dealers, agents or financial representatives, as
applicable, the applicable public offering price will be the net
asset value as so determined, but only if the selected dealer,
agent or financial representative receives the order prior to the
close of regular trading on the Exchange and transmits it to the
Principal Underwriter prior to 5:00 p.m. Eastern time. The
selected dealer, agent or financial representative, as applicable
is responsible for transmitting such orders by 5:00 p.m. Eastern
time (certain selected dealers, agents or financial
representatives may enter into operating agreements permitting
them to transmit purchase information to the Principal
Underwriter after 5:00 p.m. Eastern time and receive that day's
net asset value). If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
24
<PAGE>
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
telephone purchase orders may not exceed $500,000. Payment for
shares purchased by telephone can be made only by electronic
funds transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.
Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.
In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash or other incentives to dealers or agents, in
connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, to provide
additional compensation to registered representatives who sell
shares of the Fund. On some occasions, such cash or other
incentives may take the form of payment for attendance at
seminars, meals, sporting events or theater performances, or
payment for travel, lodging and entertainment incurred in
connection with travel taken by persons associated with a dealer
or agent to locations within or outside the United States. Such
dealer or agent may elect to receive cash incentives of
equivalent amount in lieu of such payments.
Class A, Class B, Class C and Advisor Class shares each
represent an interest in the same portfolio of investments of the
25
<PAGE>
Fund, have the same rights and are identical in all respects,
except that (i) Class A shares bear the expense of the initial
sales charge (or contingent deferred sales charge, when
applicable) and Class B and Class C shares bear the expense of
the deferred sales charge, (ii) Class B shares and Class C shares
each bear the expense of a higher distribution services fee than
that borne by Class A shares, and Advisor Class shares do not
bear such a fee, (iii) Class B and Class C shares bear higher
transfer agency costs than that borne by Class A and Advisor
Class shares, (iv) each of Class A, Class B and Class C shares
has exclusive voting rights with respect to provisions of the
Rule 12b-1 Plan pursuant to which its distribution services fee
is paid and other matters for which separate class voting is
appropriate under applicable law, provided that, if the Fund
submits to a vote of the Class A shareholders an amendment to the
Rule 12b-1 Plan that would materially increase the amount to be
paid thereunder with respect to the Class A shares, then such
amendment will also be submitted to the Class B and Advisor Class
shareholders, and the Class A, the Class B and Advisor Class
shareholders will vote separately by class, and (v) Class B and
Advisor Class shares are subject to a conversion feature. Each
class has different exchange privileges and certain different
shareholder service options available.
The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B, Class C and Advisor Class shares. On an ongoing basis,
the Directors of the Fund, pursuant to their fiduciary duties
under the 1940 Act and state law, will seek to ensure that no
such conflict arises.
Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C Shares**
The alternative purchase arrangements available with
respect to Class A shares, Class B shares and Class C shares
permit an investor to choose the method of purchasing shares that
is most beneficial given the amount of the purchase, the length
of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated
distribution services fee and contingent deferred sales charge on
Class B shares prior to conversion, or the accumulated
distribution services fee and contingent deferred sales charge on
Class C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
____________________
** Advisor Class shares are sold to investors described above
in this section under ""--General.
26
<PAGE>
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on
Class A shares, as described below. In this regard, the
Principal Underwriter will reject any order (except orders from
certain retirement plans and certain employee benefit plans) for
more than $250,000 for Class B shares. (See Appendix A for
information concerning the eligibility of certain employee
benefit plans to purchase Class B shares at net asset value
without being subject to a contingent deferred sales charge and
the ineligibility of certain such plans to purchase Class A
shares.) Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. For this reason, the Principal Underwriter will reject
any order for more than $1,000,000 for Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.
Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and
being subject to a contingent deferred sales charge for a four-
year and one-year period, respectively. For example, based on
current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.
27
<PAGE>
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
During the Fund's fiscal period October 31, 1996
(commencement of operations) through August 31, 1997, and the
fiscal years ended August 31, 1998 and 1999, the aggregate amount
of underwriting commission payable with respect to shares of the
Fund was $2,275,158, $2,095,662 and $306,262, respectively. Of
that amount, the Principal Underwriter, AFD, received $60,942,
$53,582 and $0, respectively, representing that portion of the
sales charges paid on shares of the Fund sold during the period
which was not reallowed to selected dealers (and was,
accordingly, retained by the Principal Underwriter). During the
Fund's fiscal period October 31, 1996 (commencement of
operations) to August 31, 1997, the Principal Underwriter
received, $412, $106,463 and $9,336, respectively, in contingent
deferred sales charges on Class A, Class B and Class C shares.
During the Fund's fiscal year ended August 31, 1998, the
Principal Underwriter received $16,320, $870,357 and $70,432,
respectively, in contingent deferred sales charges on Class A,
Class B and Class C shares. During the Fund's fiscal year ended
August 31, 1999, the Principal Underwriter received $1,241,
$1,447,887 and $44,555, respectively, in contingent deferred
sales charges on Class A, Class B and Class C shares.
Class A Shares
The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below.
28
<PAGE>
Sales Charge
Discount Or
Commission
As % of To Dealers
As % of the Public Or Agents
Amount of Net Amount Offering As % of
Purchase Invested Price Offering Price
_________ __________ __________ ______________
Less than
$100,000. . . 4.44% 4.25% 4.00%
$100,000 but
less than
$250,000. . . 3.36 3.25 3.00
$250,000 but
less than
$500,000. . . 2.30 2.25 2.00
$500,000 but
less than
$1,000,000*. . . 1.78 1.75 1.50
____________________
* There is no initial sales charge on transactions of $1,000,000
or more.
With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, as described below under "--Class B
Shares." In determining the contingent deferred sales charge
applicable to a redemption of Class A shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because an
initial sales charge was paid with respect to the shares, or they
have been held beyond the period during which the charge applies
or were acquired upon the reinvestment of dividends and
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling
29
<PAGE>
Class A shares. With respect to purchases of $1,000,000 or more
made through selected dealers or agents, the Adviser may,
pursuant to the Distribution Services Agreement described above,
pay such dealers or agents from its own resources a fee of up to
1% of the amount invested to compensate such dealers or agents
for their distribution assistance in connection with such
purchases.
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, or (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" as that term is
defined under "Combined Purchase Privilege" below, except that an
initial sales charge will be imposed on Class A shares issued in
exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge or (iii) upon the automatic conversion of Class B
shares or Advisor Class shares as described below under "Class B
Shares--Conversion Feature" and "--Conversion of Advisor Class
Shares to Class A Shares." The Fund receives the entire net
asset value of its Class A shares sold to investors. The
Principal Underwriter's commission is the sales charge shown
above less any applicable discount or commission "reallowed" to
selected dealers and agents. The Principal Underwriter will
reallow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, the Principal
Underwriter may elect to reallow the entire sales charge to
selected dealers and agents for all sales with respect to which
orders are placed with the Principal Underwriter. A selected
dealer who receives reallowance in excess of 90% of such a sales
charge may be deemed to be an "underwriter" under the Securities
Act.
Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but may be subject in most such cases to a
contingent deferred sales charge) or (ii) a reduced initial sales
charge. The circumstances under which investors may pay a
reduced initial sales charge are described below.
Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges above by combining purchases of shares of the
Fund into a single "purchase," if the resulting "purchase" totals
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in
the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
30
<PAGE>
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-Quality Bond Portfolio
-U.S. Government Portfolio
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Health Care Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
31
<PAGE>
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting AFS at the address or the
"For Literature" telephone number shown on the front cover of
this Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of
business on the previous day) of (a) all shares of the
Fund held by the investor and (b) all shares of any
other Alliance Mutual Fund held by the investor; and
(iii) the net asset value of all shares described
in paragraph (ii) owned by another shareholder eligible
to combine his or her purchase with that of the investor
into a single "purchase" (see above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the initial sales charge for the $100,000
purchase would be at the 2.25% rate applicable to a single
$300,000 purchase of shares of the Fund, rather than the 3.25%
rate.
To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
32
<PAGE>
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
Statement of Intention. Class A investors may also
obtain the reduced sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B,
Class C and/or Advisor Class shares) of the Fund or any other
Alliance Mutual Fund. Each purchase of shares under the
Statement of Intention will be made at the public offering price
or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in a Statement of
Intention. At the investor's option, a Statement of Intention
may include purchases of shares of the Fund or any other Alliance
Mutual Fund made not more than 90 days prior to the date that the
investor signs a Statement of Intention; however, the 13-month
period during which the Statement of Intention is in effect will
begin on the date of the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs the Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to
invest a total of $60,000 during the following 13 months in
shares of the Fund or any other Alliance Mutual Fund, to qualify
for the 3.25% sales charge on the total amount being invested
(the sales charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrowed shares will
be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow
will be released. To the extent that an investor purchases more
than the dollar amount indicated on the Statement of Intention
and qualifies for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the
end of the 13-month period. The difference in the sales charge
will be used to purchase additional shares of the Fund subject to
33
<PAGE>
the rate of the sales charge applicable to the actual amount of
the aggregate purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting AFS at the address or
telephone numbers shown on the cover of this Statement of
Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of the sales charges set forth in this
Statement of Additional Information, to an investment 13 times
larger than such initial purchase. The sales charge applicable
to each succeeding monthly purchase will be that normally
applicable, under such schedule, to an investment equal to the
sum of (i) the total purchase previously made during the 13-month
period and (ii) the current month's purchase multiplied by the
number of months (including the current month) remaining in the
13-month period. Sales charges previously paid during such
period will not be retroactively adjusted on the basis of later
purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A or Class B shares of the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinvestment of
such shares. Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes
except that no loss will be recognized to the extent that the
proceeds are reinvested in shares of the Fund within 30 calendar
days after the redemption or repurchase transaction. Investors
may exercise the reinstatement privilege by written request sent
to the Fund at the address shown on the cover of this Statement
of Additional Information.
34
<PAGE>
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without a contingent deferred sales charge to certain
categories of investors, including: (i) investment management
clients of the Adviser or its affiliates; (ii) officers and
present or former Directors of the Fund; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser, the Principal Underwriter, AFS and their affiliates;
officers and directors of ACMC, the Principal Underwriter, AFS
and their affiliates; officers, directors and present and full-
time employees of selected dealers or agents; or the spouse,
sibling, direct ancestor or direct descendant (collectively
"relatives") of any such person; or any trust, individual
retirement account or retirement plan account for the benefit of
any such person or relative; or the estate of any such person or
relative, if such shares are purchased for investment purposes
(such shares may not be resold except to the Fund); (iii) the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates; and certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, AFS and
their affiliates; (iv) directors and present or retired full-time
employees of CBRE; (v) registered investment advisers or other
financial intermediaries who charge a management, consulting or
other fee for their services and who purchase shares through a
broker or agent approved by the Principal Underwriter and clients
of such registered investment advisers or financial
intermediaries whose accounts are linked to the master account of
such investment advisor or financial intermediary on the books of
such approved broker or agent;(vi) persons participating in a
fee-based program, sponsored and maintained by a registered
broker-dealer or other financial intermediary and approved by the
Principal Underwriter, pursuant to which such persons pay an
asset-based fee to such broker-dealer or other financial
intermediary, or its affiliates or agents, for services in the
nature of investment advisory or administrative services;
(vii) persons who establish to the Principal Underwriter's
satisfaction that they are investing, within such time period as
may be designated by the Principal Underwriter, proceeds of
redemption of shares of such other registered investment
companies as may be designated from time to time by the Principal
Underwriter; and (viii) employer-sponsored qualified pension or
profit-sharing plans (including Section 401(k) plans), custodial
accounts maintained pursuant to Section 403(b)(7) retirement
plans and individual retirement accounts (including individual
retirement accounts to which simplified employee pension ("SEP")
contributions are made), if such plans or accounts are
established or administered under programs sponsored by
administrators or other persons that have been approved by the
Principal Underwriter.
35
<PAGE>
Class B Shares
Investors may purchase Class B shares at the public
offering price equal to the net asset value per share of the
Class B shares on the date of purchase without the imposition of
a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund will
receive the full amount of the investor's purchase payment.
Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions.
To illustrate, assume that an investor purchased 100
Class B shares at $10 per share (at a cost of $1,000) and in the
second year after purchase, the net asset value per share is $12
and, during such time, the investor has acquired 10 additional
Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 50 Class B shares
(proceeds of $600), 10 Class B shares will not be subject to the
charge because of dividend reinvestment. With respect to the
remaining 40 Class B shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 2.0% (the
applicable rate in the second year after purchase, as set forth
below).
36
<PAGE>
The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.
Contingent Deferred Sales Charge
as a % of
Years Since Purchase Dollar Amount Subject to Charge
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth and thereafter None
In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that were acquired
upon the reinvestment of dividends or distributions and, second,
of shares held longest during the time they are subject to the
sales charge. When shares acquired in an exchange are redeemed,
the applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied at the time of
purchase of shares of the corresponding class of the Alliance
Mutual Fund originally purchased by the shareholder.
The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Code, of a shareholder, (ii) to the extent that
the redemption represents a minimum required distribution from an
individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2, (iii) that had
been purchased by present or former Directors of the Fund, by the
relative of any such person, by any trust, individual retirement
account or retirement plan account for the benefit of any such
person or relative, or by the estate of any such person or
relative or (iv) pursuant to a systematic withdrawal plan (see
"Shareholder Services--Systematic Withdrawal Plan" below).
Conversion Feature. Eight years after the end of the
calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A
shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares.
37
<PAGE>
For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.
The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.
Class C Shares
Investors may purchase Class C shares at the public
offering price equal to the net asset value per share of the
Class C shares on the date of purchase without the imposition of
a sales charge either at the time of purchase or, as long as the
shares are held for one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, without
a contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares of the Fund and incur higher distribution
services fees and transfer agency costs than Class A shares and
Advisor Class shares, and will thus have a higher expense ratio
and pay correspondingly lower dividends than Class A shares and
Advisor Class shares.
Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
38
<PAGE>
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B Shares." In determining the contingent deferred
sales charge applicable to a redemption of Class C shares, it
will be assumed that the redemption is, first, of any shares that
are not subject to a contingent deferred sales charge (for
example, because the shares have been held beyond the period
during which the charge applies or were acquired upon the
reinvestment of dividends or distributions) and, second, of
shares held longest during the time they are subject to the sales
charge.
Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares and Advisor Class shares.
Conversion of Advisor Class Shares to Class A Shares
Advisor Class shares may be held solely (i) through the
fee-based program accounts, employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares--General," (ii) by
investment advisory clients of, and by certain other persons
associated with, the Adviser and its affiliates the Fund and by
(iii) institutional investors introduced to the Adviser by CBRE.
If (i) a holder of Advisor Class shares ceases to participate in
the fee-based program or plan, or to be associated with a
investment adviser or financial intermediary, in each case, that
satisfies the requirements to purchase shares set forth under
"Purchase of Shares--General" or (ii) the holder is otherwise no
longer eligible to purchase Advisor Class shares as described in
the Advisor Class Prospectus and this Statement of Additional
Information (each, a "Conversion Event"), then all Advisor Class
shares held by the shareholder will convert automatically to
Class A shares of the Fund during the calendar month following
the month in which the Fund is informed of the occurrence of the
Conversion Event. The Fund will provide the shareholder with at
least 30 days' notice of the conversion. The failure of a
shareholder or a fee-based program to satisfy the minimum
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investment requirements to purchase Advisor Class shares will not
constitute a Conversion Event. The conversion would occur on the
basis of the relative net asset values of the two classes and
without the imposition of any sales load, fee or other charge.
Class A shares currently bear a .30% distribution services fee
Advisor Class shares do not have any distribution services fee.
As a result, Class A shares have a higher expense ratio and may
pay correspondingly lower dividends and have a lower net asset
value than Advisor Class shares.
The conversion of Advisor Class shares to Class A shares
is subject to the continuing availability of an opinion of
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class shares
to Class A shares may be suspended if such an opinion is no
longer available at the time such conversion is to occur. In
that event, the Advisor Class shareholder would be required to
redeem his Advisor Class shares, which would constitute a taxable
event under federal income tax law.
_______________________________________________________________
REDEMPTION AND REPURCHASE OF SHARES
_______________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Sell Shares." If you are an Advisor Class
shareholder through an account established under a fee-based
program your fee-based program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares
of the Fund that are different from those described herein. A
transaction fee may be charged by your financial representative
with respect to the purchase, sale or exchange of Advisor Class
shares made through such financial representative.
Redemption
Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge that may be applicable
to Class A shares, Class B shares and Class C shares, there is no
redemption charge. Payment of the redemption price will be made
within seven days after the Fund's receipt of such tender for
redemption. If a shareholder is in doubt about what documents
are required by his or her fee-based program or employee benefit
40
<PAGE>
plan, the shareholder should contact his or her financial
representative.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.
To redeem shares of the Fund for which no share
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
To redeem shares of the Fund represented by share
certificates, the investor should forward the appropriate stock
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
41
<PAGE>
signature or signatures on the assignment form must be guaranteed
in the manner described above.
Telephone Redemption By Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by electronic
funds transfer of shares for which no stock certificates have
been issued by telephone at (800) 221-5672 by a shareholder who
has completed the appropriate portion of the Subscription
Application or, in the case of an existing shareholder, an
"Autosell" application obtained from AFS. A telephone redemption
request may not exceed $100,000 (except for certain omnibus
accounts), and must be made by 4:00 p.m. Eastern time on a Fund
business day as defined above. Proceeds of telephone redemptions
will be sent by electronic funds transfer to a shareholder's
designated bank account at a bank selected by the shareholder
that is a member of the NACHA.
Telephone Redemption By Check. Each Fund shareholder is
eligible to request redemption by check of Fund shares for which
no stock certificates have been issued by telephone at
(800) 221-5672 before 4:00 p.m. Eastern time on a Fund business
day in an amount not exceeding $50,000. Proceeds of such
redemptions are remitted by check to the shareholder's address of
record. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to AFS or by checking the appropriate box on the
Subscription Application found in the Prospectus.
Telephone Redemption-General. During periods of drastic
economic or market developments, such as the market break of
October 1987, it is possible that shareholders would have
difficulty in reaching AFS by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
AFS at the address shown on the cover of this Statement of
Additional Information. The Fund reserves the right to suspend
or terminate its telephone redemption service at any time without
notice. Telephone redemption is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) held by a shareholder
who has changed his or her address of record within the preceding
30 calendar days or (iv) held in any retirement plan account.
Neither the Fund nor the Adviser, the Principal Underwriter or
AFS will be responsible for the authenticity of telephone
requests for redemptions that the Fund reasonably believes to be
genuine. The Fund will employ reasonable procedures in order to
verify that telephone requests for redemptions are genuine,
including, among others, recording such telephone instructions
and causing written confirmations of the resulting transactions
to be sent to shareholders. If the Fund did not employ such
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<PAGE>
procedures, it could be liable for losses arising from
unauthorized or fraudulent telephone instructions. Selected
dealers or agents may charge a commission for handling telephone
requests for redemptions.
Repurchase
The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m Eastern time (certain
selected dealers, agents or financial representatives may enter
into operating agreements permitting them to transmit purchase
information to the Principal Underwriter after 5:00 p.m. Eastern
time and receive that day's net asset value). If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent. A
shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
shares of the Fund are offered through a financial intermediary
or selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
43
<PAGE>
not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.
_______________________________________________________________
SHAREHOLDER SERVICES
_______________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class shareholder through an account established under a
fee-based program your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein. A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing electronic funds transfers
drawn on the investor's own bank account. Under such a program,
pre-authorized monthly drafts for a fixed amount (at least $25)
are used to purchase shares through the selected dealer or
selected agent designated by the investor at the public offering
price next determined after the Principal Underwriter receives
the proceeds from the investor's bank. In electronic form,
drafts can be made on or about a date each month selected by the
shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application found in the Prospectus. Current shareholders should
contact AFS at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.
Exchange Privilege
You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by the Adviser).
In addition, (i) present officers and full-time employees of the
Adviser and of CBRE, (ii) present Directors or Trustees of any
Alliance Mutual Fund and (iii) certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, AFS and
their affiliates may, on a tax-free basis, exchange Class A
44
<PAGE>
shares of the Fund for Advisor Class shares of the Fund.
Exchanges of shares are made at the net asset value next
determined and without sales or service charges. Exchanges may
be made by telephone or written request. Telephone exchange
requests must be received by AFS by 4:00 p.m. Eastern time on a
Fund business day in order to receive that day's net asset value.
Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.
Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call AFS at 800-221-5672 to exchange uncertificated shares.
Except with respect to exchanges of Class A shares of the Fund
for Advisor Class shares of the Fund, exchanges of shares as
described above in this section are taxable transactions for
federal income tax purposes. The exchange service may be
changed, suspended, or terminated on 60 days' written notice.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchange of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for federal income tax purposes.
Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless AFS
receives written instruction to the contrary from the
shareholder, or the shareholder declines the privilege by
checking the appropriate box on the Subscription Application
45
<PAGE>
found in the Prospectus. Such telephone requests cannot be
accepted with respect to shares then represented by stock
certificates. Shares acquired pursuant to a telephone request
for exchange will be held under the same account registration as
the shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange
should telephone AFS with their account number and other details
of the exchange, at (800) 221-5672 before 4:00 p.m., Eastern
time, on a Fund business day as defined above. Telephone
requests for exchange received before 4:00 p.m. Eastern time on a
Fund business day will be processed as of the close of business
on that day. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching AFS
by telephone (although no such difficulty was apparent at any
time in connection with the 1987 market break). If a shareholder
were to experience such difficulty, the shareholder should issue
written instructions to AFS at the address shown on the cover of
this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the following
Fund business day prior thereto.
None of the Alliance Mutual Funds, the Adviser, the
Principal Underwriter or AFS will be responsible for the
authenticity of telephone requests for exchanges that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers, agents or financial
representatives, as applicable may charge a commission for
handling telephone requests for exchanges.
The exchange privilege is available only in states where
shares of the Alliance Mutual Fund being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.
46
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Retirement Plans
The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact AFS at the "For Literature"
telephone number on the cover of this Statement of Additional
Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.
If the aggregate net asset value of shares of the
Alliance Mutual Funds held by the qualified plan reaches $1
million on or before December 15 in any year, all Class B or C
shares of the Fund held by the plan can be exchanged at the
plan's request without any sales charge, for Class A shares of
the Fund.
Simplified Employee Pension Plan ("SEP"). Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.
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<PAGE>
403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirement plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to AFS as compensation for its services to the retirement plan
accounts maintained with the Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact AFS .
Dividend Direction Plan
A shareholder who already maintains, in addition to the
shareholder's Class A, Class B, Class C or Advisor Class Fund
account, a Class A, Class B, Class C or Advisor Class account
with one or more other Alliance Mutual Funds may direct that
income dividends and/or capital gains paid on the shareholder's
Class A, Class B, Class C or Advisor Class Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting AFS at the address or the "For Literature"
telephone number shown on the cover of this Statement of
Additional Information. Investors wishing to establish a
dividend direction plan in connection with their initial
investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact AFS to establish a dividend direction
plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
48
<PAGE>
Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions and, except as discussed
below, any applicable contingent deferred sales charge. Shares
acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and
thereafter other shares will be liquidated to the extent
necessary, and depending upon the amount withdrawn, the
investor's principal may be depleted. A systematic withdrawal
plan may be terminated at any time by the shareholder or the
Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares--General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a holder of Class A
shares who is maintaining a systematic withdrawal plan, such
investment should normally be an amount equivalent to three times
the annual withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting AFS at the address or the "For Literature"
telephone number shown on the cover of this Statement of
Additional Information.
CDSC Waiver for Class B Shares and Class C Shares.
Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B or Class C shares in a shareholder's account may
be redeemed free of any contingent deferred sales charge.
With respect to Class B shares, the waiver applies only
with respect to shares (or, in the case of shares acquired
through one or more exchanges of shares, the original shares)
acquired after July 1, 1995. Class B shares that are not subject
to a contingent deferred sales charge (such as shares acquired
with reinvested dividends or distributions) will be redeemed
first and will count toward the foregoing limitations. Remaining
Class B shares that are held the longest will be redeemed next.
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<PAGE>
Redemptions of Class B shares in excess of the foregoing
limitations will be subject to any otherwise applicable
contingent deferred sales charge.
With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.
Statements and Reports
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, Ernst & Young LLP, as
well as a monthly cumulative dividend statement and a
confirmation of each purchase and redemption. By contacting his
or her broker or AFS a shareholder can arrange for copies of his
or her account statements to be sent to another person.
_______________________________________________________________
NET ASSET VALUE
_______________________________________________________________
The per share net asset value is computed in accordance
with the Fund's Articles of Incorporation and By-Laws 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 per share net asset value is calculated
by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
A Fund business day is any weekday on which the Exchange is open
for trading.
In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the Exchange or on a
foreign securities exchange (other than foreign securities
exchanges whose operations are similar to those of the United
States over-the-counter market) are valued, except as indicted
below, at the last sale price reflected on the consolidated tape
at the close of the Exchange or, in the case of a foreign
securities exchange, at the last quoted sale price, in each case
50
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on the business day as of which such value is being determined.
If there has been no sale on such day, the securities are valued
at the mean of the closing bid and asked prices on such day. If
no bid or asked prices are quoted on such day, then the security
is valued in good faith at fair value by, or in accordance with
procedures established by, the Board of Directors. Readily
marketable securities not listed on the Exchange or on a foreign
securities exchange but listed on other United States national
securities exchanges or traded on The Nasdaq Stock Market, Inc.
are valued in like manner. Portfolio securities traded on the
Exchange and on one or more foreign or other national securities
exchanges, and portfolio securities not traded on the Exchange
but traded on one or more foreign or other national securities
exchanges are valued in accordance with these procedures by
reference to the principal exchange on which the securities are
traded.
Readily marketable securities traded in the over-the-
counter market, securities listed on a foreign securities
exchange whose operations are similar to those of the United
States over-the-counter market, and securities listed on a U.S.
national securities exchange whose primary market is believed to
be over-the-counter (but excluding securities traded on The
Nasdaq Stock Market, Inc.), are valued at the mean of the current
bid and asked prices as reported by Nasdaq or, in the case of
securities not quoted by Nasdaq, the National Quotation Bureau or
another comparable sources.
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.
Open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price, If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used.
U.S. Government Securities and other debt instruments
having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or
by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days
(unless in either case the Board of Directors determines that
this method does not represent fair value).
Fixed-income securities may be valued on the basis of
prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
The prices provided by pricing service take into account many
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<PAGE>
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/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.
All other assets of the Fund are valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors.
Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Fund business
day. In addition, trading in foreign markets may not take place
on all Fund business days. Furthermore, trading may take place
in various foreign markets on days that are not Fund business
days. The Fund's calculation of the net asset value per share,
therefore, does not always take place contemporaneously with the
most recent determination of the prices of portfolio securities
in these markets. Events affecting the values of these portfolio
securities that occur between the time their prices are
determined in accordance with the above procedures and the close
of the Exchange will not be reflected in the Fund's calculation
of net asset value unless it is believed that these prices do not
reflect current market value, in which case the securities will
be valued in good faith by, or in accordance with procedures
established by, the Board of Directors at fair value.
The Board of Directors may suspend the determination of
the Fund's, net asset value (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 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
52
<PAGE>
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 and Advisor Class shares will be invested
together in a single portfolio. The net asset value 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.
_______________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_______________________________________________________________
Dividends paid by the Fund, if any, with respect to
Class A, Class B, Class C and Advisor Class shares will be
calculated in the same manner at the same time on the same day
and will be in the same amount, except that the higher
distribution services applicable to Class B and C shares, and any
incremental transfer agency costs relating to Class B and Class C
shares, will be borne exclusively by the class to which they
relate.
United States Federal Income Taxes
General. The Fund intends for each taxable year to
qualify to be taxed as a "regulated investment company" under
sections 851 through 855 of 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 is limited, in respect of
any one issuer, to an amount not greater than 5% of the Fund's
assets and 10% of the outstanding voting securities of such
issuer, and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than
U.S. Government Securities or securities of other regulated
investment companies).
53
<PAGE>
If the Fund qualifies as a regulated investment company
for any taxable year and makes timely distributions to its
shareholders 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 shareholders.
The Fund intends to also avoid the 4% federal excise tax
that would otherwise apply to certain undistributed income for a
given calendar year if it makes timely distributions to the
shareholders equal to at least the sum of (i) 98% of its ordinary
income for that year; (ii) 98% of its capital gain net income and
foreign currency gains for the twelve-month period ending on
October 31 of that year; and (iii) any ordinary income or capital
gain net income from the preceding calendar year that was not
distributed during that year. For this purpose, income or gain
retained by the Fund that is subject to corporate income tax will
be considered to have been distributed by the Fund by year-end.
For federal income and excise tax purposes, dividends declared
and payable to shareholders of record as of a date in October,
November or December of a given year but actually paid during the
immediately following January will be treated as if paid by the
Fund on December 31 of that calendar year, and will be taxable to
these shareholders for the year declared, and not for the year in
which the shareholders actually receive the dividend.
The Fund intends to make timely distributions of the
Fund's taxable income (including any net capital gain) so that
the Fund will not be subject to federal income or excise taxes.
However, exchange control or other regulations on the
repatriation of investment income, capital or the proceeds of
securities sales, if any exist or are enacted in the future, may
limit the Fund's ability to make distributions sufficient in
amount to avoid being subject to one or both of such federal
taxes.
Dividends and Distributions. Dividends of the Fund's
net ordinary income and distributions of any net realized short-
term capital gain are taxable to shareholders as ordinary income.
Due to distributions of amounts representing a return of capital
the Fund will receive from REITs in which the Fund is invested,
distributions made by the Fund may also include nontaxable
returns of capital, which will reduce a shareholder's basis in
shares of the Fund. If a shareholder's basis is reduced to zero
(which could happen if the shareholder does not reinvest
distributions and returns of capital are significant), any
further returns of capital will be taxable as capital gain.
54
<PAGE>
In the case of corporate shareholders, a portion of the
Fund's dividends may be eligible for the dividends-received
deduction. The amount eligible for the deduction is limited to
the amount of qualifying dividends received by the Fund.
Distributions received from REITs generally do not constitute
qualifying dividends. A corporation's dividends-received
deduction generally will be disallowed unless the corporation
holds shares in the Fund at least 46 days during the 90-day
period beginning 45 days before the date on which the corporation
becomes entitled to receive the dividend. Furthermore, the
dividends-received deduction will be disallowed to the extent a
corporation's investment in shares of the Fund is financed with
indebtedness.
Distributions of net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) are
taxable as long-term capital gain, regardless of how long a
shareholder has held shares in the Fund. Any dividend or
distribution received by a shareholder on shares of the Fund will
have the effect of reducing the net asset value of such shares by
the amount of such dividend or distribution. Furthermore, a
dividend or distribution made shortly after the purchase of such
shares by a shareholder, although in effect a return of capital
to that particular shareholder, would be taxable to him as
described above. Dividends are taxable in the manner discussed
regardless of whether they are paid to the shareholder in cash or
are reinvested in additional shares of the Fund.
After the end of the taxable year, the Fund will notify
shareholders of the federal income tax status of any
distributions made by the Fund to shareholders during such year.
A dividend or capital gains distribution with respect to
shares of the Fund held by a tax-deferred or qualified plan, such
as an individual retirement account, 403(b)(7) retirement plan or
corporate pension or profit-sharing plan, generally will not be
taxable to the plan. Distributions from such plans will be
taxable to individual participants under applicable tax rules
without regard to the character of the income earned by the
qualified plan.
It is the present policy of the Fund to distribute to
shareholders all net investment income quarterly and to
distribute realized capital gains, if any, annually. There is no
fixed dividend rate and there can be no assurance that the Fund
will pay any dividends. The amount of any dividend or
distribution paid on shares of the Fund must necessarily depend
upon the realization of income and capital gains from the Fund's
investments.
55
<PAGE>
Sales and Redemptions. Any gain or loss arising from a
sale or redemption of Fund shares generally will be capital gain
or loss except in the case of a dealer or a financial
institution, and will be long-term capital gain or loss if the
shareholder has held such shares for more than one year at the
time of the sale or redemption; otherwise it will be short-term
capital gain or loss. If a shareholder 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
shareholder on the sale of those shares during the six-month
period will be treated as a long-term capital loss to the extent
of the distribution. In determining the holding period of such
shares for this purpose, any period during which a shareholder's
risk of loss is offset by means of options, short sales or
similar transactions is not counted.
Any loss realized by a shareholder 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
Dividend Reinvestment Plan would constitute a replacement if made
within the period. If disallowed, the loss will be reflected in
an upward adjustment to the basis of the shares acquired.
Backup Withholding. The Fund may be required to
withhold United States federal income tax at the rate of 31% of
all distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification numbers or to
make required certifications, or who have been notified by the
Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other
shareholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against a shareholder's
United States federal income tax liability or refunded.
Short Sales. In general, gain or loss realized by the
Fund on the closing of a short sale will be considered to be
short-term capital gain or loss.
Taxation of Foreign Stockholders
The foregoing discussion relates only to United States
federal income tax law as it affects shareholders who are United
States citizens or residents or United States corporations. The
effects of federal income tax law on shareholders who are non-
resident alien individuals or foreign corporations may be
substantially different. Foreign investors should therefore
consult their counsel for further information as to the United
States tax consequences of receipt of income from the Fund.
56
<PAGE>
Real Estate Mortgage Investment Conduits. The fund may
invest in REMICs. Interests in REMICs are classified as either
"regular" interests or "residual" interests. Regular interests
in a REMIC are treated as debt instruments for federal income tax
purposes to which the rules generally applicable to debt
obligations apply. If regular interests in a REMIC are issued at
a discount, application of the original issued discount
provisions of the Code may increase the amount of the Fund's net
investment income available to be distributed to shareholders,
potentially causing the Fund to pay out as an income distribution
each year an amount which is greater than the total amount of
cash interest the Fund actually received.
Under the Code, special rules apply with respect to the
treatment of a portion of the Fund's income from REMIC residual
interests. (Such portion is referred to herein as "Excess
Inclusion Income.") Excess Inclusion Income generally cannot be
offset by net operating losses and, in addition, constitutes
unrelated business taxable income to entities which are subject
to the unrelated business income tax. The Code provides that a
portion of Excess Inclusion Income attributable to REMIC residual
interests held by regulated investment companies such as the Fund
shall, pursuant to regulations, be allocated to the shareholders
of such regulated investment company in proportion to the
dividends received by such shareholders. Accordingly,
shareholders of the Fund will generally not be able to use net
operating losses to offset such Excess Inclusion Income. In
addition, if a shareholder of the Fund is a tax-exempt entity not
subject to the unrelated business income tax and is allocated any
amount of Excess Inclusion Income, the Fund must pay a tax on the
amount of Excess Inclusion Income allocated to such shareholder
at the highest corporate rate. Any tax paid by the Fund as a
result of this requirement may be deducted by the Fund from the
gross income of the residual interest involved. A shareholder
subject to the unrelated business income tax may be required to
file a return and pay a tax on such Excess Inclusion Income even
though a shareholder might not have been required to pay such tax
or file such return absent the receipt of such Excess Inclusion
Income. It is anticipated that only a small portion, if any, of
the assets of the Fund will be invested in REMIC residual
interests. Accordingly, the amount of Excess Inclusion Income,
if any, received by the Fund and allocated to its shareholders
should be quite small. Shareholders that are subject to the
unrelated business income tax should consult their own tax
advisor regarding the treatment of their income derived from the
Fund.
57
<PAGE>
_______________________________________________________________
PORTFOLIO TRANSACTIONS
_______________________________________________________________
The management of the Fund has the responsibility for
allocating its brokerage orders and may direct orders to any
broker. It is the Fund's general policy to seek favorable net
prices and prompt reliable execution in connection with the
purchase or sale of all portfolio securities. In the purchase
and sale of over-the-counter securities, it is the Fund's policy
to use the primary market makers except when a better price can
be obtained by using a broker. The Board of Directors has
approved, as in the best interests of the Fund and the
shareholders, a policy of considering, among other factors, sales
of the Fund's shares as a factor in the selection of broker-
dealers to execute portfolio transactions, subject to best
execution. The Adviser is authorized under the Advisory
Agreement to place brokerage business with such brokers and
dealers. The use of brokers who supply supplemental research and
analysis and other services may result in the payment of higher
commissions than those available from other brokers and dealers
who provide only the execution of portfolio transactions. In
addition, the supplemental research and analysis and other
services that may be obtained from brokers and dealers through
which brokerage transactions are affected may be useful to the
Adviser in connection with advisory clients other than the Fund.
Investment decisions for the Fund are made independently
from those for other investment companies and other advisory
accounts managed by the Adviser. It may happen, on occasion,
that the same security is held in the portfolio of the Fund and
one or more of such other companies or accounts. Simultaneous
transactions are likely when several funds or accounts are
managed by the same Adviser, particularly when a security is
suitable for the investment objectives of more than one of such
companies or accounts. When two or more companies or accounts
managed by the Adviser are simultaneously engaged in the purchase
or sale of the same security, the transactions are allocated to
the respective companies or accounts both as to amount and price,
in accordance with a method deemed equitable to each company or
account. In some cases this system may adversely affect the
price paid or received by the Fund or the size of the position
obtainable for the Fund.
Allocations are made by the officers of the Fund or of
the Adviser. Purchases and sales of portfolio securities are
determined by the Adviser and are placed with broker-dealers by
the order department of the Adviser.
58
<PAGE>
The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Fund; but, on the other hand, certain research
services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in serving the Fund. Consistent with the Conduct Rules of
the National Association of Securities Dealers, Inc. and subject
to seeking best execution, the Fund may consider sales of shares
of the Fund or other investment companies managed by the Adviser
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ for which DLJ may receive a portion of the
brokerage commissions. In such instances, the placement of
orders with such brokers would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that DLJ is an affiliate of the Adviser.
During the fiscal period October 1, 1996 (commencement
of operations) through August 31, 1997, the fiscal year ended
August 31, 1998 and the fiscal year ended August 31, 1999, the
Fund incurred brokerage commissions amounting in the aggregate to
$526,476, $811,574 and $901,795, respectively. During the fiscal
period October 1, 1996 (commencement of operations) through
August 31, 1997, the fiscal year ended August 31, 1998 and the
fiscal year ended August 31, 1999, brokerage commissions
amounting in the aggregate to $0, $0 and $0, respectively, were
paid to DLJ, and brokerage commissions amounting in the aggregate
to $0, $0 and $0, respectively, were paid to brokers utilizing
the Pershing Division of DLJ. During the fiscal year ended
August 31, 1999, the brokerage commissions paid to DLJ
constituted 0% of the Fund's aggregate brokerage commissions, and
the brokerage commissions paid to brokers utilizing the Pershing
Division of DLJ constituted 0% of the Fund's aggregate brokerage
commissions. During the fiscal year ended August 31, 1999, of
the Fund's aggregate dollar amount of brokerage transactions
involving the payment of commissions, 0% were effected through
DLJ and 0% were effected through brokers utilizing the Pershing
Division of DLJ. During the fiscal year ended August 31, 1999,
transactions in portfolio securities of the Fund aggregating
59
<PAGE>
$320,358,656 with associated brokerage commissions of
approximately $343,702 were allocated to persons or firms
supplying research services to the Fund or the Adviser.
_______________________________________________________________
GENERAL INFORMATION
_______________________________________________________________
Capitalization
The Fund is a Maryland corporation organized in 1996.
The authorized capital stock of the Fund currently consists of
3,000,000,000 shares of Class A Common Stock, 3,000,000,000
shares of Class B Common Stock, 3,000,000,000 shares of Class C
Common Stock and 3,000,000,000 shares of Advisor Class Common
Stock , each having a par value of $.001 per share. All shares of
the Fund, when issued, are fully paid and non-assessable. The
Directors are authorized to reclassify and issue any unissued
shares to any number of additional series and classes without
shareholder approval. Accordingly, the Directors in the future,
for reasons such as the desire to establish one or more
additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
of shares. Any issuance of shares of another class or series
would be governed by the 1940 Act and the law of the State of
Maryland. If shares of another series were issued in connection
with the creation of a second portfolio, each share of either
portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series on matters, such as the election of Directors, that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Advisory Agreement and changes in investment policy, shares
of each portfolio would vote as a separate series.
It is anticipated that annual shareholder meetings will
not be held; shareholder meetings will be held only when required
by federal or state law. Shareholders have available certain
procedures for the removal of Directors.
A shareholder will be entitled to share pro rata with
other holders of the same class of shares all dividends and
distributions arising from the Fund's assets and, upon redeeming
shares, will receive the then current net asset value of the Fund
represented by the redeemed shares less any applicable CDSC. The
Fund is empowered to establish, without shareholder approval,
additional portfolios, which may have different investment
objectives and policies than those of the Fund, and additional
classes of shares within the Fund. If an additional portfolio or
class were established in the Fund, each share of the portfolio
60
<PAGE>
or class would normally be entitled to one vote for all purposes.
Generally, shares of each portfolio and class would vote together
as a single class on matters, such as the election of Directors,
that affect each portfolio and class in substantially the same
manner. Class A, B, C and Advisor Class shares have identical
voting, dividend, liquidation and other rights, except that each
class bears its own transfer agency expenses, each of Class A,
Class B and Class C shares of the Fund bears its own distribution
expenses and Class B shares and Advisor Class shares convert to
Class A shares under certain circumstances. Each class of shares
of the Fund votes separately with respect to the Fund's Rule 12b-
1 distribution plan and other matters for which separate class
voting is appropriate under applicable law. Shares are freely
transferable, are entitled to dividends as determined by the
Directors and, in liquidation of the Fund, are entitled to
receive the net assets of the Fund.
As of October 8, 1999 there were 3,413,946 Class A
shares, 15,849,629 Class B shares, 4,215,650 Class C shares and
211,404 Advisor Class shares of common stock of the Fund
outstanding. To the knowledge of the Fund, the following persons
owned of record or beneficially 5% or more of the outstanding
shares of the Fund as of October 8, 1999:
Name and Address Shares % of Class
Class A
MLPF&S 900,665 26.29%
For the Sole Benefit of
Its Customers
Attn: Fund Administration (97K40)
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246-6484
Class B
MLPF&S 7,142,068 44.91%
For the Sole Benefit of
Its Customers
Attn: Fund Administration (97K66)
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246-6484
Class C
MLPF&S 2,221,805 52.26%
For the Sole Benefit of
Its Customers
Attn: Fund Administration (97K67)
4800 Deer Lake Dr East, 2nd Floor
61
<PAGE>
Jacksonville, FL 32246-6484
Advisor Class
Alliance Capital Management LP 11,745 5.56%
Attn: Sarah Powell
1345 Avenue of the Americas
New York, NY 10105-0302
Alliance Plans Div/FTC 14,770 6.99%
C/F Daniel G. Pine IRA
Rollover Account
740 Westover Road
Stamford, CT 06902-1329
Richard G. Wollack TTEE 40,621 19.21%
The Wollack Family REV TR
3464 Clay Street
San Francisco, CA 94118-2009
MLPF&S 41,997 19.87%
For the Sole Benefit of
Its Customers
Attn: Fund Administration
4800 Deer Lake Dr East, 2nd Floor
Jacksonville, FL 32246-6484
Procedures for calling a shareholders' meeting for the
removal of Directors of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act will be available to shareholders
of the Fund. The rights of the holders of shares of a series may
not be modified except by the vote of a majority of the
outstanding shares of such series.
Custodian
The Bank of New York, 48 Wall Street, New York, New
York, will act as the Fund's custodian for the assets of the Fund
but plays no part in deciding the purchase or sale of portfolio
securities. Subject to the supervision of the Fund's Directors,
The Bank of New York may enter into sub-custodial agreements for
the holding of the Fund's foreign securities.
Principal Underwriter
Alliance Fund Distributors, Inc., an indirect wholly-
owned subsidiary of Alliance, located at 1345 Avenue of the
Americas, New York, New York 10105, is the principal underwriter
of shares of the Fund. Under the Distribution Services
Agreement, the Fund has agreed to indemnify the Principal
Underwriter, in the absence of its willful misfeasance, bad
62
<PAGE>
faith, gross negligence or reckless disregard of its obligations
thereunder, against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended.
Counsel
Legal matters in connection with the issuance of the
shares offered hereby are passed upon by Seward & Kissel LLP, New
York, New York. Seward & Kissel LLP has relied upon the opinion
of Venable, Baetjer and Howard, LLP, Baltimore, Maryland, for
matters relating to Maryland law.
Independent Auditors
Ernst & Young LLP, New York, New York has been appointed
as independent auditors for the Fund.
Performance Information
From time to time, the Fund advertises its "yield,"
"actual distribution rate" and "total return." Computed
separately for each class, the Fund's yield for any 30-day (or
one month) period is computed by dividing the net investment
income per share earned during such period by the maximum public
offering price per share on the last day of the period, and then
annualizing such 30-day (or one month) yield in accordance with a
formula prescribed by the Commission which provides for
compounding on a semi-annual basis. The Fund's "actual
distribution rate," which may be advertised in items of sales
literature, is computed in the same manner as yield except that
actual income dividends declared per share during the period in
question is substituted for net investment income per share.
Computed separately for each class, the Fund's "total return" is
its average annual compounded total return for recent one, five
and ten year periods. The Fund's actual distribution rate is
computed separately for Class A, Class B, Class C and Advisor
Class shares. The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by
the Commission, the average annual compounded rate of return over
the period that would equate an assumed initial amount invested
to the value of such investment at the end of the period. For
purposes of computing total return, income dividends and capital
gains distributions paid on shares of the Fund are assumed to
have been reinvested when received and the maximum sales charge
applicable purchases of Fund shares is assumed to have been paid.
The average annual total return based on net asset value
for each class of shares for the one-, five- and ten-year periods
ended August 31, 1999 (or since inception through that date, as
noted) was as follows:
63
<PAGE>
12 Months
Ended 5 Years Ended 10 Years Ended
8/31/99 8/31/99 8/31/99
_________ _____________ ______________
Class A 3.86% 5.49%* N/A
Class B 3.20% 4.78%* N/A
Class C 3.20% 4.77%* N/A
Advisor Class 4.18% 5.80%* N/A
*Inception Dates: Class A - October 1, 1996
Class B - October 1, 1996
Class C - October 1, 1996
Advisor Class - October 1, 1996
Advertisements quoting performance rankings of the Fund
as measured by financial publications or by independent
organizations such as Lipper, Inc. and Morningstar, Inc., and
advertisements presenting the historical record of payments of
income dividends by the Fund may also from time to time be sent
to investors or placed in newspapers, magazines such as The Wall
Street Journal, The New York Times, Barrons, Investor's Daily,
Money Magazine, Changing Times, Business Week and Forbes or other
media on behalf of the Fund.
Additional Information
Any shareholder inquiries may be directed to the
shareholder's broker or to Alliance Fund Services, Inc. at the
address or telephone numbers shown on the front cover of this
Statement of Additional Information. This Statement of
Additional Information does not contain all the information set
forth in the Registration Statement filed by the Fund with the
Commission under the Securities Act. Copies of the Registration
Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the offices of
the Commission in Washington, D.C.
64
<PAGE>
____________________________________________________________
REPORT OF INDEPENDENT AUDITORS AND
FINANCIAL STATEMENTS
____________________________________________________________
65
<PAGE>
ALLIANCE
---------------
REAL ESTATE
---------------
INVESTMENT
---------------
FUND
---------------
Annual Report
August 31, 1999
Alliance Capital [LOGO](R)
<PAGE>
PORTFOLIO OF INVESTMENTS
August 31, 1999 Alliance Real Estate Investment Fund
================================================================================
Company Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS-99.1%
REAL ESTATE
INVESTMENT TRUSTS-94.6%
APARTMENTS-9.6%
Apartment Investment &
Management Co. Cl. A ..................... 203,500 $ 8,343,500
Avalonbay Communities,
Inc. ..................................... 267,815 9,440,479
Essex Property Trust, Inc. ................. 183,300 6,438,413
-----------
24,222,392
-----------
DIVERSIFIED-16.7%
Captec Net Lease Realty,
Inc. ..................................... 114,300 1,314,450
Correctional Properties
Trust .................................... 406,550 5,793,338
Entertainment Properties
Trust .................................... 405,100 6,203,094
Glenborough Realty Trust,
Inc. ..................................... 406,700 7,040,994
Golf Trust of America,
Inc. .................................... 265,200 5,121,675
Sun Communities, Inc. ..................... 168,100 6,009,575
Vornado Realty Trust ...................... 304,600 10,394,475
-----------
41,877,601
-----------
HOTELS &
RESTAURANTS-7.3%
Hospitality Properties
Trust ................................... 199,900 5,372,312
Innkeepers USA Trust ...................... 485,700 4,401,656
MeriStar Hospitality Corp. ................. 414,370 6,992,494
Starwood Hotels & Resorts
Worldwide, Inc. ......................... 42,900 1,021,556
Wyndham International,
Inc. Cl. A .............................. 150,200 535,087
-----------
18,323,105
-----------
OFFICE-17.2%
Arden Realty, Inc. ........................ 269,800 6,289,712
Boston Properties, Inc. ................... 269,100 8,964,394
Crescent Real Estate
Equities Co. ............................ 280,000 5,810,000
Equity Office Properties
Trust ................................... 515,021 13,165,224
SL Green Realty Corp. ..................... 433,000 9,011,812
-----------
43,241,142
-----------
OFFICE - INDUSTRIAL
MIX-14.8%
Alexandria Real Estate
Equities, Inc. .......................... 201,600 5,909,400
Brandywine Realty
Investments, Inc. ....................... 389,400 6,984,863
Highwoods Properties,
Inc. .................................... 264,400 6,560,425
Mission West Properties,
Inc. .................................... 220,300 1,762,400
Reckson Associates Realty
Corp. ................................... 392,300 8,140,225
Spieker Properties, Inc. .................. 201,700 7,715,025
-----------
37,072,338
-----------
REGIONAL MALLS-6.4%
Macerich Co. .............................. 320,000 8,020,000
Mills Corp. ............................... 421,600 8,089,450
-----------
16,109,450
-----------
SHOPPING CENTERS-10.4%
Burnham Pacific Properties,
Inc. .................................... 104,900 1,199,794
Pan Pacific Retail
Properties, Inc. ........................ 530,700 9,851,119
Prime Retail, Inc. ........................ 816,000 6,120,000
Ramco-Gershenson
Properties ............................... 251,600 3,758,275
Regency Realty Corp. ...................... 242,056 5,083,176
-----------
26,012,364
-----------
STORAGE-3.9%
Public Storage, Inc. ...................... 381,300 9,913,800
-----------
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) Alliance Real Estate Investment Fund
================================================================================
Company Shares Value
- --------------------------------------------------------------------------------
WAREHOUSE &
INDUSTRIAL-8.3%
AMB Property Corp. ........................ 168,100 $ 3,614,150
Cabot Industrial Trust .................... 365,200 7,372,475
ProLogis Trust ............................ 495,700 9,728,112
-----------
20,714,737
-----------
Total Real Estate Investment
Trusts
(cost $278,549,703) ..................... 237,486,929
-----------
REAL ESTATE
DEVELOPMENT &
MANAGEMENT-4.5%
Brookfield Properties
Corp. (Canada)
(cost $11,960,912) ...................... 932,400 11,412,761
-----------
Total Common Stocks
(cost $290,510,615) ..................... 248,899,690
-----------
Principal
Amount
Company (000) Value
- --------------------------------------------------------------------------------
TIME DEPOSIT-0.8%
Bank of New York
4.75%, 9/01/99
(amortized cost
$1,992,000) ....................... $ 1,992 $ 1,992,000
------------
TOTAL INVESTMENTS-99.9%
(cost $292,502,615) ............... 250,891,690
Other assets less
liabilities-0.1% .................. 157,808
------------
NET ASSETS-100% ..................... $251,049,498
============
- --------------------------------------------------------------------------------
See notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 Alliance Real Estate Investment Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $292,502,615) .......................... $ 250,891,690
Cash ............................................................................. 148,509
Receivable for investment securities sold ........................................ 1,135,716
Receivable for capital stock sold ................................................ 244,337
Dividends and interest receivable ................................................ 168,121
Deferred organizational expenses ................................................. 126,895
-------------
Total assets ..................................................................... 252,715,268
-------------
LIABILITIES
Payable for capital stock redeemed ............................................... 894,418
Advisory fee payable ............................................................. 196,144
Distribution fee payable.......................................................... 194,548
Accrued expenses ................................................................. 380,660
-------------
Total liabilities ................................................................ 1,665,770
-------------
NET ASSETS ......................................................................... $ 251,049,498
=============
COMPOSITION OF NET ASSETS
Capital stock, at par ............................................................ $ 246,827
Additional paid-in capital ....................................................... 344,755,626
Accumulated net realized loss on investments and foreign currency transactions ... (52,341,964)
Net unrealized depreciation of investments and foreign currency denominated assets
and liabilities ................................................................ (41,610,991)
-------------
$ 251,049,498
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($35,299,269 / 3,463,699 shares of capital stock issued and outstanding) ....... $10.19
Sales charge--4.25% of public offering price ..................................... .45
------
Maximum offering price ........................................................... $10.64
======
Class B Shares
Net asset value and offering price per share
($168,741,076 / 16,598,298 shares of capital stock issued and outstanding) ..... $10.17
======
Class C Shares
Net asset value and offering price per share
($44,738,695 / 4,398,134 shares of capital stock issued and outstanding) ....... $10.17
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($2,270,458 / 222,538 shares of capital stock issued and outstanding) .......... $10.20
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
Year Ended August 31, 1999 Alliance Real Estate Investment Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $15,534) .... $ 18,952,788
Interest ................................................ 255,453 $ 19,208,241
------------
EXPENSES
Advisory fee ............................................ 2,889,075
Distribution fee - Class A .............................. 125,363
Distribution fee - Class B .............................. 2,206,739
Distribution fee - Class C .............................. 560,012
Transfer agency ......................................... 764,508
Printing ................................................ 147,216
Custodian ............................................... 132,270
Administrative .......................................... 124,000
Audit and legal ......................................... 79,634
Amortization of organization expenses ................... 60,955
Directors' fees ......................................... 28,000
Miscellaneous ........................................... 25,512
------------
Total expenses .......................................... 7,143,284
------------
Net investment income ................................... 12,064,957
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions ............ (52,356,931)
Net realized loss on foreign currency transactions ...... (9,366)
Net change in unrealized depreciation of:
Investments ........................................... 51,625,228
Foreign currency denominated assets and liabilities ... (67)
------------
Net gain on investments and foreign currency transactions (741,136)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................ $ 11,323,821
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS Alliance Real Estate Investment Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, August 31,
1999 1998
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................................... $ 12,064,957 $ 14,025,396
Net realized gain (loss) on investments and foreign currency transactions (52,366,297) 6,488,125
Net change in unrealized depreciation of investments and foreign
currency denominated assets and liabilities ........................... 51,625,161 (113,565,407)
------------- -------------
Net increase (decrease) in net assets from operations ................... 11,323,821 (93,051,886)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ............................................................... (1,745,364) (2,204,713)
Class B ............................................................... (8,140,266) (9,402,948)
Class C ............................................................... (2,066,633) (2,290,119)
Advisor Class ......................................................... (112,694) (133,960)
Distributions in excess of net investment income
Class A ............................................................... (507,946) -0-
Class B ............................................................... (2,369,028) -0-
Class C ............................................................... (601,444) -0-
Advisor Class ......................................................... (32,797) -0-
Net realized gain on investments
Class A ............................................................... (375,757) (39,960)
Class B ............................................................... (2,075,324) (201,260)
Class C ............................................................... (512,970) (44,722)
Advisor Class ......................................................... (23,058) (2,319)
Tax return of capital
Class A ............................................................... (62,310) -0-
Class B ............................................................... (308,086) -0-
Class C ............................................................... (77,463) -0-
Advisor Class ......................................................... (3,958) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) ................................................. (133,803,420) 230,444,209
------------- -------------
Total increase (decrease) ............................................... (141,494,697) 123,072,322
NET ASSETS
Beginning of year ....................................................... 392,544,195 269,471,873
------------- -------------
End of year (including undistributed net investment income of $479,529
at August 31, 1998) ................................................... $ 251,049,498 $ 392,544,195
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1999 Alliance Real Estate Investment Fund
================================================================================
NOTE A: Significant Accounting Policies
Alliance Real Estate Investment Fund, Inc. (the "Fund") was incorporated in the
state of Maryland on July 15, 1996 as a diversified, open-end management
investment company. The Fund offers Class A, Class B, Class C and Advisor Class
shares. Class A shares 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%. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on the
period of time the shares are held. Class B shares will automatically convert to
Class A shares eight years after the end of the calendar month of purchase.
Class C shares are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. Advisor Class shares are
sold without an initial or contingent deferred sales charge and are not subject
to ongoing distribution expenses. Advisor Class shares are offered to investors
participating in fee based programs and to certain retirement plan accounts. All
four classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The following is
a summary of significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked prices of that day. Readily marketable securities
traded in the over-the-counter market, securities listed on a foreign securities
exchange whose operations are similar to the U.S. over-the-counter market, and
securities listed on a national securities exchange whose primary market is
believed to be over-the-counter, are valued at the mean of the current bid and
asked prices. U.S. government and fixed income securities which mature in 60
days or less are valued at amortized cost, unless this method does not represent
fair value. Securities for which current market quotations are not readily
available are valued at their fair value as determined in good faith by, or in
accordance with procedures adopted by, the Board of Directors. Fixed income
securities may be valued on the basis of prices obtained from a pricing service
when such prices are believed to reflect the fair market value of such
securities.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued.
Net realized foreign exchange gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and forward currency
exchange contracts, holding of foreign currencies, exchange gains or losses
realized between the trade and settlement dates on security transactions, and
the difference between the amounts of dividends, interest and foreign taxes
receivable recorded on the Fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net currency gains and losses from valuing foreign
currency denominated assets and liabilities at year end exchange rates are
reflected as a component of net unrealized appreciation (depreciation) of
investments and foreign currency denominated assets and liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
4. Organization Expenses
Organization costs of $304,750 have been deferred and are being amortized on a
straight-line basis through October 2001.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions
12
<PAGE>
Alliance Real Estate Investment Fund
================================================================================
are accounted for on the date the securities are purchased or sold. Investment
gains and losses are determined on the identified cost basis. The Fund accretes
discounts as adjustments to interest income.
6. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at August
31, 1999 and the reported amounts of income and expenses during the period.
Actual results could differ from those estimates.
Significant estimates may include the classification of distributions received
by the Fund from the issuers of the Fund's portfolio securities. These
distributions may be classified as either dividend income, capital gains or as
non-taxable distributions. The final classifications of these distributions
cannot be determined until reported to the Fund by the issuers of the Fund's
portfolio securities, which normally occurs in January after the end of the
calendar year. Reclassification of distributions made to the Fund will not
affect the net assets of the Fund. The reclassification of distributions
received by the Fund may require the Fund to reclassify a portion of its
distributions to Fund shareholders.
7. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees than
Class A shares and Advisor Class shares (Advisor Class shares have no
distribution fees).
8. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences, do not require such
reclassification.
During the current fiscal year, permanent differences, primarily due to book/tax
differences, resulting from the Fund's investments in Real Estate Investment
Trusts and tax classifications of distributions, resulted in a decrease in
distributions in excess of net investment income and additional paid-in capital
and a corresponding increase in accumulated net realized loss on investments and
foreign currency transactions. This reclassification had no affect on net
assets.
- --------------------------------------------------------------------------------
NOTE B: Advisory Fee and Other Transactions With Affiliates
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") a monthly fee equal to the annualized
rate of .90 of 1% of the average daily net assets of the Fund. Such fee is
accrued daily and paid monthly.
Pursuant to the advisory agreement, the Fund paid $124,762 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended August 31, 1999.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $395,473 for the year ended August 31, 1999.
For the year ended August 31, 1999, the Fund's expenses were reduced by $28,989
under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor has advised the
Fund that it has received $1,241, $1,447,887 and $44,555 in contingent deferred
sales charges imposed upon redemptions by shareholders of Class A, Class B and
Class C shares, respectively, for the year ended August 31, 1999.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Real Estate Investment Fund
================================================================================
Brokerage commissions paid on investment transactions for the year ended August
31, 1999, amounted to $901,795, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
- --------------------------------------------------------------------------------
NOTE C: Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual rate
of up to .30 of 1% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to the Class B and
Class C shares. There is no distribution fee on the Advisor Class shares. The
fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution assistance
and promotional activities. The Distributor has advised the Fund that it has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $11,892,181 and $666,846, for Class B and C shares, respectively;
such costs may be recovered from the Fund in future periods so long as the
Agreement is in effect. In accordance with the Agreement there is no provision
for recovery of unreimbursed distribution costs, incurred by the Distributor,
beyond the current fiscal year for Class A shares. The Agreement also provides
that the Adviser may use its own resources to finance the distribution of the
Fund's shares.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
Purchases and sales of investment securities, (excluding short-term investments
and U.S. government or government agency obligations) aggregated $91,754,190 and
$228,604,466, respectively, for the year ended August 31, 1999. There were no
purchases or sales of U.S. government or government agency obligations for the
year ended August 31, 1999.
At August 31, 1999, the cost of investments for federal income tax purposes was
$293,099,232. Accordingly, gross unrealized appreciation of investments was
$1,171,226 and gross unrealized depreciation of investments was $43,378,768
resulting in net unrealized depreciation of $42,207,542 (excluding foreign
currency transactions).
At August 31, 1999, the Fund had a capital loss carryforward of $9,807,830 which
expires in the year 2007.
Capital losses incurred after October 31 (post-October losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
$41,937,517 during the fiscal year 1999. To the extent that the carryover losses
are used to offset future capital gains, it is probable that the gain so offset
will not be distributed to shareholders.
14
<PAGE>
Alliance Real Estate Investment Fund
================================================================================
NOTE E: Capital Stock
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Class A
Shares sold .................... 1,764,409 4,031,794 $ 19,090,372 $ 54,670,681
Shares issued in reinvestment of
dividends and distributions .. 171,388 107,045 1,756,498 1,392,487
Shares converted from Class B .. 42,263 36,683 449,139 457,491
Shares redeemed ................ (3,407,716) (2,222,402) (35,576,653) (28,964,016)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (1,429,656) 1,953,120 $ (14,280,644) $ 27,556,643
============= ============= ============= =============
Class B
Shares sold .................... 3,270,822 16,336,188 $ 34,546,957 $ 221,327,921
Shares issued in reinvestment of
dividends and distributions .. 561,653 328,979 5,748,227 4,276,970
Shares converted to Class A .... (42,346) (36,750) (449,139) (457,491)
Shares redeemed ................ (12,946,430) (5,480,259) (135,195,797) (70,036,664)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (9,156,301) 11,148,158 $ (95,349,752) $ 155,110,736
============= ============= ============= =============
Class C
Shares sold .................... 1,216,451 5,180,658 $ 12,871,848 $ 70,280,469
Shares issued in reinvestment of
dividends and distributions .. 124,858 63,778 1,279,574 824,321
Shares redeemed ................ (3,605,389) (1,922,771) (37,755,412) (24,674,279)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (2,264,080) 3,321,665 $ (23,603,990) $ 46,430,511
============= ============= ============= =============
Advisor Class
Shares sold .................... 39,978 207,950 $ 424,030 $ 2,825,619
Shares issued in reinvestment of
dividends and distributions .. 11,392 8,017 116,904 105,015
Shares redeemed ................ (105,522) (119,760) (1,109,968) (1,584,315)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (54,152) 96,207 $ (569,034) $ 1,346,319
============= ============= ============= =============
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility") to
provide short-term financing if necessary, subject to certain restrictions in
connection with abnormal redemption activity. Commitment fees related to the
Facility are paid by the participating funds and are included in the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended August 31, 1999.
15
<PAGE>
FINANCIAL HIGHLIGHTS Alliance Real Estate Investment Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
CLASS A
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ..................... $10.47 $12.80 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b) ................................ .46 .52 .30
Net realized and unrealized gain (loss) on investments and
foreign currency transactions .......................... (.06) (2.33) 2.88
------ ------ ------
Net increase (decrease) in net asset value from operations .40 (1.81) 3.18
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income ..................... (.46) (.51) (.30)
Distributions in excess of net investment income ......... (.10) -0- -0-
Distributions from net realized gains on investments ..... (.10) (.01) -0-
Tax return of capital .................................... (.02) -0- (.08)
------ ------ ------
Total dividends and distributions ........................ (.68) (.52) (.38)
------ ------ ------
Net asset value, end of period ........................... $10.19 $10.47 $12.80
====== ====== ======
Total Return
Total investment return based on net asset value (c) ..... 3.86% (14.90)% 32.24%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ................ $35,299 $51,214 $37,638
Ratio to average net assets of:
Expenses net of waivers/reimbursements ................. 1.58% 1.55% 1.77%(d)(e)
Expenses before waivers/reimbursements ................. 1.58% 1.55% 1.79%(d)
Net investment income .................................. 4.57% 3.87% 2.73%(d)
Portfolio turnover rate .................................. 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
16
<PAGE>
Alliance Real Estate Investment Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
CLASS B
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $10.44 $12.79 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b)................................. .38 .42 .23
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.05) (2.33) 2.89
------ ------ ------
Net increase (decrease) in net asset value from operations .33 (1.91) 3.12
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income...................... (.38) (.43) (.24)
Distributions in excess of net investment income ......... (.10) -0- -0-
Distributions from net realized gains on investments (.10) (.01) -0-
Tax return of capital..................................... (.02) -0- (.09)
------ ------ ------
Total dividends and distributions......................... (.60) (.44) (.33)
------ ------ ------
Net asset value, end of period............................ $10.17 $10.44 $12.79
====== ====== ======
Total Return
Total investment return based on net asset value (c)...... 3.20% (15.56)% 31.49%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)................. $168,741 $268,856 $186,802
Ratio to average net assets of:
Expenses net of waivers/reimbursements.................. 2.31% 2.26% 2.44%(d)(e)
Expenses before waivers/reimbursements.................. 2.31% 2.26% 2.45%(d)
Net investment income................................... 3.82% 3.16% 2.08%(d)
Portfolio turnover rate................................... 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
17
<PAGE>
FINANCIAL HIGHLIGHTS (continued) Alliance Real Estate Investment Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
CLASS C
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $10.44 $12.79 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b)................................. .38 .42 .23
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.05) (2.33) 2.89
------ ------ ------
Net increase (decrease) in net asset value from operations .33 (1.91) 3.12
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income...................... (.38) (.43) (.25)
Distributions in excess of net investment income ......... (.10) -0- -0-
Distributions from net realized gains on investments ..... (.10) (.01) -0-
Tax return of capital..................................... (.02) -0- (.08)
------ ------ ------
Total dividends and distributions......................... (.60) (.44) (.33)
------ ------ ------
Net asset value, end of period............................ $10.17 $10.44 $12.79
====== ====== ======
Total Return
Total investment return based on net asset value (c)...... 3.20% (15.56)% 31.49%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)................. $44,739 $69,575 $42,719
Ratio to average net assets of:
Expenses net of waivers/reimbursements.................. 2.30% 2.26% 2.43%(d)(e)
Expenses before waivers/reimbursements.................. 2.30% 2.26% 2.45%(d)
Net investment income................................... 3.77% 3.15% 2.06%(d)
Portfolio turnover rate................................... 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
18
<PAGE>
Alliance Real Estate Investment Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
ADVISOR CLASS
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $10.48 $12.82 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b)................................. .48 .55 .35
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.05) (2.34) 2.88
------ ------ ------
Net increase (decrease) in net asset value from operations .43 (1.79) 3.23
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income...................... (.48) (.54) (.38)
Distributions in excess of net investment income ......... (.11) -0- -0-
Distributions from net realized gains on investments ..... (.10) (.01) -0-
Tax return of capital..................................... (.02) -0- (.03)
------ ------ ------
Total dividends and distributions......................... (.71) (.55) (.41)
------ ------ ------
Net asset value, end of period............................ $10.20 $10.48 $12.82
====== ====== ======
Total Return
Total investment return based on net asset value (c)...... 4.18% (14.74)% 32.72%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)................. $2,270 $2,899 $2,313
Ratio to average net assets of:
Expenses net of waivers/reimbursements.................. 1.30% 1.25% 1.45%(d)(e)
Expenses before waivers/reimbursements.................. 1.30% 1.25% 1.47%(d)
Net investment income................................... 4.75% 4.08% 3.07%(d)
Portfolio turnover rate................................... 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) 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 charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment return calculated for a period
of less than one year is not annualized.
(d) Annualized.
(e) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended August 31, 1997, the ratios of expenses
net of waivers/reimbursements were 1.77%, 2.43%, 2.42% and 1.44% for Class
A, B, C and Advisor Class shares, respectively.
19
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance Real Estate Investment Fund
================================================================================
To the Shareholders and Board of Directors
Alliance Real Estate Investment Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Alliance
Real Estate Investment Fund, Inc. (the "Fund"), including the portfolio of
investments, as of August 31, 1999, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1999, by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Real Estate Investment Fund, Inc. at August 31, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
October 8, 1999
TAX INFORMATION (unaudited)
================================================================================
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $2,987,109 of the capital gain distributions paid by the Fund
during the fiscal year August 31, 1999 are from long term capital gains.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns will be included
with your Form 1099 DIV which will be sent to you separately in January 2000.
20
<PAGE>
<PAGE>
____________________________________________________________
APPENDIX A:
CERTAIN EMPLOYEE BENEFIT PLANS
____________________________________________________________
Employee benefit plans described below which are
intended to be tax-qualified under section 401(a) of the Internal
Revenue Code of 1986, as amended ("Tax Qualified Plans"), for
which Merrill Lynch, Pierce, Fenner & Smith Incorporated or an
affiliate thereof ("Merrill Lynch") is recordkeeper (or with
respect to which recordkeeping services are provided pursuant to
certain arrangements as described in paragraph (ii) below)
("Merrill Lynch Plans") are subject to specific requirements as
to the Fund shares which they may purchase. Notwithstanding
anything to the contrary contained elsewhere in this Statement of
Additional Information, the following Merrill Lynch Plans are not
eligible to purchase Class A shares and are eligible to purchase
Class B shares of the Fund at net asset value without being
subject to a contingent deferred sales charge:
(i) Plans for which Merrill Lynch is the recordkeeper on a
daily valuation basis, if when the plan is established
as an active plan on Merrill Lynch's recordkeeping
system:
(a) the plan is one which is not already
investing in shares of mutual funds or
interests in other commingled investment
vehicles of which Merrill Lynch Asset
Management, L.P. is investment adviser or
manager ("MLAM Funds"), and either (A) the
aggregate assets of the plan are less than
$3 million or (B) the total of the sum of
(x) the employees eligible to participate in
the plan and (y) those persons, not
including any such employees, for whom a
plan account having a balance therein is
maintained, is less than 500, each of (A)
and (B) to be determined by Merrill Lynch in
the normal course prior to the date the plan
is established as an active plan on Merrill
Lynch's recordkeeping system (an "Active
Plan"); or
(b) the plan is one which is already investing
in shares of or interests in MLAM Funds and
the assets of the plan have an aggregate
value of less than $5 million, as determined
A-1
<PAGE>
by Merrill Lynch as of the date the plan
becomes an Active Plan.
For purposes of applying (a) and (b), there
are to be aggregated all assets of any Tax-
Qualified Plan maintained by the sponsor of
the Merrill Lynch Plan (or any of the
sponsor's affiliates) (determined to be such
by Merrill Lynch) which are being invested
in shares of or interests in MLAM Funds,
Alliance Mutual Funds or other mutual funds
made available pursuant to an agreement
between Merrill Lynch and the principal
underwriter thereof (or one of its
affiliates) and which are being held in a
Merrill Lynch account.
(ii) Plans for which the recordkeeper is not Merrill Lynch,
but which are recordkept on a daily valuation basis by
a recordkeeper with which Merrill Lynch has a
subcontracting or other alliance arrangement for the
performance of recordkeeping services, if the plan is
determined by Merrill Lynch to be so eligible and the
assets of the plan are less than $3 million.
Class B shares of the Fund held by any of the above-
described Merrill Lynch Plans are to be replaced at Merrill
Lynch's direction through conversion, exchange or otherwise by
Class A shares of the Fund on the earlier of the date that the
value of the plan's aggregate assets first equals or exceeds $5
million or the date on which any Class B share of the Fund held
by the plan would convert to a Class A share of the Fund as
described under "Purchase of Shares" and "Redemption and
Repurchase of Shares."
Any Tax Qualified Plan, including any Merrill Lynch
Plan, which does not purchase Class B shares of the Fund without
being subject to a contingent deferred sales charge under the
above criteria is eligible to purchase Class B shares subject to
a contingent deferred sales charge as well as other classes of
shares of the Fund as set forth above under "Purchase of Shares"
and "Redemption and Repurchase of Shares."
A-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) (1) Articles of Incorporation of the Registrant -
Incorporated by reference to Exhibit 1 to
Registrant's Registration Statement on Form
N-1A (File Nos. 333-08153 and 811-07707) filed
with the Securities and Exchange Commission on
July 16, 1996.
(2) Articles of Amendment of Articles of
Incorporation of the Registrant dated
September 30, 1996 and filed October 1, 1996 -
Incorporated by reference to Exhibit 1(b) to
Post-Effective Amendment No. 3 of Registrant's
Registration Statement on Form N-1A (File Nos.
333-08153 and 811-07707) filed with the
Securities and Exchange Commission on
November 2, 1998.
(b) By-Laws - Incorporated by reference to Exhibit 2 to
Registrant's Registration Statement on Form N-1A
(File Nos. 333-08153 and 811-07707) filed with the
Securities and Exchange Commission on July 16,
1996.
(c) Not applicable.
(d) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Incorporated by
reference to Exhibit 5 to Post-Effective Amendment
No. 3 of Registrant's Registration Statement on
Form N-1A (File Nos. 333-08153 and 811-07707) filed
with the Securities and Exchange Commission on
November 2, 1998.
(e) (1) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors,
Inc. - Incorporated by reference to Exhibit
6(a) to Post-Effective Amendment No. 3 of
Registrant's Registration Statement on Form N-
1A (File Nos. 333-08153 and 811-07707) filed
with the Securities and Exchange Commission on
November 2, 1998.
(2) Form of Selected Dealers Agreement between
Alliance Fund Distributors, Inc. and selected
dealers offering shares of Registrant -
Incorporated by reference to Exhibit 6(b) to
C-1
<PAGE>
Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08153 and 811-07707) filed with the
Securities and Exchange Commission on August
27, 1996.
(3) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected
agent making available shares of the
Registrant - Incorporated by reference to
Exhibit 6(c) to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form
N-1A (File Nos. 333-08153 and 811-07707) filed
with the Securities and Exchange Commission on
August 27, 1996.
(f) Not applicable.
(g) Custody Agreement between the Registrant and The
Bank of New York - Incorporated by reference to
Exhibit 8 to Post-Effective Amendment No. 3 of
Registrant's Registration Statement on Form N-1A
(File Nos. 333-08153 and 811-07707) filed with the
Securities and Exchange Commission on November 2,
1998.
(h) Transfer Agency Agreement between the Registrant
and Alliance Fund Services, Inc. - Incorporated by
reference to Exhibit 9 to Post-Effective Amendment
No. 3 of Registrant's Registration Statement on
Form N-1A (File Nos. 333-08153 and 811-07707) filed
with the Securities and Exchange Commission on
November 2, 1998.
(i) (1) Consent and Opinion of Seward & Kissel LLP -
Filed herewith.
(2) Consent and Opinion of Venable, Baetjer and
Howard, LLP - Incorporated by reference to
Exhibit 10(b) to Pre-Effective Amendment No. 2
of Registrant's Registration Statement on Form
N-1A (File Nos. 333-08153 and 811-07707) filed
with the Securities and Exchange Commission on
August 27, 1996.
(j) Consent of Independent Auditors - Filed herewith.
(k) Not applicable.
(l) Not applicable.
C-2
<PAGE>
(m) Rule 12b-1 Plan - See Exhibit (e)(1) and (2) above.
(n) Financial Data Schedules - Filed herewith.
(o) Amended and Restated Rule 18f-3 Plan dated
September 30, 1996 - Incorporated by reference to
Exhibit 18 to Pre-Effective Amendment No. 2 of
Registrant's Registration Statement on Form N-1A
(File Nos. 333-08153 and 811-07707) filed with the
Securities and Exchange Commission on August 27,
1996.
OTHER EXHIBITS:
Powers of Attorney of: Ruth S. Block, John D. Carifa,
David H. Dievler, David H. Dobkin, William H. Foulk,
Jr., Howard E. Hassler, James M. Hester, Clifford L.
Michel and Donald J. Robinson - Filed herewith.
ITEM 24. Persons Controlled by or Under Common Control with the
Fund.
None.
ITEM 25. 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, which is
incorporated by reference herein, and as set forth in
Article EIGHTH of Registrant's Articles of
Incorporation, filed as Exhibit (a) in response to Item
23 hereto, Article VII and Article VIII of Registrant's
By-Laws, filed as Exhibit (b) in response to Item 23
hereto, and Section 10 of the proposed Distribution
Services Agreement, filed as Exhibit e(1) in response to
Item 23 hereto. The Adviser's liability for any loss
suffered by the Registrant or its shareholders is set
forth in Section 4 of the proposed Advisory Agreement,
filed as Exhibit (d) in reponse to Item 23 hereto.
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
C-3
<PAGE>
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.
C-4
<PAGE>
The Registrant participates in a joint
trustees/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 Alliance Capital Management L.P.
Under this policy, outside trustees and directors are
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 the
Adviser.
ITEM 26. Business and Other Connections of Adviser.
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively, of
this Registration Statement are incorporated by
reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference herein.
ITEM 27. Principal Underwriters.
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale of
shares of the Registrant. Alliance Fund Distributors,
Inc. also acts as Principal Underwriter or Distributor
for the following investment companies:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
C-5
<PAGE>
Alliance Health Care Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Institutional Funds, Inc.
Alliance Institutional Reserves, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Select Investor Series, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of Alliance
Fund Distributors, Inc., the principal place of business
of which is 1345 Avenue of the Americas, New York, New
York, 10105.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
Michael J. Laughlin Director and Chairman
John D. Carifa Director Chairman and
President
Robert L. Errico Director and President
Geoffrey L. Hyde Director and Senior
Vice President
Dave H. Williams Director
David Conine Executive Vice President
Richard K. Saccullo Executive Vice President
C-6
<PAGE>
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel and
Secretary
Richard A. Davies Senior Vice President
and Managing Director
Robert H. Joseph, Jr. Senior Vice President
and Chief Financial Officer
Anne S. Drennan Senior Vice President
and Treasurer
Benji A. Baer Senior Vice President
Karen J. Bullot Senior Vice President
John R. Carl Senior Vice President
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Mark J. Dunbar Senior Vice President
Donald N. Fritts Senior Vice President
Bradley F. Hanson Senior Vice President
George H. Keith Senior Vice President
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Susan L. Matteson-King Senior Vice President
Daniel D. McGinley Senior Vice President
Antonios G. Poleondakis Senior Vice President
Robert E. Powers Senior Vice President
Kevin A. Rowell Senior Vice President
Raymond S. Sclafani Senior Vice President
C-7
<PAGE>
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
William C. White Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Gerard J. Friscia Vice President and
Controller
Ricardo Arreola Vice President
Kenneth F. Barkoff Vice President
Charles M. Barrett Vice President
Gregory P. Best Vice President
Casimir F. Bolanowski Vice President
Robert F. Brendli Vice President
Christopher L. Butts Vice President
Timothy W. Call Vice President
Jonathan W. Cangalosi Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Russell R. Corby Vice President
John W. Cronin Vice President
William J. Crouch Vice President
Robert J. Cruz Vice President
Richard W. Dabney Vice President
C-8
<PAGE>
John F. Dolan Vice President
Richard P. Dyson Vice President
John C. Endahl Vice President
John E. English Vice President
Sohaila S. Farsheed Vice President
Duff C. Ferguson Vice President
Daniel J. Frank Vice President
Shawn C. Gage Vice President
Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
Counsel
Alex G. Garcia Vice President
Michael J. Germain Vice President
Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer
John Grambone Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Michael S. Hart Vice President
Timothy A. Hill Vice President
Brian R. Hoegee Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Michael J. Hutten Vice President
Scott Hutton Vice President
C-9
<PAGE>
Oscar J. Isoba Vice President
Richard D. Keppler Vice President
Richard D. Kozlowski Vice President
Daniel W. Krause Vice President
Donna M. Lamback Vice President
P. Dean Lampe Vice President
Nicholas J. Lapi Vice President
Henry Michael Lesmeister Vice President
Eric L. Levinson Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Jerry W. Lynn Vice President
Michael F. Mahoney Vice President
Shawn P. McClain Vice President
David L. McGuire Vice President
Jeffrey P. Mellas Vice President
Michael V. Miller Vice President
Thomas F. Monnerat Vice President
Timothy S. Mulloy Vice President
Joanna D. Murray Vice President
Michael F. Nash, Jr. Vice President
Nicole Nolan-Koester Vice President
Daniel A. Notto Vice President
Peter J. O'Brien Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
C-10
<PAGE>
Christopher W. Olson Vice President
Richard J. Olszewski Vice President
Catherine N. Peterson Vice President
James J. Posch Vice President
Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel
Bruce W. Reitz Vice President
Karen C. Satterberg Vice President
John P. Schmidt Vice President
Robert C. Schultz Vice President
Richard J. Sidell Vice President
Clara Sierra Vice President
Teris A. Sinclair Vice President
Scott C. Sipple Vice President
Martine H. Stansbery, Jr. Vice President
Vincent T. Strangio Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Benjamin H. Travers Vice President
David R. Turnbough Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
Mark E. Westmoreland Vice President
David E. Willis Vice President
Stephen P. Wood Vice President
C-11
<PAGE>
Emilie D. Wrapp Vice President and Assistant
Assistant General Secretary
Counsel
Michael W. Alexander Assistant Vice
President
Richard J. Appaluccio Assistant Vice
President
Paul G. Bishop Assistant Vice
President
Mark S. Burns Assistant Vice
President
John M. Capeci Assistant Vice
President
Maria L. Carreras Assistant Vice
President
John P. Chase Assistant Vice
President
William P. Condon Assistant Vice
President
Jean A. Coomber Assistant Vice
President
Terri J. Daly Assistant Vice
President
Ralph A. DiMeglio Assistant Vice
President
Faith C. Deutsch Assistant Vice
President
Timothy J. Donegan Assistant Vice
President
Adam E. Engelhardt Assistant Vice
President
Michele Grossman Assistant Vice
President
C-12
<PAGE>
Theresa Iosca Assistant Vice
President
Erik A. Jorgensen Assistant Vice
President
Eric G. Kalender Assistant Vice
President
Edward W. Kelly Assistant Vice
President
Victor Kopelakis Assistant Vice
President
Evamarie C. Lombardo Assistant Vice
President
Kristine J. Luisi Assistant Vice
President
Kathryn Austin Masters Assistant Vice
President
Richard F. Meier Assistant Vice
President
Rizwan A. Raja Assistant Vice
President
Carol H. Rappa Assistant Vice
President
Mark V. Spina Assistant Vice
President
Gayle S. Stamer Assistant Vice
President
Eileen Stauber Assistant Vice
President
Margaret M. Tompkins Assistant Vice
President
Marie R. Vogel Assistant Vice Assistant
President Secretary
C-13
<PAGE>
Wesley S. Williams Assistant Vice
President
Matthew Witschel Assistant Vice
President
David M. Wolf Assistant Vice
President
Mark R. Manley Assistant Secretary
(c) Not applicable.
ITEM 28. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules thereunder
are maintained as follows: journals, ledgers,
securities records and other original records are
maintained principally at the offices of Alliance Fund
Services, Inc., 500 Plaza Drive, Secaucus, New Jersey,
07094 and at the offices of The Bank of New York, the
Registrant's custodian, 48 Wall Street, New York, New
York 10286. All other records so required to be
maintained are maintained at the offices of Alliance
Capital Management L.P., 1345 Avenue of the Americas,
New York, New York, 10105.
ITEM 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
(c) The Registrant undertakes to furnish each person to whom
a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon request
and without charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the removal of
any Director of the Fund in accordance with Section 16
of the Investment Company Act of 1940.
C-14
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for
effectiveness of this Amendment to its Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City and State of New York, on the 28th day of
October, 1999.
ALLIANCE REAL ESTATE INVESTMENT
FUND, INC.
By /s/ John D. Carifa
______________________________
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of 1933 this
Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates
indicated:
SIGNATURE TITLE DATE
1) Principal Executive
Officer
/s/ John D. Carifa
_______________________ Chairman and
John D. Carifa President October 28, 1999
2) Principal Financial
and Accounting Officer
/s/ Mark D. Gersten
_______________________ Treasurer and
Mark D. Gersten Financial
Officer October 28, 1999
C-15
<PAGE>
3) All of the Directors
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
Howard E. Hassler
James M. Hester
Clifford L. Michel
Donald J. Robinson
by Edmund P. Bergan, Jr. , 1999
_______________________ October 28, 1999
Edmund P. Bergan, Jr.
(Attorney-in-fact)
C-16
<PAGE>
INDEX TO EXHIBITS
PAGE
(i) Opinion of Seward & Kissel LLP
(j) Consent of Independent Auditors
(n) Financial Data Schedules
Other Powers of Attorney
C-17
00250231.AU0
<PAGE>
Exhibit (i)
SEWARD & KISSEL LLP
ONE BATTERY PARK PLAZA
NEW YORK, NY 10004
Telephone: (212) 574-1200
Facsimile: (212) 480-8421
www.sewkis.com
October 28, 1999
Alliance Premier Growth Fund, Inc.
Alliance Health Care Fund, Inc.
Alliance Technology Fund, Inc.
Alliance Quasar Fund, Inc.
The Alliance Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Utility Income Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance New Europe Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
Alliance International Premier Growth Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Greater China 97 Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Global Environment Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Ladies and Gentlemen:
We have acted as counsel for each of the corporations named
above (each, a "Company," and collectively, the "Companies") in
connection with the registration under the Securities Act of
1933, as amended (the "Securities Act"), of an indefinite number
of shares of each Company's common stock, par value per share as
set forth in that Company's Charter (the "Common Stock"). Each
Company is a Maryland corporation and is registered under the
Investment Company Act of 1940, as amended, as an open-end
management investment company. This opinion is rendered to each
Company severally, and not to the Companies jointly, and relates
to Common Stock of each class and portfolio being registered
pursuant to the Post-Effective Amendment to the Registration
Statement on Form N-1A to be filed with the Securities and
Exchange Commission (the "Commission") to become effective on
November 1, 1999 pursuant to paragraph (b) of Rule 485 under the
<PAGE>
Securities Act (as so amended, the "Registration Statement") in
which this letter is included as Exhibit (i).
As counsel for a Company, we have participated in the
preparation of each Company's Registration Statement. We have
examined the Charter and By-laws of the Company and any
amendments and supplements thereto and have relied upon a
certificate of an Assistant Secretary of the Company certifying
the resolutions of the Board of Directors of the Company
authorizing the sale and issuance of shares of the Common Stock.
We have also examined and relied upon such corporate records of
the Company and such other documents and certificates as to
factual matters as we have deemed to be necessary to render the
opinion expressed herein.
Based on such examination, we are of the opinion that the
shares of Common Stock of the Company to be offered for sale
pursuant to the Registration Statement are, to the extent of the
number of shares of the relevant class, and, if applicable,
portfolio, authorized to be issued by the Company in its Charter,
duly authorized, and, when sold, issued and paid for as
contemplated by the Registration Statement, will have been
validly issued and will be fully paid and nonassessable shares of
Common Stock of the Company under the laws of the State of
Maryland.
We do not express an opinion with respect to any laws other
than the Maryland General Corporation Law. Accordingly, our
opinion does not extend to, among other laws, the federal
securities laws or the securities or "blue sky" laws of Maryland
or any other jurisdiction. Members of this firm are admitted to
the bar in the State of New York and the District of Columbia.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement and to the
reference to our firm under the caption "General Information-
- -Counsel" in the Part B thereof. In giving this consent, we do
not thereby admit that we are included in the category of persons
whose consent is required under Section 7 of the Securities Act
or the rules and regulations of the Commission.
Very truly yours,
/s/ Seward & Kissel LLP
2
00250157.BX9
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights", "Shareholder Services-Statements and
Reports" and "General Information-Independent Auditors" and to
the use of our report dated October 8, 1999 in this Registration
Statement (Form N-1A Nos. 333-08513 and 811-07707) of Alliance
Real Estate Investment Fund, Inc.
ERNST & YOUNG LLP
New York, New York
October 26, 1999
00250231.AU7
<PAGE>
[ARTICLE] 6
[CIK] 0001018368
[NAME] ALLIANCE REAL ESTATE INVESTMENT FUND - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] AUG-31-1999
[PERIOD-END] AUG-31-1999
[INVESTMENTS-AT-COST] 292,502,615
[INVESTMENTS-AT-VALUE] 250,891,690
[RECEIVABLES] 1,548,174
[ASSETS-OTHER] 126,895
[OTHER-ITEMS-ASSETS] 148,509
[TOTAL-ASSETS] 252,715,268
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,665,770
[TOTAL-LIABILITIES] 1,665,770
[SENIOR-EQUITY] 246,827
[PAID-IN-CAPITAL-COMMON] 344,755,626
[SHARES-COMMON-STOCK] 3,463,699
[SHARES-COMMON-PRIOR] 4,893,355
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (52,341,964)
[ACCUM-APPREC-OR-DEPREC] (41,610,991)
[NET-ASSETS] 35,299,269
[DIVIDEND-INCOME] 18,952,788
[INTEREST-INCOME] 255,453
[OTHER-INCOME] 0
[EXPENSES-NET] 7,143,284
[NET-INVESTMENT-INCOME] 12,064,957
[REALIZED-GAINS-CURRENT] (52,366,297)
[APPREC-INCREASE-CURRENT] 51,625,161
[NET-CHANGE-FROM-OPS] 11,323,821
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (2,295,279)
[DISTRIBUTIONS-OF-GAINS] (396,098)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,806,672
[NUMBER-OF-SHARES-REDEEMED] (3,407,716)
[SHARES-REINVESTED] 171,388
[NET-CHANGE-IN-ASSETS] (141,494,697)
[ACCUMULATED-NII-PRIOR] 479,529
[ACCUMULATED-GAINS-PRIOR] 6,349,332
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,889,075
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 7,143,284
<PAGE>
[AVERAGE-NET-ASSETS] 41,787,672
[PER-SHARE-NAV-BEGIN] 10.47
[PER-SHARE-NII] .49
[PER-SHARE-GAIN-APPREC] (.09)
[PER-SHARE-DIVIDEND] (.58)
[PER-SHARE-DISTRIBUTIONS] (.10)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.19
[EXPENSE-RATIO] 1.58
</TABLE>
00250231.AU3
<PAGE>
[ARTICLE] 6
[CIK] 0001018368
[NAME] ALLIANCE REAL ESTATE INVESTMENT FUND - CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] AUG-31-1999
[PERIOD-END] AUG-31-1999
[INVESTMENTS-AT-COST] 292,502,615
[INVESTMENTS-AT-VALUE] 250,891,690
[RECEIVABLES] 1,548,174
[ASSETS-OTHER] 126,895
[OTHER-ITEMS-ASSETS] 148,509
[TOTAL-ASSETS] 252,715,268
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,665,770
[TOTAL-LIABILITIES] 1,665,770
[SENIOR-EQUITY] 246,827
[PAID-IN-CAPITAL-COMMON] 344,755,626
[SHARES-COMMON-STOCK] 16,598,298
[SHARES-COMMON-PRIOR] 25,754,599
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (52,341,964)
[ACCUM-APPREC-OR-DEPREC] (41,610,991)
[NET-ASSETS] 168,741,076
[DIVIDEND-INCOME] 18,952,788
[INTEREST-INCOME] 255,453
[OTHER-INCOME] 0
[EXPENSES-NET] 7,143,284
[NET-INVESTMENT-INCOME] 12,064,957
[REALIZED-GAINS-CURRENT] (52,366,297)
[APPREC-INCREASE-CURRENT] 51,625,161
[NET-CHANGE-FROM-OPS] 11,323,821
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (10,705,033)
[DISTRIBUTIONS-OF-GAINS] (2,187,671)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,228,476
[NUMBER-OF-SHARES-REDEEMED] (12,946,430)
[SHARES-REINVESTED] 561,653
[NET-CHANGE-IN-ASSETS] (141,494,697)
[ACCUMULATED-NII-PRIOR] 479,529
[ACCUMULATED-GAINS-PRIOR] 6,349,332
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,889,075
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 7,143,284
<PAGE>
[AVERAGE-NET-ASSETS] 220,673,865
[PER-SHARE-NAV-BEGIN] 10.44
[PER-SHARE-NII] .41
[PER-SHARE-GAIN-APPREC] (.08)
[PER-SHARE-DIVIDEND] (.50)
[PER-SHARE-DISTRIBUTIONS] (.10)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.17
[EXPENSE-RATIO] 2.31
</TABLE>
00250231.AU4
<PAGE>
[ARTICLE] 6
[CIK] 0001018368
[NAME] ALLIANCE REAL ESTATE INVESTMENT FUND - CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] AUG-31-1999
[PERIOD-END] AUG-31-1999
[INVESTMENTS-AT-COST] 292,502,615
[INVESTMENTS-AT-VALUE] 250,891,690
[RECEIVABLES] 1,548,174
[ASSETS-OTHER] 126,895
[OTHER-ITEMS-ASSETS] 148,509
[TOTAL-ASSETS] 252,715,268
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,665,770
[TOTAL-LIABILITIES] 1,665,770
[SENIOR-EQUITY] 246,827
[PAID-IN-CAPITAL-COMMON] 344,755,626
[SHARES-COMMON-STOCK] 4,398,134
[SHARES-COMMON-PRIOR] 6,662,214
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (52,341,964)
[ACCUM-APPREC-OR-DEPREC] (41,610,991)
[NET-ASSETS] 44,738,695
[DIVIDEND-INCOME] 18,952,788
[INTEREST-INCOME] 255,453
[OTHER-INCOME] 0
[EXPENSES-NET] 7,143,284
[NET-INVESTMENT-INCOME] 12,064,957
[REALIZED-GAINS-CURRENT] (52,366,297)
[APPREC-INCREASE-CURRENT] 51,625,161
[NET-CHANGE-FROM-OPS] 11,323,821
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (2,717,770)
[DISTRIBUTIONS-OF-GAINS] (540,740)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,216,451
[NUMBER-OF-SHARES-REDEEMED] (3,605,389)
[SHARES-REINVESTED] 124,858
[NET-CHANGE-IN-ASSETS] (141,494,697)
[ACCUMULATED-NII-PRIOR] 479,529
[ACCUMULATED-GAINS-PRIOR] 6,349,332
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,889,075
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 7,143,284
<PAGE>
[AVERAGE-NET-ASSETS] 56,001,162
[PER-SHARE-NAV-BEGIN] 10.44
[PER-SHARE-NII] .40
[PER-SHARE-GAIN-APPREC] (.07)
[PER-SHARE-DIVIDEND] (.50)
[PER-SHARE-DISTRIBUTIONS] (.10)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.17
[EXPENSE-RATIO] 2.30
</TABLE>
00250231.AU5
<PAGE>
[ARTICLE] 6
[CIK] 0001018368
[NAME] ALLIANCE REAL ESTATE INVESTMENT FUND - CLASS AD
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] AUG-31-1999
[PERIOD-END] AUG-31-1999
[INVESTMENTS-AT-COST] 292,502,615
[INVESTMENTS-AT-VALUE] 250,891,690
[RECEIVABLES] 1,548,174
[ASSETS-OTHER] 126,895
[OTHER-ITEMS-ASSETS] 148,509
[TOTAL-ASSETS] 252,715,268
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,665,770
[TOTAL-LIABILITIES] 1,665,770
[SENIOR-EQUITY] 246,827
[PAID-IN-CAPITAL-COMMON] 344,755,626
[SHARES-COMMON-STOCK] 222,538
[SHARES-COMMON-PRIOR] 276,690
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (52,341,964)
[ACCUM-APPREC-OR-DEPREC] (41,610,991)
[NET-ASSETS] 2,270,458
[DIVIDEND-INCOME] 18,952,788
[INTEREST-INCOME] 255,453
[OTHER-INCOME] 0
[EXPENSES-NET] 7,143,284
[NET-INVESTMENT-INCOME] 12,064,957
[REALIZED-GAINS-CURRENT] (52,366,297)
[APPREC-INCREASE-CURRENT] 51,625,161
[NET-CHANGE-FROM-OPS] 11,323,821
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (148,201)
[DISTRIBUTIONS-OF-GAINS] (24,306)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 39,978
[NUMBER-OF-SHARES-REDEEMED] (105,522)
[SHARES-REINVESTED] 11,392
[NET-CHANGE-IN-ASSETS] (141,494,697)
[ACCUMULATED-NII-PRIOR] 479,529
[ACCUMULATED-GAINS-PRIOR] 6,349,332
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2,889,075
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 7,143,284
<PAGE>
[AVERAGE-NET-ASSETS] 2,545,687
[PER-SHARE-NAV-BEGIN] 10.48
[PER-SHARE-NII] .50
[PER-SHARE-GAIN-APPREC] (.07)
[PER-SHARE-DIVIDEND] (.61)
[PER-SHARE-DISTRIBUTIONS] (.10)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10.20
[EXPENSE-RATIO] 1.30
</TABLE>
00250231.AU6
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance Balanced Shares,
Inc., Alliance Bond Fund, Inc., Alliance Global Dollar
Government Fund, Inc., Alliance Global Small Cap Fund, Inc.,
Alliance Global Strategic Income Trust, Inc., Alliance
Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Mortgage Securities
Income Fund, Inc., Alliance Multi-Market Strategy Trust,
Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance North American Government
Income Trust, Inc., Alliance Premier Growth Fund, Inc.,
Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance Select Investor Series, Inc., Alliance
Utility Income Fund, Inc., Alliance Variable Products Series
Fund, Inc., Alliance Worldwide Privatization Fund, Inc., The
Alliance Fund, Inc. and The Alliance Portfolios, and filing
the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Ruth Block
____________________
Ruth Block
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance All-Asia Investment
Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Capital Reserves, Alliance Global
Dollar Government Fund, Inc., Alliance Global Environment
Fund, Inc., Alliance Global Small Cap Fund, Inc., Alliance
Global Strategic Income Trust, Inc., Alliance Government
Reserves, Alliance Greater China '97 Fund, Inc., Alliance
Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Fund, Alliance International Premier Growth
Fund, Inc., Alliance Limited Maturity Government Fund, Inc.,
Alliance Money Market Fund, Alliance Mortgage Securities
Income Fund, Inc., Alliance Multi-Market Strategy Trust,
Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance
New Europe Fund, Inc., Alliance North American Government
Income Trust, Inc., Alliance Premier Growth Fund, Inc.,
Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance Select Investor Series, Inc., Alliance
Technology Fund, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Fund, Inc.,
The Alliance Portfolios, and The Hudson River Trust, and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John D. Carifa
_______________________
John D. Carifa
<PAGE>
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance All-Asia Investment
Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Environment Fund, Inc., Alliance Global
Small Cap Fund, Inc., Alliance Global Strategic Income
Trust, Inc., Alliance Greater China '97 Fund, Inc., Alliance
Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Fund, Alliance International Premier Growth
Fund, Inc., Alliance Limited Maturity Government Fund, Inc.,
Alliance Mortgage Securities Income Fund, Inc., Alliance
Multi-Market Strategy Trust, Inc., Alliance Municipal Income
Fund, Inc., Alliance Municipal Income Fund II, Alliance New
Europe Fund, Inc., Alliance North American Government Income
Trust, Inc., Alliance Premier Growth Fund, Inc., Alliance
Quasar Fund, Inc., Alliance Real Estate Investment Fund,
Inc., Alliance Select Investor Series, Inc., Alliance
Technology Fund, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Fund, Inc.,
and The Alliance Portfolios, and filing the same, with
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ David H. Dievler
______________________
David H. Dievler
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance All-Asia Investment
Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Environment Fund, Inc., Alliance Global
Small Cap Fund, Inc., Alliance Global Strategic Income
Trust, Inc., Alliance Growth and Income Fund, Inc., Alliance
Health Care Fund, Inc., Alliance High Yield Fund, Inc.,
Alliance Institutional Funds, Inc., Alliance Institutional
Reserves, Inc., Alliance International Fund, Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Mortgage Securities
Income Fund, Inc., Alliance Multi-Market Strategy Trust,
Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance New Europe Fund, Inc.,
Alliance North American Government Income Trust, Inc.,
Alliance Premier Growth Fund, Inc., Alliance Quasar Fund,
Inc., Alliance Real Estate Investment Fund, Inc., Alliance
Select Investor Series, Inc., Alliance Utility Income Fund,
Inc., Alliance Variable Products Series Fund, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Fund, Inc.,
The Alliance Portfolios, and The Hudson River Trust, and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John H. Dobkin
_______________________
John H. Dobkin
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance Bond Fund, Inc.,
Alliance Balanced Shares, Inc., Alliance Capital Reserves,
Alliance Global Dollar Government Fund, Inc., Alliance
Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance
Greater China '97 Fund, Inc., Alliance Growth and Income
Fund, Inc., Alliance Health Care Fund, Inc., Alliance High
Yield Fund, Inc., Alliance Institutional Funds, Inc.,
Alliance Institutional Reserves, Inc., Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Money Market Fund,
Alliance Mortgage Securities Income Fund, Inc., Alliance
Multi-Market Strategy Trust, Inc., Alliance Municipal Income
Fund, Inc., Alliance Municipal Income Fund II, Alliance
Municipal Trust, Alliance North American Government Income
Trust, Inc., Alliance Premier Growth Fund, Inc., Alliance
Quasar Fund, Inc., Alliance Real Estate Investment Fund,
Inc., Alliance Select Investor Series, Inc., Alliance
Technology Fund, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Fund, Inc.,
The Alliance Portfolios and The Hudson River Trust, and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ William H. Foulk, Jr.
__________________________
William H. Foulk, Jr.
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance Balanced Shares,
Inc., Alliance Bond Fund, Inc., Alliance Global Dollar
Government Fund, Inc., Alliance Global Small Cap Fund, Inc.,
Alliance Global Strategic Income Trust, Inc., Alliance
Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Mortgage Securities
Income Fund, Inc., Alliance Multi-Market Strategy Trust,
Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance North American Government
Income Trust, Inc., Alliance Premier Growth Fund, Inc.,
Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance Select Investor Series, Inc., Alliance
Utility Income Fund, Inc., Alliance Variable Products Series
Fund, Inc., Alliance Worldwide Privatization Fund, Inc., The
Alliance Fund, Inc., and The Alliance Portfolios and filing
the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Dr. James M. Hester
_______________________
Dr. James M. Hester
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance Balanced Shares,
Inc., Alliance Bond Fund, Inc., Alliance Global Dollar
Government Fund, Inc., Alliance Global Small Cap Fund, Inc.,
Alliance Global Strategic Income Trust, Inc., Alliance
Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Money Market Fund,
Alliance Mortgage Securities Income Fund, Inc., Alliance
Multi-Market Strategy Trust, Inc., Alliance Municipal Income
Fund, Inc., Alliance Municipal Income Fund II, Alliance
North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc.,
Alliance Real Estate Investment Fund, Inc., Alliance Select
Investor Series, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Fund, Inc.,
The Alliance Portfolios and The Hudson River Trust, and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Clifford J. Michel
______________________
Clifford L. Michel
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of AFD Exchange Reserves, Alliance Balanced Shares,
Inc., Alliance Bond Fund, Inc., Alliance Capital Reserves,
Alliance Global Dollar Government Fund, Inc., Alliance
Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance
Growth and Income Fund, Inc., Alliance Health Care Fund,
Inc., Alliance High Yield Fund, Inc., Alliance Institutional
Funds, Inc., Alliance Institutional Reserves, Inc., Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Mortgage Securities
Income Fund, Inc., Alliance Multi-Market Strategy Trust,
Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance
North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc.,
Alliance Real Estate Investment Fund, Inc., Alliance Select
Investor Series, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance
Worldwide Privatization Fund, Inc., The Alliance Fund, Inc.,
The Alliance Portfolios and The Hudson River Trust, and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Donald J. Robinson
______________________
Donald J. Robinson
Dated: August 18, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr. and Domenick Pugliese and each of them, to
act severally as attorneys-in-fact and agents, with power of
substitution and resubstitution, for the undersigned in any
and all capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of Alliance Real Estate Investment Fund, Inc. and
filing the same, with exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Howard E. Hassler
__________________________
Howard E. Hassler
Dated: October 8, 1998
00250231.AU8
