<PAGE>
As filed with the Securities and Exchange
Commission on October 17, 1996
File Nos. 333-08193
811-07709
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 2
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
_______________________________
Alliance/Regent Sector Opportunity 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:(212) 969-1000
_____________________________
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
One Battery Park Plaza
New York, New York 10004
<PAGE>
It is proposed that this filing will become effective (check
appropriate box)
x immediately upon filing pursuant to paragraph (b)
on (date) 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.
The Registrant hereby amends this Registrant Statement under
the Securities Act of 1933 on such date or dates as may be
necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectus
_____________ (Caption)
_______________________
PART A
Item 1. Cover Page........................ Cover Page
Item 2. Synopsis.......................... Expense Information
Item 3. Condensed Financial
Information....................... Not Applicable
Item 4. General Description
of Registrant..................... Description of the
Fund; General
Information
Item 5. Management of the Fund............ Management of the
Fund; General
Information
Item 6. Capital Stock and Other
Securities........................ Dividends,
Distributions and
Taxes; General
Information
Item 7. Purchase of Securities
Being Offered..................... Purchase and Sale of
Shares; General
Information
Item 8. Redemption or Repurchase.......... Purchase and Sale of
Shares; General
Information
Item 9. Pending Legal Proceedings......... Not Applicable
Location in Statement of
PART B Additional Information
______ (Caption)
________________________
Item 10. Cover Page........................ Cover Page
Item 11. Table of Contents................. Cover Page
Item 12. General Information
<PAGE>
and History....................... Management of the
Fund; General
Information
Item 13. Investment Objectives and
Policies.......................... Description of the
Fund
Item 14. Management of the Registrant ..... Management of the
Fund
Item 15. Control Persons and
Principal Holders of
Securities ....................... Not Applicable
Item 16. Investment Advisory and
Other Services.................... Management of the
Fund, Expenses of
the Fund, General
Information
Item 17. Brokerage Allocation and
Other Practices................... Portfolio
Transactions
Item 18. Capital Stock and Other
Securities........................ General Information
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered....... Purchase of Shares;
Redemption and
Repurchase of
Shares; Dividends,
Distributions and
Taxes; Shareholder
Services
Item 20. Tax Status........................ Description of the
Fund, Dividends,
Distributions and
Taxes
Item 21. Underwriters...................... General Information
Item 22. Calculation of Performance
Data.............................. General Information
Item 23. Financial Statements.............. Financial
Statements; Report
of Independent
Auditors
<PAGE>
ALLIANCE/REGENT
SECTOR OPPORTUNITY
FUND
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
Prospectus and Application
October 15, 1996
Table of Contents Page
The Fund at a Glance.......................................
Expense Information........................................
Glossary...................................................
Description of the Fund....................................
Investment Objective....................................
Investment Policies.....................................
Additional Investment Policies and
Practices............................................
Certain Fundamental Investment
Policies.............................................
Purchase and Sale of Shares................................
Management of the Fund.....................................
Dividends, Distributions and Taxes.........................
General Information........................................
Adviser
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
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Alliance/Regent Sector Opportunity Fund, Inc. (the "Fund")
seeks long-term growth of capital through investment in U.S.
equity securities. The Fund utilizes a "top-down" investment
approach focusing on economic analysis to determine portfolio
allocation among market sectors and industries, and pursues its
objective by investing in a diversified portfolio of equity
securities of U.S. issuers that have a market capitalization of
at least one billion dollars.
The Fund is an open-end diversified management investment
company. This Prospectus sets forth concisely the information
that a prospective investor should know about the Fund before
investing. A "Statement of Additional Information" for the Fund
dated October 15, 1996, which provides further information
regarding certain matters discussed in this Prospectus and other
matters which may be of interest to some investors, has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, call or write
Alliance Fund Services, Inc. at the indicated address or call the
"For Literature" telephone number shown above.
The Fund offers three classes of shares through this Prospectus.
These shares may be purchased, at the investor's choice, at a
price equal to their net asset value (i) plus an initial sales
charge imposed at the time of purchase ("Class A shares"),
(ii) with a contingent deferred sales charge imposed on most
redemptions made within four years of purchase ("Class B
shares"), or (iii) without any initial or contingent deferred
sales charge, as long as the shares are held for one year or more
("Class C shares"). See "Purchase and Sale of Shares."
AN INVESTMENT IN THESE SECURITIES IS NOT A DEPOSIT OR OBLIGATION
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
INVESTORS ARE ADVISED TO READ THIS PROSPECTUS CAREFULLY AND TO
RETAIN IT FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[Alliance Logo]
2
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The Fund At A Glance
The following summary is qualified in its entirety by the more
detailed information contained in the Prospectus.
The Fund's Investment Adviser Is . . .
Alliance Capital Management L.P. ("Alliance"), a global
investment adviser providing diversified services to institutions
and individuals through a broad line of investments including
more than 100 mutual funds. Since 1971 Alliance has earned a
reputation as a leader in the investment world with over $168
billion in assets under management as of June 30, 1996. Alliance
provides investment management services to employee benefit plans
for 33 of the FORTUNE 100 companies. In rendering its services,
Alliance will act through its Regent Investor Services Division
("Regent"). Regent manages in excess of $2.4 billion for
individuals, corporations, retirement plans, foundations and
endowments.
The Fund
Seeks . . . Long-term growth of capital through investment in
U.S. equity securities.
Utilizes . . . a "top-down" investment approach that focuses on
economic analysis to determine portfolio allocation among market
sectors and industries.
Invests primarily in . . . a diversified portfolio of equity
securities of U.S. issuers that have a market capitalization of
at least one billion dollars.
A Word About Risk . . .
The price of shares of the Fund will fluctuate as the daily
prices of the individual stocks and other equity securities in
which it invests fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost. While the
Fund invests principally in common stocks and other equity
securities, in order to achieve its investment objective, the
Fund may at times use certain types of investment instruments
that involve risks different from the risks presented by equity
securities.
Getting Started. . .
Shares of the Fund are available through your financial
representative and most banks, insurance companies and brokerage
firms nationwide. Shares can be purchased for a minimum initial
3
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investment of $250, and subsequent investments can be made for as
little as $50. For detailed information about purchasing and
selling shares, see "Purchase and Sale of Shares." In addition,
the Fund offers several time and money saving services to
investors. Be sure to ask your financial representative about:
AUTOMATIC DIVIDEND REINVESTMENT
AUTOMATIC INVESTMENT PROGRAM
RETIREMENT PLANS
SHAREHOLDER COMMUNICATIONS
DIVIDEND DIRECTION PLANS
AUTO EXCHANGE
SYSTEMATIC WITHDRAWALS
A CHOICE OF PURCHASE PLANS
TELEPHONE TRANSACTIONS
24-HOUR INFORMATION
[ALLIANCE LOGO]
[(R)/SM These are registered marks used under license from the
owner, Alliance Capital Management L.P.]
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_________________________________________________________________
EXPENSE INFORMATION
_________________________________________________________________
Shareholder Transaction Expenses are one of several factors to
consider when you invest in the Fund. The following table
summarizes your maximum transaction costs and estimated annual
expenses for each class of shares. The Example following the
table shows the cumulative expenses attributable to a
hypothetical $1,000 investment in each class for the periods
specified.
Class A Shares Class B Shares Class C Shares
Maximum sales charge imposed
on purchases (as a percentage
of offering price)....... 4.25%(a) None None
Sales charge imposed on
dividend reinvestments... None None None
Deferred sales charge (as
a percentage of original
purchase price or
redemption proceeds,
whichever is lower)...... None 4.0% during the 1% during the
first year, first year,
decreasing 1.0% 0% thereafter
annually to 0%
after the fourth
year(b)
Exchange fee............... None None None
____________________________________________________________
(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1% deferred
sales charge on redemptions within one year of purchase. See "Purchase
and Sale of Shares--How to Buy Shares"--page __.
(b) Class B shares automatically convert to Class A shares after eight years.
See "Purchase and Sale of Shares--How to Buy Shares"--page __.
5
<PAGE>
Operating Expenses Class A Class B Class C
Management fees .75% .75% .75%
12b-1 fees .30% 1.00% 1.00%
Other expenses(a) .82% .82% .82%
Total fund operating expenses 1.87% 2.57% 2.57%
Example Class A Class B+ Class B++ Class C+ Class C++
After 1 year $61 $66 $26 $36 $26
After 3 years $99 $100 $80 $80 $80
___________________________________________________________
+ Assumes redemption at end of period.
++ Assumes no redemption at end of period.
(a) These expenses include a transfer agency fee payable to
Alliance Fund Services, Inc., an affiliate of Alliance, based
on a fixed dollar amount charged to the Fund for each
shareholder account.
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Long-term
shareholders of the Fund may pay aggregate sales charges totaling
more than the economic equivalent of the maximum initial sales
charges permitted by the Conduct Rules of the National
Association of Securities Dealers, Inc. See "Management of the
Fund--Distribution Services Agreement." The Rule 12b-1 fee for
each class comprises a service fee not exceeding .25% of the
aggregate average daily net assets of the Fund attributable to
the class and an asset-based sales charge equal to the remaining
portion of the Rule 12b-1 fee. "Other Expenses" are based on
estimated amounts for the Fund's current fiscal year. The
Example set forth above assumes reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated
by Securities and Exchange Commission regulations. THE EXAMPLE
SHOULD NOT BE CONSIDERED REPRESENTATIVE OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
6
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_________________________________________________________________
GLOSSARY
_________________________________________________________________
The following terms are used in this Prospectus. Many of these
terms are explained in greater detail under "Description of the
Fund--Additional Investment Practices."
Equity securities are common and preferred stocks, and include
convertible securities, but do not include rights, warrants and
options to subscribe for the purchase of common and preferred
stocks.
U.S. Government securities are securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
Moody's is Moody's Investors Service, Inc.
S&P is Standard & Poor's Ratings Services.
Duff & Phelps is Duff & Phelps Credit Rating Co.
Fitch is Fitch Investors Service, Inc.
Qualifying bank deposits are certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of banks having
total assets of more than $1 billion and which are members of the
Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act").
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.
7
<PAGE>
___________________________________________________________
DESCRIPTION OF THE FUND
___________________________________________________________
The Fund is a diversified 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 long-term growth of
capital through investment in U.S. equity securities. As a
matter of fundamental policy, the Fund will normally invest at
least 65% of its total assets in the equity securities of
companies that are (i) organized and have their principal office
in the U.S. and (ii) the equity securities of which are traded
principally in the U.S.
INVESTMENT POLICIES
The Fund seeks to achieve its objective by investing
predominantly in the equity securities of U.S. issuers with
market capitalizations (share price multiplied by the number of
shares outstanding) of at least one billion dollars at the time
of investment. In selecting investments for the Fund, Regent
employs on an active, continuing basis a "top-down" investment
approach based on economic analysis. This approach has four main
elements:
- The analysis of secular, i.e., long-term,
evolutionary change in the economy: which sectors
are growing as a share of gross domestic product
(GDP) and which are contracting, and why;
- The analysis of the business cycle: what is the
current cyclical state of the economy, and how is
the course of the cycle likely to affect stock
price performance;
- Valuation in the stock market: what profitability
and growth prospects are discounted by current
stock prices;
8
<PAGE>
- Earnings growth and momentum: for what sectors,
industries and companies are earnings estimates
increasing, and for which are they declining.
On the basis of this analysis, Regent identifies and
emphasizes those sectors and industries expected to show superior
performance. Regent believes that economic change creates
industry-level factors which are responsible for a significant
portion of the movements in individual stock prices, and its
sector analysis emphasizes anticipation of developments that
cause these factors to change and thus influence stock prices.
Examples of sectors include the technology sector, the energy
sector and the utilities sector. Regent then combines its
sector-level analysis with company-level fundamental analysis in
order to determine which companies within favored sectors are
most suitable for inclusion in portfolios under its management.
Differentiating factors among specific companies include, among
other things, earnings growth, stock price valuation, management
experience and expertise, product development, and other related
factors.
Regent expects the average market capitalization of
companies represented in the Fund's portfolio normally to be in
the range of the larger market capitalizations of companies
comprising the Standard and Poor's 500 Composite Stock Price
Index (the "S&P 500"). The average market capitalization of the
Fund's portfolio may be higher or lower than that of the S&P 500
at any given time. The average market capitalization of the
companies represented in the S&P 500 is approximately $10
billion.
The Fund may also: (i) invest up to 5% of its net assets
in rights or warrants; (ii) purchase and sell exchange-traded
index options and stock index futures contracts; and (iii) write
covered exchange-traded call options on common stocks unless, as
a result, the amount of its securities subject to call options
would exceed 15% of its total assets, and purchase and sell
exchange-traded call and put options on common stocks written by
others, but the total cost of all options held by the Fund
(including exchange-traded index options) may not exceed 10% of
its total assets. For additional information on the use, risks
and costs of these policies and practices see "Additional
Investment Practices." The Fund will not write put options or
invest in illiquid securities if as a result more than 15% of its
net assets would be so invested.
ADDITIONAL INVESTMENT POLICIES AND PRACTICES
The Fund may engage in the following investment policies
and practices to the extent described above.
9
<PAGE>
RIGHTS AND WARRANTS. The Fund will invest in rights or
warrants only if the underlying equity securities themselves are
deemed appropriate by Regent 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 thereof. If the market price of the underlying
security is below the exercise price set forth in 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.
OPTIONS. An option gives the purchaser of the option,
upon payment of a premium, the right to deliver to (in the case
of a put) or receive from (in the case of a call) the writer of
the option a specified amount of a security on or before a fixed
date at a predetermined price. A call option written by 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.
In purchasing an option, the Fund would be in a position
to realize a gain if, during the option period, the price of the
underlying security increased (in the case of a call) or
decreased (in the case of a put) by an amount in excess of the
premium paid; otherwise the Fund would experience a loss equal to
the premium paid for the option.
If an option written by the Fund were exercised, the
Fund would be obligated to purchase (in the case of a put) or
sell (in the case of a call) the underlying security at the
exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then
be purchased or sold by the Fund at a disadvantageous price.
These risks could be reduced by entering into a closing
transaction (i.e., by disposing of the option prior to its
10
<PAGE>
exercise). 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.
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.
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 other
commodity called for by the contract at a specified price on a
specified date. A "purchase" of a futures contract means the
incurring of an obligation to acquire the securities, or 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.
Options on futures contracts written or purchased by the
Fund will be traded on U.S. exchanges. These investment
techniques will be used only to hedge against anticipated future
changes in market conditions 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.
ILLIQUID SECURITIES. The Fund will not maintain more
than 15% of its net assets in illiquid securities. Illiquid
securities will generally include 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).
Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize their full value
upon sale. Regent will monitor the illiquidity of such
securities with respect to the Fund under the supervision of the
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<PAGE>
Directors of the Fund. To the extent permitted by applicable
law, Rule 144A securities will not be treated as "illiquid" for
purposes of the foregoing restriction so long as such securities
meet liquidity guidelines established by the Fund's Directors.
The Fund may not be able to readily sell securities for which
there is no ready market.
GENERAL. The successful use of the foregoing investment
practices draws upon Alliance's special skills and experience
with respect to such instruments and usually depends on
Alliance's ability to forecast price movements correctly. Should
prices move unexpectedly, the Fund may not achieve the
anticipated benefits of the transactions or may realize losses
and thus be in a worse position than if such strategies had not
been used. In addition, the correlation between movements in the
prices of such instruments and movements in the prices of the
securities hedged will not be perfect and could produce
unanticipated losses.
The Fund's ability to dispose of its position in options
depends on the availability of liquid markets in such
instruments. If a secondary market does not exist with respect
to an option purchased or written by the Fund, it might not be
possible to effect a closing transaction in the option (i.e.,
dispose of the option) with the result that an option purchased
by the Fund would have to be exercised in order for the Fund to
realize any profit. Therefore, no assurance can be given that
the Fund will be able to utilize these instruments effectively
for the purposes set forth above. Furthermore, the Fund's
ability to engage in options and futures transactions may be
limited by tax considerations. See "Dividends, Distributions and
Taxes" in the Statement of Additional Information of the
Fund.
FUTURE DEVELOPMENTS. The 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.
DEFENSIVE POSITION. For temporary defensive purposes,
the Fund may reduce its position in equity securities and invest
without limit in short-term, liquid, high-grade debt securities,
which may include U.S. Government securities, bank deposits,
money market instruments, short-term debt securities, including
notes and bonds. For a description of the types of securities in
which the Fund may invest while in a temporary defensive
position, please see the Statement of Additional Information.
12
<PAGE>
PORTFOLIO TURNOVER. Regent anticipates that the Fund's
annual rate of turnover will not exceed 100%. A 100% annual
turnover rate would occur if all of the securities in the Fund's
portfolio are replaced once in a period of one year. A higher
rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, 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. See "Dividends, Distributions and Taxes" in the
Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
In addition to its fundamental investment objective, the
Fund has adopted the following fundamental investment policies,
which may not be changed without the approval of its
shareholders. Additional fundamental and non-fundamental
investment policies are set forth in the Statement of Additional
Information.
The Fund may not: (i) purchase more than 10% of the
outstanding voting securities of any one issuer; (ii) invest 25%
or more of the value of its total assets in the same industry;
(iii) borrow money or issue senior securities except for
temporary or emergency purposes in an amount not exceeding 5% of
the value of its total assets at the time the borrowing is made;
or (iv) pledge, mortgage, hypothecate or otherwise encumber any
of its assets except in connection with the writing of call
options and except to secure permitted borrowings.
_________________________________________________________________
PURCHASE AND SALE OF SHARES
_________________________________________________________________
HOW TO BUY SHARES
You can purchase shares of the Fund through broker-
dealers, banks or other financial intermediaries, or directly
through Alliance Fund Distributors, Inc. ("AFD"), the Fund's
principal underwriter. The minimum initial investment is $250.
The minimum for subsequent investments is $50. Investments of
$25 or more are allowed under the automatic investment program.
Share certificates are issued only upon request. See the
Subscription Application and Statement of Additional Information
for more information.
Existing shareholders may make subsequent purchases by
electronic funds transfer if they have completed the Telephone
Transactions section of the Subscription Application or the
Shareholder Options form obtained from Alliance Fund Services,
13
<PAGE>
Inc., the Funds registrar, transfer agent and dividend disbursing
agent ("AFS"). Telephone purchase orders can be made by calling
(800) 221-5672, may not exceed $500,000, must be received by the
Fund by 3:00 p.m. Eastern time on a Fund business day and will be
made at the next day's net asset value (less any applicable sales
charge).
The Fund offers three classes of shares through this
Prospectus, Class A, Class B and Class C. The Fund may refuse
any order to purchase shares. In this regard, the Fund reserves
the right to restrict purchases of Fund shares (including through
exchanges) when they appear to evidence a pattern of frequent
purchases and sales made in response to short-term
considerations.
Class A Shares--Initial Sales Charge Alternative
You can purchase Class A shares at net asset value plus
an initial sales charge, as follows:
Initial Sales Charge
As % of As % of Commission to
Net Amount Offering Dealer/Agent as %
Amount Purchased Invested Price of Offering Price
Less than $100,000 4.44% 4.25% 4.00%
$100,000 to
less than $250,000 3.36 3.25 3.00
$250,000 to
less than $500,000 2.30 2.25 2.00
$500,000 to
less than $1,000,000 1.78 1.75 1.50
On purchases of $1,000,000 or more, you pay no initial
sales charge but may pay a contingent deferred sales charge (a
"CDSC") equal to 1% of the lesser of net asset value at the time
of redemption or original cost if you redeem within one 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 in accordance
with the Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain
Retirement Plans, Reinstatement Privilege and Sales at Net Asset
Value programs. Consult the Subscription Application and
Statement of Additional Information.
14
<PAGE>
Class B Shares--Deferred Sales Charge Alternative
You can purchase Class B shares at net asset value
without an initial sales charge. However, you may pay a CDSC if
you redeem shares within four years after purchase. The amount
of the CDSC (expressed as a percentage of the lesser of the
current net asset value or original cost) will vary according to
the number of years from the purchase of Class B shares until the
redemption of those shares. The amount of the CDSC on Class B
shares is set forth below.
Year Since Purchase CDSC
First................. 4.0%
Second................ 3.0%
Third................. 2.0%
Fourth............ 1.0%
Fifth................. None
Class B shares are subject to higher distribution fees
than Class A 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 shares pay correspondingly lower
dividends and may have a lower net asset value than Class A
shares.
Class C Shares--Asset-Based Sales Charge Alternative
You can purchase Class C shares without any initial
sales charge. The Fund thus receives the full amount of your
purchase, and, if you hold your shares for one year or more, you
will receive the entire net asset value of your shares upon
redemption. Class C shares incur higher distribution fees than
Class A shares and do not convert to any other class of shares of
the Fund. The higher fees mean a higher expense ratio, so Class
C shares pay correspondingly lower dividends and may have a lower
net asset value that Class A Shares.
Class C shares redeemed within one year of purchase will
be subject to a CDSC equal to 1% of the lesser of the original
cost of the shares being redeemed or net asset value at the time
of redemption.
Application of the CDSC
Shares obtained from dividend or distribution
reinvestment are not subject to a CDSC. The CDSC is deducted
from the amount of the redemption and is paid to AFD. The CDSC
will be waived on redemptions of shares following the death or
disability of a shareholder, to meet the requirements of certain
qualified retirement plans or pursuant to a monthly, bi-monthly
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or quarterly systematic withdrawal plan. See the Statement of
Additional Information.
How the Fund Values its Shares
The net asset value of each class of shares in the Fund
is calculated by dividing the value of the Fund's net assets
allocable to that class by the outstanding shares of that class.
Shares are valued each day the New York Stock Exchange (the
"Exchange") is open as of the close of regular trading (currently
4:00 p.m. Eastern time). The securities in the Fund are valued
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 Fund's Directors believe would accurately
reflect fair market value.
General
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 Class A
shares. If you are making a smaller investment, you might
consider 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. Consult your financial agent. Dealers and agents
may receive different 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 $5,000,000. The Fund
may refuse any order to purchase shares.
The Fund offers a fourth class of shares, Advisor Class
shares, by means of a separate Prospectus. Advisor Class shares
may be purchased and held solely (i) through accounts established
under a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary and
approved by AFD pursuant to which each investor pays an asset-
based fee at an annual rate of at least .50% of the assets in the
investor's account to the broker-dealer or other financial
intermediary, or its affiliate or agent, (ii) 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 and (iii) by investment advisory clients of, and
certain other persons associated with, Alliance and its
affiliates or the Fund. Advisor Class shares are offered without
any initial sales charge or CDSC and without an ongoing
distribution fee and are expected, therefore, to have different
performance than Class A, Class B or Class C shares. You may
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<PAGE>
obtain more information about Advisor Class shares by contacting
AFS at (800) 221-5672 or by contacting your financial
representative.
In addition to the discount or commission paid to
dealers or agents, AFD from time to time pays additional cash or
other incentives to dealers or agents, including Equico
Securities, Inc., an affiliate of AFD, in connection with the
sale of shares of the Fund. Such additional amounts may be
utilized, in whole or in part, in some cases together with other
revenues of such dealers or agents, to provide additional
compensation to registered representatives who sell shares of the
Fund. On some occasions, such cash or other incentives will be
conditioned upon the sale of a specified minimum dollar amount of
the shares of the Fund and/or other Alliance Mutual Funds during
a specific period of time. Such 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 by persons
associated with a dealer and their immediate family members to
urban or resort 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.
HOW TO SELL SHARES
You may "redeem", i.e., sell your shares in the Fund to
the Fund on any day the Exchange is open, either directly or
through your financial intermediary. The price you will receive
is the net asset value (less any applicable CDSC) next calculated
after the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for
shares recently purchased by check or electronic funds transfer,
the Fund will not send proceeds until it 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 request before 4:00 p.m.
Eastern time, and your broker must transmit your request to the
Fund by 5:00 p.m. Eastern time, for you to receive that day's net
asset value (less any applicable CDSC). Your broker is
responsible for furnishing all necessary documentation to the
Fund and may charge you for this service.
Selling Shares Directly To the Fund
Send a signed letter of instruction or stock power form
to AFS, along with certificates, if any, that represent the
shares you want to sell. For your protection, signatures must be
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<PAGE>
guaranteed by a bank, a member firm of a national stock exchange
or other eligible guarantor institution. 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. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
800-221-5672
Alternatively, a request for redemption of shares for
which no stock certificates have been issued can also be made by
telephone to 800-221-5672. Telephone redemption requests must be
made by 4:00 p.m. Eastern time on a Fund business day in order to
receive that day's net asset value, and, except for certain
omnibus accounts, may be made only once in any 30-day period. A
shareholder who has completed the Telephone Transactions section
of the Subscription Application, or the Shareholder Options form
obtained from AFS, can elect to have the proceeds of their
redemption sent to their bank via an electronic funds transfer.
Proceeds of telephone redemptions also may be sent by check to a
shareholder's address of record. Redemption requests by
electronic funds transfer may not exceed $100,000 and redemption
requests by check may not exceed $50,000. Telephone redemption
is not available for shares held in nominee or street name
accounts or retirement plan accounts or shares held by a
shareholder who has changed his or her address of record within
the previous 30 calendar days.
General
The sale of shares is a taxable transaction for federal
tax purposes. Under unusual circumstances, the Fund may suspend
redemptions or postpone payment for up to seven days or longer,
as permitted by federal securities law. The Fund reserves 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 telephonic 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 telephonic requests. The
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<PAGE>
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. A shareholder's manual
explaining all available services will be provided upon request.
To request a shareholder manual, call 800-227-4618.
HOW TO EXCHANGE SHARES
You may exchange your shares of the Fund 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 net asset value next
determined, 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. An
exchange is a taxable capital transaction for federal tax
purposes. The exchange service may be changed, suspended, or
terminated on 60 days written notice.
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_________________________________________________________________
MANAGEMENT OF THE FUND
_________________________________________________________________
ADVISER
Alliance, which is a Delaware limited partnership with
principal offices at 1345 Avenue of the Americas, New York, New
York 10105, has been retained under an advisory agreement (the
"Advisory Agreement") to provide investment advice and, in
general, to conduct the management and investment program of the
Fund, subject to the general supervision and control of the
Directors of the Fund.
Alliance is a leading international investment manager
supervising client accounts with assets as of June 30, 1996 of
more than $168 billion (of which more than $55 billion
represented the assets of investment companies). Alliance's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. The 51 registered investment
companies managed by Alliance comprising more than 100 separate
investment portfolios currently have over two million
shareholders. As of June 30, 1996, Alliance was retained as an
investment manager of employee benefit plan assets for 33 of the
Fortune 100 companies.
In rendering its services, Alliance will act through its
Regent Investor Services Division. Regent was established in
1994, when Alliance acquired Regent's predecessor, Regent
Investor Services, Inc. which was founded in 1982. Regent now
has approximately $2.4 billion in assets under management on
behalf of individuals, endowments, foundations, trusts,
corporations and retirement funds.
The Regent employee who will be responsible for the day-
to-day management of the Fund's portfolio is Eugene J. Lancaric.
Mr. Lancaric is a Senior Vice President and the Chief Investment
Officer of Regent and has been employed by Regent since April
1994. Prior thereto he was a Research Analyst at Strategic
Economic Decisions Inc. in Menlo Park, California, an investment
software development firm, since prior to 1991.
ACMC, the sole general partner of, and the owner of a 1%
general partnership interest in, Alliance, is an indirect wholly-
owned subsidiary of The Equitable Life Assurance Society of the
United States ("Equitable"), one of the largest life insurance
companies in the United States, which is a wholly-owned
subsidiary of The Equitable Companies Incorporated, a holding
company controlled by AXA, a French insurance holding company.
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Certain information concerning the ownership and control of
Equitable by AXA is set forth in the Fund's Statement of
Additional Information under "Management of the Fund."
Under the Advisory Agreement, the Fund pays Alliance a
fee at the annual rate of .75% of the Fund's average daily net
assets. The fee is accrued daily and paid monthly.
PERFORMANCE OF A SIMILARLY MANAGED PORTFOLIO. Regent
has ultimate responsibility over investment decisions for 22
institutional accounts that invest in U.S. equities and cash
equivalents (the "Historical Portfolio"). The Historical
Portfolio has substantially the same investment objective and
policies and has been managed in accordance with essentially the
same investment strategies and techniques as those contemplated
for the Fund. See "Investment Objective and Policies." The
Historical Portfolio was not subject to certain restrictions to
which the Fund, as a registered investment company, is subject.
Set forth below is performance data provided by Regent
relating to the Historical Portfolio for the last two full
calendar years during which Regent has managed the Historical
Portfolio. As of June 30, 1996, the assets in the Historical
Portfolio totalled approximately $237 million. The average size
of an institutional account in the Historical Portfolio is $10.8
million.
The performance data has been adjusted to reflect the
imposition of an advisory fee equal to the advisory fee payable
by the Fund. The performance data includes the cost of brokerage
commissions but excludes custodial fees, transfer agency costs
and other administrative expenses that will be payable by the
Fund and will result in a higher expense ratio for the Fund.
Expenses associated with the distribution of Class A, Class B and
Class C shares of the Fund in accordance with the plan pursuant
to Rule 12b-1 approved by the Fund's Board of Directors are also
excluded. The performance data also have not been adjusted for
taxes, if any, payable by the accounts in the Historical
Portfolio.
Regent has calculated the investment performance of the
Historical Portfolio on a trade-date basis. Dividends have been
accrued at the end of the month and cash flows weighted daily.
The total returns set forth below have been 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 Portfolio has, over
time, performed favorably when compared with the performance of
the S&P 500. The S&P 500 is a widely recognized, unmanaged index
of market activity based upon the aggregate performance of a
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<PAGE>
selected portfolio of publicly traded common stocks,including
monthly adjustments to reflect the reinvestment of dividends and
other distributions. The S&P 500 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. To the extent the Fund does not invest in U.S.
common stocks or utilizes investment techniques such as futures
or options, the S&P 500 may not be substantially comparable to
the Fund. The S&P 500 is included to illustrate material
economic and market factors that existed during the time period
shown. The S&P 500 does not reflect the deduction of any
fees.
The following performance data are provided solely to
illustrate the past performance of Regent in managing the
Historical Portfolio as measured against the S&P 500, a broad
based market index. Investors should not rely on the following
performance data of the Historical Portfolio as an indication of
future performance of the 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.
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<PAGE>
Schedule of Investment Performance - Historical Portfolio
Historical
Portfolio S&P 500
Total Total
Three-month period ended: Return Return
September 30, 1994............... 4.51% 4.88%
December 31, 1994................ 0.35% -0.01%
March 31, 1995................... 10.06% 9.73%
June 30, 1995.................... 11.67% 9.53%
Cumulative total return for
the period July 1, 1994 to
June 30, 1995.................... 28.90% 26.04%
Three-month period ended:
September 30, 1995............... 8.57% 7.95%
December 31, 1995................ 5.19% 6.02%
March 31, 1996................... 7.78% 5.37%
June 30, 1996.................... 5.90% 4.48%
Cumulative total return for
the period July 1, 1994 to
June 30, 1996.................... 30.35% 26.00%
Three-month period ended:
September 30, 1996...............
The average total returns presented above reflects
the performance of the Historical Portfolio for each quarter of
the last two years and cumulatively for the last two years and
for the quarter ended September 30, 1996.
EXPENSES OF THE FUND
In addition to the payments to Alliance under the
Advisory Agreement described above, the Fund pays certain other
costs, including (i) custody, transfer and dividend disbursing
expenses, (ii) fees of the Directors who are not affiliated with
Alliance, (iii) legal and auditing expenses, (iv) clerical,
accounting and other office costs, (v) costs of printing the
Fund's prospectuses and shareholder reports, (vi) costs of
maintaining the Fund's existence, (vii) interest charges, taxes,
brokerage fees and commissions, (viii) costs of stationery and
supplies, (ix) expenses and fees related to registration and
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<PAGE>
filing with the Commission and with state regulatory authorities,
(x) upon the approval of the Board of Directors, costs of
personnel of Alliance or its affiliates rendering clerical,
accounting and other office services, and (xi) such promotional,
shareholder servicing and other expenses as may be contemplated
by the Distribution Services Agreement, described below.
DISTRIBUTION SERVICES AGREEMENT
Rule 12b-1 adopted by the Commission under the 1940 Act
permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a duly adopted
plan. The Fund has adopted a "Rule 12b-1 plan" (the "Plan") and
has entered into a Distribution Services Agreement (the
"Agreement") with AFD. Pursuant to the Plan, the Fund pays to
AFD a Rule 12b-1 distribution services fee, which may not exceed
an annual rate of .30% of the Fund's aggregate average daily net
assets attributable to the Class A shares, 1.00% of the Fund's
aggregate average daily net assets attributable to the Class B
shares and 1.00% of the Fund's aggregate average daily net assets
attributable to the Class C shares, for distribution expenses.
The Plan provides that a portion of the distribution services fee
in an amount not to exceed .25% of the aggregate average daily
net assets of the Fund attributable to each of Class A, Class B
and Class C shares constitutes a service fee used for personal
service and/or the maintenance of shareholder accounts.
The Plan provides that AFD will use the distribution
services fee received from the Fund in its entirety for payments
(i) to compensate broker-dealers or other persons for providing
distribution assistance, (ii) to otherwise promote the sale of
shares of the Fund, and (iii) to compensate broker-dealers,
depository institutions and other financial intermediaries for
providing administrative, accounting and other services with
respect to the Fund's shareholders. In this regard, some
payments under the Plan are used to compensate financial
intermediaries with trail or maintenance commissions in an amount
equal to .25%, annualized, with respect to Class A shares and
Class B shares, and 1.00%, annualized, with respect to Class C
shares, of the assets maintained in the Fund by its customers.
Distribution services fees received from the Fund with respect to
Class A shares will not be used to pay any interest expenses,
carrying charges or other financing costs or allocation of
overhead of AFD. Distribution services fees received from the
Fund with respect to Class B and Class C shares may be used for
these purposes. The Plan also provides that Alliance may use its
own resources to finance the distribution of the Fund's shares.
The Fund is not obligated under the Plan to pay any
distribution services fee in excess of the amounts set forth
above. With respect to Class A shares of the Fund, distribution
24
<PAGE>
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 under the Plan is directly tied to the expenses
incurred by AFD. Actual distribution expenses for such Class B
and Class C shares for any given year, however, will probably
exceed the distribution services fees payable under the Plan with
respect to the class involved and payments received from CDSCs.
The excess will be carried forward by AFD and reimbursed from
distribution services fees payable and payments subsequently
received through CDSCs, so long as the Plan and the Agreement are
in effect.
The 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.
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
service arrangements would be made and that shareholders would
not be adversely affected. The State of Texas requires that
shares of the Fund may be sold in that state only by dealers or
other financial institutions that are registered there as broker-
dealers.
_________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________
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 the Fund without charge by returning to
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<PAGE>
Alliance, with appropriate instructions, the check representing
such 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 the Fund.
Each income dividend and capital gains distribution, if
any, declared by the Fund on its outstanding shares will, at the
election of each shareholder, be paid in cash or in additional
shares of the Fund having an aggregate net asset value as of the
payment date of such dividend or distribution equal to the cash
amount of such income dividend or distribution. Election to
receive income dividends and distributions in cash or shares is
made at the time shares are initially purchased and may be
changed at any time prior to the record date for a particular
dividend or distribution. Cash dividends can be paid by check
or, if the shareholder so elects, electronically via the ACH
network. There is no sales or other charge in connection with
the reinvestment of dividends and capital gains distributions.
Dividends paid by the Fund, if any, with respect to Class A,
Class B and Class C 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 fees applicable to
Class B and C shares, and any incremental transfer agency costs
relating to Class B shares, will be borne exclusively by the
class to which they relate.
While it is the intention of the 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 such dividend or distribution must necessarily depend
upon the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate, and there can be
no assurance that the Fund will pay any dividends or realize any
capital gains.
If you buy shares just before the 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.
U.S. Federal Income Taxes
The Fund intends to qualify to be taxed as a "regulated
investment company" under the Code. To the extent that the Fund
distributes its taxable income and net capital gain to its
shareholders, qualification as a regulated investment company
relieves the Fund of federal income and excise taxes on that part
of its taxable income including net capital gains which it pays
out to its shareholders. Dividends out of net ordinary income
and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of
26
<PAGE>
corporate shareholders, such dividends may be eligible for the
dividends-received deduction, except that the amount eligible for
the deduction is limited to the amount of qualifying dividends
received by the Fund. A corporation's dividends-received
deduction will be disallowed unless the corporation holds shares
in the Fund at least 46 days. Furthermore, the dividends-
received deduction will be disallowed to the extent a
corporation's investment in shares of the Fund is financed with
indebtedness.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders as capital gains distributions is taxable to the
shareholders as long-term capital gains, irrespective of the
length of time a shareholder may have held his or her stock.
Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.
Under the current federal tax law, the amount of an
income dividend or capital gains distribution declared by the
Fund during October, November or December of a year to
shareholders of record as of a specified date in such a month
that is paid during January of the following year is includable
in the prior year's taxable income of shareholders that are
calendar year taxpayers.
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 or her as described above.
If a shareholder held shares six months or less and during that
period received a distribution taxable to such shareholder as
long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term capital
loss to the extent of such distribution.
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, 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.
The Fund will be required to withhold 31% of any
payments made to a shareholder if the shareholder has not
provided a certified taxpayer identification number to the Fund,
or the Secretary of the Treasury notifies the Fund that a
27
<PAGE>
shareholder has not reported all interest and dividend income
required to be shown on the shareholder's Federal income tax
return.
Shareholders will be advised annually as to the federal
tax status of dividends and capital gains distributions made by
the Fund for the preceding year. Distributions by the Fund may
be subject to state and local taxes. Shareholders are urged to
consult their tax advisers regarding their own tax situation.
__________________________________________________________________
GENERAL INFORMATION
__________________________________________________________________
PORTFOLIO TRANSACTIONS
Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking
best price and execution, the Fund may consider sales of its
shares as a factor in the selection of dealers to enter into
portfolio transactions with the Fund.
ORGANIZATION
Alliance/Regent Sector Opportunity Fund, Inc. is a
Maryland corporation organized on July 15, 1996. 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 in the Fund 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 additional classes of
shares. If an additional portfolio or class were established in
the Fund, each share of the portfolio or class would normally be
entitled to one vote for all purposes. Generally, shares of each
portfolio and class would vote as a single series or class on
matters, such as the election of Directors, that affect each
portfolio or class in substantially the same manner. Class A,
Class B, Class 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 bears its own distribution expenses and
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Class B shares and Advisor Class shares convert to Class A shares
under certain circumstances. Each class of shares 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. Certain additional matters
relating to the Fund's organization are discussed in its
Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND
DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance,
located at 500 Plaza Drive, Secaucus, New Jersey 07094, acts as
the Fund's registrar, transfer agent and dividend-disbursing
agent for a fee based upon the number of shareholder accounts
maintained for the Fund. The transfer agency fee with respect to
the Class B shares will be higher than the transfer agency fee
with respect to the Class A shares or Class C shares.
PRINCIPAL UNDERWRITER
AFD, 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.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return,
which is computed separately for Class A, Class B and Class C
shares. Such advertisements disclose the Fund's average annual
compounded total return for the periods prescribed by the
Commission. The Fund's total return for each such 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 the 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 paid and the maximum sales charges
applicable to purchases and redemptions of the Fund's shares are
assumed to have been paid. The Fund's advertisements may quote
performance rankings or ratings of the Fund by financial
publications or independent organizations such as Lipper
Analytical Services, Inc. and Morningstar, Inc. or compare the
Fund's performance to various indices.
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ADDITIONAL INFORMATION
This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do
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 Statements 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.
30
00250232.AI3
<PAGE>
This prospectus does not constitute an offering in any state in
which such offering may not lawfully be made.
Alliance/Regent
Sector Opportunity
Fund
Goal: Long-term growth of
capital through investment in
U.S. equity securities
Prospectus and Application
October 15, 1996
00250232.AI3
<PAGE>
ALLIANCE/REGENT
SECTOR OPPORTUNITY
FUND
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
Prospectus and Application
(Advisor Class)
October 15, 1996
Table of Contents Page
The Fund at a Glance...................................
Expense Information....................................
Glossary...............................................
Description of the Fund................................
Investment Objective................................
Investment Policies.................................
Additional Investment Policies and
Practices........................................
Certain Fundamental Investment
Policies.........................................
Purchase and Sale of Shares............................
Management of the Fund.................................
Dividends, Distributions and Taxes.....................
Conversion Feature.....................................
General Information....................................
Adviser
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Alliance/Regent Sector Opportunity Fund, Inc. (the "Fund") seeks
long-term growth of capital through investment in U.S. equity
securities. The Fund utilizes a "top-down" investment approach
focusing on economic analysis to determine portfolio allocation
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<PAGE>
among market sectors and industries, and pursues its objective by
investing in a diversified portfolio of securities of U.S.
issuers that have a market capitalization of at least one billion
dollars.
The Fund is an open-end diversified management investment
company. This Prospectus sets forth concisely the information
that a prospective investor should know about the Fund before
investing. A "Statement of Additional Information" for the Fund
dated October 15, 1996, which provides further information
regarding certain matters discussed in this Prospectus and other
matters which may be of interest to some investors, has been
filed with the Securities and Exchange Commission and is
incorporated herein by reference. For a free copy, call or write
Alliance Fund Services, Inc. at the indicated address or call the
"For Literature" telephone number shown above.
This Prospectus offers the Advisor Class shares of the Fund,
which may be purchased at net asset value without any initial or
contingent deferred sales charges and without ongoing
distribution expenses. Advisor Class shares are offered solely
to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors,
Inc., the Fund's principal underwriter, (ii) participants in
self-directed defined contribution employee benefit plans (e.g.,
401(k) plans) that meet certain minimum standards and (iii)
investment advisory clients of, and certain persons associated
with, Alliance Capital Management L.P. and its affiliates or the
Fund. See "Purchase and Sale of Shares."
AN INVESTMENT IN THESE SECURITIES IS NOT A DEPOSIT OR OBLIGATION
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK AND IS NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY.
INVESTORS ARE ADVISED TO READ THIS PROSPECTUS CAREFULLY AND TO
RETAIN IT FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[Alliance Logo]
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The Fund At A Glance
The following summary is qualified in its entirety by the more
detailed information contained in the Prospectus.
The Fund's Investment Adviser Is . . .
Alliance Capital Management L.P. ("Alliance"), a global
investment adviser providing diversified services to institutions
and individuals through a broad line of investments including
more than 100 mutual funds. Since 1971 Alliance has earned a
reputation as a leader in the investment world with over $168
billion in assets under management as of June 30, 1996. Alliance
provides investment management services to employee benefit plans
for 33 of the FORTUNE 100 companies. In rendering its services,
Alliance will act through its Regent Investor Services Division
("Regent"). Regent manages in excess of $2.4 billion for
individuals, corporations, retirement plans, foundations and
endowments.
The Fund
Seeks . . . Long-term growth of capital through investment in
U.S. equity securities.
Utilizes . . . a "top-down" investment approach that focuses on
economic analysis to determine portfolio allocation among market
sectors and industries.
Invests primarily in . . . a diversified portfolio of equity
securities of U.S. issuers that have a market capitalization of
at least one billion dollars.
A Word About Risk . . .
The price of shares of the Fund will fluctuate as the daily
prices of the individual stocks and other equity securities in
which it invests fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost. While the
Fund invests principally in common stocks and other equity
securities, in order to achieve its investment objective, the
Fund may at times use certain types of investment instruments
that involve risks different from the risks presented by equity
securities.
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<PAGE>
Getting Started. . .
Shares of the Fund are available through your financial
representative. The Fund offers multiple classes of shares, of
which only the Advisor Class is offered by this Prospectus.
Advisor Class shares may be purchased at net asset value without
any initial or contingent deferred sales charges and are not
subject to ongoing distribution expenses. Advisor Class shares
may be purchased and held solely (i) through accounts established
under a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary and
approved by Alliance Fund Distributors, Inc., the Fund's
principal underwriter, pursuant to which each investor pays an
asset-based fee at an annual rate of at least .50% of the assets
in the investor's account, to the broker-dealer or financial
intermediary, or its affiliate or agent, (ii) 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 and (iii) by investment advisory clients of, and
certain other persons associated with, Alliance and its
affiliates or the Fund. A shareholder's Advisor Class shares
will automatically convert to Class A shares of the Fund under
certain circumstances. See "Conversion Feature--Conversion to
Class A Shares." Shares can be purchased for a minimum initial
investment of $250, and subsequent investments can be made for as
little as $50. In addition, persons investing in Advisor Class
shares of the Fund through a fee-based program may do so only if
the fee-based program has an aggregate of at least $250,000
invested in Advisor Class shares of Alliance Mutual Funds,
including the Fund. Fee-based programs through which Advisor
Class shares may be purchased may impose different requirements
with respect to minimal initial and subsequent investment levels
than described above. For detailed information about purchasing
and selling shares, see "Purchase and Sale of Shares."
[ALLIANCE LOGO]
[(R)/SM These are registered marks used under license from the
owner, Alliance Capital Management L.P.]
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________________________________________________________________
EXPENSE INFORMATION
________________________________________________________________
Shareholder Transaction Expenses are one of several factors to
consider when you invest in the Fund. The following table
summarizes your maximum transaction costs from investing in the
Advisor Class shares of the Fund and estimated annual expenses
for Advisor Class shares of the Fund. The "Example" following
the table below shows the cumulative expenses attributable to a
hypothetical $1,000 investment in Advisor Class shares for the
periods specified.
Advisor Class Shares
____________________
Maximum sales charge imposed on
purchases............................. None
Sales charge imposed on dividend
reinvestments......................... None
Deferred sales charge................... None
Exchange fee............................ None
__________________________________________________________________________
Operating Expenses Example
_________________________________________ ___________________________
Advisor Class Advisor Class
_____________ _____________
Management fees .75% After 1 year $16
12b-1 fees None
Other expenses (a) .82 After 3 years $50
Total fund operating
operating expenses 1.57%
__________________________________________________________________________
(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance, based on a fixed dollar amount
charged to the Fund for each shareholder's account.
(b) The expense information does not reflect any charges or expenses imposed
by your financial representative or your employee benefit plan.
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in
5
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the Fund will bear directly or indirectly. The Example set forth
above assumes reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Commission
regulations. "Other Expenses" are based on estimated amounts for
the Fund's current fiscal year. THE EXAMPLE SHOULD NOT BE
CONSIDERED REPRESENTATIVE OF PAST OR FUTURE EXPENSES; ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
6
<PAGE>
________________________________________________________________
GLOSSARY
________________________________________________________________
The following terms are used in this Prospectus. Many of these
terms are explained in greater detail under "Description of the
Fund--Additional Investment Practices".
Equity securities are common and preferred stocks, and include
convertible securities, but do not include rights, warrants and
options to subscribe for the purchase of common and preferred
stocks.
U.S. Government securities are securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
Moody's is Moody's Investors Service, Inc.
S&P is Standard & Poor's Ratings Services.
Duff & Phelps is Duff & Phelps Credit Rating Co.
Fitch is Fitch Investors Service, Inc.
Qualifying bank deposits are certificates of deposit, bankers'
acceptances and interest-bearing savings deposits of banks having
total assets of more than $1 billion and which are members of the
Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act").
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.
7
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________________________________________________________________
DESCRIPTION OF THE FUND
________________________________________________________________
The Fund is a diversified 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 long-term growth of
capital through investment in U.S. equity securities. As a
matter of fundamental policy, the Fund will normally invest at
least 65% of its total assets in the equity securities of
companies that are (i) organized and have their principal office
in the U.S. and (ii) the equity securities of which are traded
principally in the U.S.
INVESTMENT POLICIES
The Fund seeks to achieve its objective by investing
predominantly in the equity securities of U.S. issuers with
market capitalizations (share price multiplied by the number of
shares outstanding) of at least one billion dollars at the time
of investment. In selecting investments for the Fund, Regent
employs on an active, continuing basis a "top-down" investment
approach based on economic analysis. This approach has four main
elements:
- The analysis of secular, i.e., long-term,
evolutionary change in the economy: which sectors
are growing as a share of gross domestic product
(GDP) and which are contracting, and why;
- The analysis of the business cycle: what is the
current cyclical state of the economy, and how is
the course of the cycle likely to affect stock
price performance;
- Valuation in the stock market: what profitability
and growth prospects are discounted by current
stock prices;
8
<PAGE>
- Earnings growth and momentum: for what sectors,
industries and companies are earnings estimates
increasing, and for which are they declining.
On the basis of this analysis, Regent identifies and
emphasizes those sectors and industries expected to show superior
performance. Regent believes that economic change creates
industry-level factors which are responsible for a significant
portion of the movements in individual stock prices, and its
sector analysis emphasizes anticipation of developments that
cause these factors to change and thus influence stock prices.
Examples of sectors include the technology sector, the energy
sector and the utilities sector. Regent then combines its
sector-level analysis with company-level fundamental analysis in
order to determine which companies within favored sectors are
most suitable for inclusion in portfolios under its management.
Differentiating factors among specific companies include, among
other things, earnings growth, stock price valuation, management
experience and expertise, product development, and other related
factors.
Regent expects the average market capitalization of
companies represented in the Fund's portfolio normally to be in
the range of the larger market capitalizations of companies
comprising the Standard and Poor's 500 Composite Stock Price
Index (the "S&P 500"). The average market capitalization of the
Fund's portfolio may be higher or lower than that of the S&P 500
at any given time. The average market capitalization of the
companies represented in the S&P 500 is approximately $10
billion.
The Fund may also: (i) invest up to 5% of its net assets
in rights or warrants; (ii) purchase and sell exchange-traded
index options and stock index futures contracts; and (iii) write
covered exchange-traded call options on common stocks unless, as
a result, the amount of its securities subject to call options
would exceed 15% of its total assets, and purchase and sell
exchange-traded call and put options on common stocks written by
others, but the total cost of all options held by the Fund
(including exchange-traded index options) may not exceed 10% of
its total assets. For additional information on the use, risks
and costs of these policies and practices see "Additional
Investment Practices." The Fund will not write put options or
invest in illiquid securities if as a result more than 15% of its
net assets would be so invested.
ADDITIONAL INVESTMENT POLICIES AND PRACTICES
The Fund may engage in the following investment policies
and practices to the extent described above.
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<PAGE>
RIGHTS AND WARRANTS. The Fund will invest in rights or
warrants only if the underlying equity securities themselves are
deemed appropriate by Regent 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 thereof. If the market price of the underlying
security is below the exercise price set forth in 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.
OPTIONS. An option gives the purchaser of the option,
upon payment of a premium, the right to deliver to (in the case
of a put) or receive from (in the case of a call) the writer of
the option a specified amount of a security on or before a fixed
date at a predetermined price. A call option written by 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.
In purchasing an option, the Fund would be in a position
to realize a gain if, during the option period, the price of the
underlying security increased (in the case of a call) or
decreased (in the case of a put) by an amount in excess of the
premium paid; otherwise the Fund would experience a loss equal to
the premium paid for the option.
If an option written by the Fund were exercised, the
Fund would be obligated to purchase (in the case of a put) or
sell (in the case of a call) the underlying security at the
exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then
be purchased or sold by the Fund at a disadvantageous price.
These risks could be reduced by entering into a closing
transaction (i.e., by disposing of the option prior to its
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<PAGE>
exercise). 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.
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.
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 other
commodity called for by the contract at a specified price on a
specified date. A "purchase" of a futures contract means the
incurring of an obligation to acquire the securities or 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.
Options on futures contracts written or purchased by the
Fund will be traded on U.S. exchanges. These investment
techniques will be used only to hedge against anticipated future
changes in market conditions 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.
ILLIQUID SECURITIES. The Fund will not maintain more
than 15% of its net assets in illiquid securities. Illiquid
securities will generally include 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).
Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize their full value
upon sale. Regent will monitor the illiquidity of such
securities with respect to the Fund under the supervision of the
11
<PAGE>
Directors of the Fund. To the extent permitted by applicable
law, Rule 144A securities will not be treated as "illiquid" for
purposes of the foregoing restriction so long as such securities
meet liquidity guidelines established by the Fund's Directors.
The Fund may not be able to readily sell securities for which
there is no ready market.
GENERAL. The successful use of the foregoing
investment practices draws upon Alliance's special skills and
experience with respect to such instruments and usually depends
on Alliance's ability to forecast price movements correctly.
Should prices move unexpectedly, the Fund may not achieve the
anticipated benefits of the transactions or may realize losses
and thus be in a worse position than if such strategies had not
been used. In addition, the correlation between movements in the
prices of such instruments and movements in the prices of the
securities hedged will not be perfect and could produce
unanticipated losses.
The Fund's ability to dispose of its position in
options depends on the availability of liquid markets in such
instruments. If a secondary market does not exist with respect
to an option purchased or written by the Fund, it might not be
possible to effect a closing transaction in the option (i.e.,
dispose of the option) with the result that an option purchased
by the Fund would have to be exercised in order for the Fund to
realize any profit. Therefore, no assurance can be given that
the Fund will be able to utilize these instruments effectively
for the purposes set forth above. Furthermore, the Fund's
ability to engage in options and futures transactions may be
limited by tax considerations. See "Dividends, Distributions and
Taxes" in the Statement of Additional Information of the
Fund.
FUTURE DEVELOPMENTS. The 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.
DEFENSIVE POSITION. For temporary defensive purposes,
the Fund may reduce its position in equity securities and invest
without limit in short-term, liquid, high-grade debt securities,
which may include U.S. Government securities, bank deposits,
money market instruments, short-term debt securities, including
notes and bonds. For a description of the types of securities in
which the Fund may invest while in a temporary defensive
position, please see the Statement of Additional Information.
12
<PAGE>
PORTFOLIO TURNOVER. Regent anticipates that the Fund's
annual rate of turnover will not exceed 100%. A 100% annual
turnover rate would occur if all of the securities in the Fund's
portfolio are replaced once in a period of one year. A higher
rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, 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. See "Dividends, Distributions and Taxes" in the
Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
In addition to its fundamental investment objective, the
Fund has adopted the following fundamental investment policies,
which may not be changed without the approval of its
shareholders. Additional fundamental and non-fundamental
investment policies are set forth in the Statement of Additional
Information.
The Fund may not: (i) purchase more than 10% of the
outstanding voting securities of any one issuer; (ii) invest 25%
or more of the value of its total assets in the same industry;
(iii) borrow money or issue senior securities except for
temporary or emergency purposes in an amount not exceeding 5% of
the value of its total assets at the time the borrowing is made;
or (iv) pledge, mortgage, hypothecate or otherwise encumber any
of its assets except in connection with the writing of call
options and except to secure permitted borrowings.
________________________________________________________________
PURCHASE AND SALE OF SHARES
________________________________________________________________
HOW TO BUY SHARES
The Fund offers multiple classes of shares, of which
only the Advisor Class is offered by this Prospectus. Advisor
Class shares of the Fund may be purchased through your financial
representative at net asset value without any initial or
contingent deferred sales charges and are not subject to ongoing
distribution expenses. Advisor Class shares may be purchased and
held solely (i) through accounts established under a fee-based
program, sponsored and maintained by a registered broker-dealer
or other financial intermediary and approved by AFD pursuant to
which each investor pays an asset-based fee at an annual rate of
at least .50% of the assets in the investor's account to the
broker-dealer or other financial intermediary, or its affiliate
or agent, (ii) through a self-directed defined contribution
employee benefit plan (e.g., a 401(k) plan) that has at least
13
<PAGE>
1,000 participants or $25 million in assets and (iii) by
investment advisory clients of, and certain other persons
associated with, Alliance and its affiliates or the Fund. For
more detailed information about who may purchase and hold Advisor
Class shares see the Statement of Additional Information. A
shareholder's Advisor Class shares will automatically convert to
Class A shares of the Fund under certain circumstances. For a
more detailed description of the conversion feature and Class A
shares, see "Conversion Feature." The minimum initial investment
in the Fund is $250. The minimum for subsequent investments in
the Fund is $50. In addition, persons investing in Advisor Class
shares of the Fund through a fee-based program may do so only if
the fee-based program has an aggregate of at least $250,000
invested in Advisor Class shares of Alliance Mutual Funds,
including the Fund. Investments of $25 or more are allowed under
the automatic investment program of the Fund and under a
403(b)(7) retirement plan. Share certificates are issued only
upon request. See the Subscription Application and Statement of
Additional Information for more information.
The Fund may refuse any order to purchase Advisor Class
shares. In this regard, the Fund reserves the right to restrict
purchases of Advisor Class shares (including exchanges) when
there appears to be evidence of a pattern of frequent purchases
and sales made in response to short-term fluctuations in share
price.
How the Fund Values its Shares
The net asset value of Advisor Class shares of the Fund
is calculated by dividing the value of the Fund's net assets
allocable to the Advisor Class by the outstanding shares of the
Advisor Class. Shares are valued each day the Exchange is open
as of the close of regular trading (currently 4:00 p.m. Eastern
time). The securities in the Fund are valued 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 Fund's Directors believe would accurately reflect fair market
value.
HOW TO SELL SHARES
You may "redeem," i.e., sell your shares in the Fund to
the Fund on any day the Exchange is open, either directly or
through your financial representative. The price you will
receive is the net asset value next calculated after the Fund
receives your request in proper form. Proceeds generally will be
sent to you within seven days. However, for shares recently
purchased by check or electronic funds transfer, the Fund will
not send proceeds until it is reasonably satisfied that the check
or electronic funds transfer has been collected (which may take
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<PAGE>
up to 15 days). If you are in doubt about what documents are
required by your fee based program or employee benefit plan, you
should contact your financial representative.
Selling Shares Through Your Financial Representative
Your financial representative must receive your request
before 4:00 p.m. Eastern time, and your financial representative
must transmit your request to the Fund by 5:00 p.m. Eastern time,
for you to receive that day's net asset value. Your financial
representative is responsible for furnishing all necessary
documentation to the Fund and may charge you for this service.
Selling Shares Directly To the Fund
Send a signed letter of instruction or stock power form
to Alliance Fund Services, Inc. ("AFS"), along with certificates,
if any, that represent the shares you want to sell. For your
protection, signatures must be guaranteed by a bank, a member
firm of a national stock exchange or other eligible guarantor
institution. Stock power forms are available from your financial
representative, AFS, and many commercial banks. Additional
documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. For
details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
800-221-5672
Alternatively, a request for redemption of shares for
which no stock certificates have been issued can also be made by
telephone to 800-221-5672. Telephone redemption requests must be
made by 4:00 p.m. Eastern time on a Fund business day in order to
receive that day's net asset value and, except for certain
omnibus accounts, may be made only once in any 30-day period. A
shareholder who has completed the Telephone Transactions section
of the Subscription Application, or the Shareholder Options form
obtained from AFS, can elect to have the proceeds of their
redemption sent to their bank via an electronic funds transfer.
Proceeds of telephone redemptions also may be sent by check to a
shareholder's address of record. Except for certain omnibus
accounts, redemption requests by electronic funds transfer may
not exceed $100,000 and redemption requests by check may not
exceed $50,000. Telephone redemption is not available for shares
held in nominee or "street name" accounts or retirement plan
accounts or shares held by a shareholder who has changed his or
her address of record within the previous 30 calendar days.
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<PAGE>
General
The sale of shares is a taxable transaction for federal
tax purposes. Under unusual circumstances, the Fund may suspend
redemptions or postpone payment for up to seven days or longer,
as permitted by federal securities law. The Fund reserves 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 telephonic 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 telephonic 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.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares of the Fund
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 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.
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. An
exchange is a taxable capital transaction for federal tax
purposes. The exchange service may be changed, suspended, or
terminated on 60 days' written notice.
GENERAL
If you are a Fund 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
16
<PAGE>
from those described in this Prospectus. 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.
The Fund offers three classes of shares other than the
Advisor Class, which are Class A, Class B and Class C. All
classes of shares of the Fund have a common investment objective
and investment portfolio. Class A shares are offered with an
initial sales charge and pay a distribution services fee.
Class B shares have a contingent deferred sales charge (a "CDSC")
and also pay a distribution services fee. Class C shares have no
initial sales charge or CDSC as long as they are not redeemed
within one year of purchase, but pay a distribution services fee.
Because Advisor Class shares have no initial sales charge or CDSC
and pay no distribution services fee, Advisor Class shares are
expected to have different performance from Class A, Class B or
Class C shares. You may obtain more information about Class A,
Class B and Class C shares, which are not offered by this
Prospectus, by contacting AFS by telephone at 1-800-221-5672 or
by contacting your financial representative.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
ADVISER
Alliance, which is a Delaware limited partnership with
principal offices at 1345 Avenue of the Americas, New York, New
York 10105, has been retained under an advisory agreement (the
"Advisory Agreement") to provide investment advice and, in
general, to conduct the management and investment program of the
Fund, subject to the general supervision and control of the
Directors of the Fund.
Alliance is a leading international investment manager
supervising client accounts with assets as of June 30, 1996 of
more than $168 billion (of which more than $55 billion
represented the assets of investment companies). Alliance's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. The 51 registered investment
companies managed by Alliance comprising more than 100 separate
investment portfolios currently have over one million
shareholders. As of June 30, 1996 Alliance was retained as an
investment manager of employee benefit plan assets for 33 of the
Fortune 100 companies.
17
<PAGE>
In rendering its services, Alliance will act through its
Regent Investor Services Division. Regent was established in
1994, when Alliance acquired Regent's predecessor, Regent
Investor Services, Inc., which was founded in 1982. Regent now
has approximately $2.4 billion in assets under management on
behalf of individuals, endowments, foundations, trusts,
corporations and retirement funds.
The Regent employee who will be responsible for the day-
to-day management of the Fund's portfolio is Eugene J. Lancaric.
Mr. Lancaric is a Senior Vice President and the Chief Investment
Officer of Regent and has been employed by Regent since April
1994. Prior thereto he was a Research Analyst at Strategic
Economic Decisions Inc. in Menlo Park, California, an investment
software development firm since prior to 1991.
ACMC, the sole general partner of, and the owner of a 1%
general partnership interest in, Alliance, is an indirect wholly-
owned subsidiary of The Equitable Life Assurance Society of the
United States ("Equitable"), one of the largest life insurance
companies in the United States, which is a wholly-owned
subsidiary of The Equitable Companies Incorporated, a holding
company controlled by AXA, a French insurance holding company.
Certain information concerning the ownership and control of
Equitable by AXA is set forth in the Fund's Statement of
Additional Information under "Management of the Fund."
Under the Advisory Agreement, the Fund pays Alliance a
fee at the annual rate of .75% of the Fund's average daily net
assets. The fee is accrued daily and paid monthly.
PERFORMANCE OF A SIMILARLY MANAGED PORTFOLIO. Regent
has ultimate responsibility over investment decisions for 22
institutional accounts that invest in U.S. equities and cash
equivalents (the "Historical Portfolio"). The Historical
Portfolio has substantially the same investment objective and
policies and has been managed in accordance with essentially the
same investment strategies and techniques as those contemplated
for the Fund. See "Investment Objective and Policies." The
Historical Portfolio was not subject to certain restrictions to
which the Fund, as a registered investment company, is subject.
Set forth below is performance data provided by Regent
relating to the Historical Portfolio for the last two full
calendar years during which Regent has managed the Historical
Portfolio. As of June 30, 1996, the assets in the Historical
Portfolio totalled approximately $237 million. The average size
of an institutional account in the Historical Portfolio is $10.8
million.
18
<PAGE>
The performance data has been adjusted to reflect the
imposition of an advisory fee equal to the advisory fee payable
by the Fund. The performance data includes the cost of brokerage
commissions but excludes custodial fees, transfer agency costs
and other administrative expenses that will be payable by the
Fund and will result in a higher expense ratio for the Fund.
Expenses associated with the distribution of Class A, Class B and
Class C shares of the Fund in accordance with the plan pursuant
to Rule 12b-1 approved by the Fund's Board of Directors are also
excluded. The performance data also have not been adjusted for
taxes, if any, payable by the accounts in the Historical
Portfolio.
Regent has calculated the investment performance of the
Historical Portfolio on a trade-date basis. Dividends have been
accrued at the end of the month and cash flows weighted daily.
The total returns set forth below have been 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 Portfolio has, over
time, performed favorably when compared with the performance of
the S&P 500. The S&P 500 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 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. To the extent the Fund does not invest in U.S.
common stocks or utilizes investment techniques such as futures
or options, the S&P 500 may not be substantially comparable to
the Fund. The S&P 500 is included to illustrate material
economic and market factors that existed during the time period
shown. The S&P 500 does not reflect the deduction of any
fees.
The following performance data are provided solely to
illustrate the past performance of Regent in managing the
Historical Portfolio as measured against the S&P 500, a broad
based market index. Investors should not rely on the following
performance data of the Historical Portfolio as an indication of
future performance of the 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.
19
<PAGE>
Schedule of Investment Performance - Historical Portfolio
Historical S&P 500
Portfolio Index
Total Total
Three-month period ended: Return Return
September 30, 1994............... 4.51% 4.88%
December 31, 1994................ 0.35% -0.01%
March 31, 1995................... 10.06% 9.73%
June 30, 1995.................... 11.67% 9.53%
Cumulative total return for
the period July 1, 1994 to
June 30, 1995.................... 28.90% 26.04%
Three-month period ended:
September 30, 1995............... 8.57% 7.95%
December 31, 1995................ 5.19% 6.02%
March 31, 1996................... 7.78% 5.37%
June 30, 1996.................... 5.90% 4.48%
Cumulative total return for
the period July 1, 1994 to
June 30, 1996.................... 30.35% 26.00%
Three-month period ended:
September 30, 1996...............
The average total returns presented above reflects the
performance of the Historical Portfolio for each quarter of the
last two years and cumulatively for the last one and two year
periods and for the quarter ended September 30, 1996.
EXPENSES OF THE FUND
In addition to the payments to Alliance under the
Advisory Agreement described above, the Fund pays certain other
costs, including (i) custody, transfer and dividend disbursing
expenses, (ii) fees of the Directors who are not affiliated with
Alliance, (iii) legal and auditing expenses, (iv) clerical,
accounting and other office costs, (v) costs of printing the
Fund's prospectuses and shareholder reports, (vi) costs of
20
<PAGE>
maintaining the Fund's existence, (vii) interest charges, taxes,
brokerage fees and commissions, (viii) costs of stationery and
supplies, (ix) expenses and fees related to registration and
filing with the Commission and with state regulatory authorities,
(x) upon the approval of the Board of Directors, costs of
personnel of Alliance or its affiliates rendering clerical,
accounting and other office services, and (xi) such promotional,
shareholder servicing and other expenses as may be contemplated
by the Distribution Services Agreement, described below.
DISTRIBUTION SERVICES AGREEMENT
The Fund has entered into a Distribution Services
Agreement with AFD with respect to the Advisor Class shares. 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 service
arrangements would be made and that shareholders would not be
adversely affected. The State of Texas requires that shares of
the Fund may be sold in that state only by dealers or other
financial institutions that are registered there as broker-
dealers.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
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 the Fund without charge by returning to
Alliance, with appropriate instructions, the check representing
such 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 the Fund.
Each income dividend and capital gains distribution, if
any, declared by the Fund on its outstanding shares will, at the
election of each shareholder, be paid in cash or in additional
shares of the Fund having an aggregate net asset value as of the
21
<PAGE>
payment date of such dividend or distribution equal to the cash
amount of such income dividend or distribution. Election to
receive income dividends and distributions in cash or shares is
made at the time shares are initially purchased and may be
changed at any time prior to the record date for a particular
dividend or distribution. Cash dividends can be paid by check
or, if the shareholder so elects, electronically via the ACH
network. There is no sales or other charge in connection with
the reinvestment of dividends and capital gains distributions.
While it is the intention of the 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 such dividend or distribution must necessarily depend
upon the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate, and there can be
no assurance that the Fund will pay any dividends or realize any
capital gains.
If you buy shares just before the 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.
U.S. Federal Income Taxes
The Fund intends to qualify to be taxed as a "regulated
investment company" under the Code. To the extent that the Fund
distributes its taxable income and net capital gain to its
shareholders, qualification as a regulated investment company
relieves the Fund of federal income and excise taxes on that part
of its taxable income including net capital gains which it pays
out to its shareholders. Dividends out of net ordinary income
and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of
corporate shareholders, such dividends may be eligible for the
dividends-received deduction, except that the amount eligible for
the deduction is limited to the amount of qualifying dividends
received by the Fund. A corporation's dividends-received
deduction will be disallowed unless the corporation holds shares
in the Fund at least 46 days. Furthermore, the dividends-
received deduction will be disallowed to the extent a
corporation's investment in shares of the Fund is financed with
indebtedness.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders as capital gains distributions is taxable to the
shareholders as long-term capital gains, irrespective of the
length of time a shareholder may have held his or her stock.
22
<PAGE>
Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.
Under the current federal tax law, the amount of an
income dividend or capital gains distribution declared by the
Fund during October, November or December of a year to
shareholders of record as of a specified date in such a month
that is paid during January of the following year is includable
in the prior year's taxable income of shareholders that are
calendar year taxpayers.
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 or her as described above.
If a shareholder held shares six months or less and during that
period received a distribution taxable to such shareholder as
long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term capital
loss to the extent of such distribution.
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, 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.
The Fund will be required to withhold 31% of any
payments made to a shareholder if the shareholder has not
provided a certified taxpayer identification number to the Fund,
or the Secretary of the Treasury notifies the Fund that a
shareholder has not reported all interest and dividend income
required to be shown on the shareholder's Federal income tax
return.
Shareholders will be advised annually as to the federal
tax status of dividends and capital gains distributions made by
the Fund for the preceding year. Distributions by the Fund may
be subject to state and local taxes. Shareholders are urged to
consult their tax advisers regarding their own tax situation.
23
<PAGE>
CONVERSION TO CLASS A SHARES
Advisor Class shares may be held solely through the fee-
based program accounts and employee benefit plans described above
under "--How to Buy Shares," and by investment advisory clients
of, and certain other persons associated with, Alliance and its
affiliates or the Fund. If (i) a holder of Advisor Class shares
ceases to participate in a fee-based program or plan that
satisfies the requirements to purchase shares set forth under
"--How to Buy Shares" or (ii) the holder is otherwise no longer
eligible to purchase Advisor Class shares as described in this
Prospectus (each, a "Conversion Event"), then all Advisor Class
shares held by the shareholder will convert automatically and
without notice to the shareholder, other than the notice
contained in this Prospectus, 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
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 net asset values of the two
classes and without the imposition of any sales load, fee or
other charge.
DESCRIPTION OF CLASS A SHARES
The following sets forth maximum transaction costs,
annual expenses, per share income and capital charges for Class A
shares of the Fund. Class A shares are subject to a distribution
fee that may not exceed an annual rate of .30%. The higher fees
mean a higher expense ratio, so Class A shares pay
correspondingly lower dividends and may have a lower net asset
value than Advisor Class shares.
Shareholder Transaction Expenses are one of several factors to
consider when you invest in the Fund. The following table
summarizes your maximum transaction costs from investing in Class
A shares of the Fund and estimated annual expenses for Class A
shares of the Fund. The "Examples" to the right of the table
below show the cumulative expenses attributable to a hypothetical
$1,000 investment for the periods specified.
24
<PAGE>
Class A Shares
Maximum sales charge imposed on purchases (as a
percentage of offering price) (a)................ None (sales
charge
waived)
Sales charge imposed on dividend reinvestments... None
Deferred sales charge (as a percentage of
original purchase price or redemption proceeds,
whichever is lower).............................. None
Exchange fee..................................... None
Operating Expenses Example (a)
Management fees .75% After 1 year $ 19
12b-1 fees .30% After 3 years $ 59
Other expenses(b) .82% After 5 years $101
After 10 years $219
Total fund operating
expenses 1.87
(a) Advisor Class shares convert to Class A shares at net asset
value and without the imposition of any sales charge and
accordingly the maximum sales charge of 4.25% on most purchases
of Class A shares for cash does not apply.
(b) These expenses include a transfer agency fee payable to
Alliance Fund Services, Inc., an affiliate of Alliance, based on
a fixed dollar amount charged to the Fund for each shareholder's
account.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
PORTFOLIO TRANSACTIONS
Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking
best price and execution, the Fund may consider sales of its
shares as a factor in the selection of dealers to enter into
portfolio transactions with the Fund.
ORGANIZATION
Alliance/Regent Sector Opportunity Fund, Inc. is a
Maryland corporation organized on July 15, 1996. It is
anticipated that annual shareholder meetings will not be held;
shareholder meetings will be held only when required by federal
25
<PAGE>
or state law. Shareholders have available certain procedures for
the removal of Directors.
A shareholder in the Fund 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. The Fund is
empowered to establish, without shareholder approval, additional
portfolios, which may have different investment objectives, and
additional classes of shares. If an additional portfolio or
class were established in the Fund, each share of the portfolio
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. Advisor Class, Class A, Class B and Class C 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 bears its own distribution
expenses and Class B and Advisor Class shares convert to Class A
shares under certain circumstances. Each class of shares votes
separately with respect to 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. Certain additional matters
relating to the Fund's organization are discussed in the
Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND
DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance,
located at 500 Plaza Drive, Secaucus, New Jersey 07094, acts as
the Fund's registrar, transfer agent and dividend-disbursing
agent for a fee based upon the number of shareholder accounts
maintained for the Fund.
PRINCIPAL UNDERWRITER
AFD, 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.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return,
which is computed separately for each class of shares, including
Advisor Class shares. Such advertisements disclose the Fund's
average annual compounded total return for the periods prescribed
26
<PAGE>
by the Commission. The Fund's total return for each such 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 the 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 paid and the maximum sales
charges applicable to purchases and redemptions of the Fund's
shares are assumed to have been paid. The Fund's advertisements
may quote performance rankings or ratings of the Fund by
financial publications or independent organizations such as
Lipper Analytical Services, Inc. and Morningstar, Inc. or compare
the Fund's performance to various indices.
ADDITIONAL INFORMATION
This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do
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 Statements 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.
27
00250232.AI3
<PAGE>
This prospectus does not constitute an offering in any state in
which such offering may not lawfully be made.
Alliance/Regent
Sector Opportunity
Fund
Goal: Long-term growth of
capital through investment in
U.S. equity securities
Prospectus and Application
October 15, 1996
00250232.AI3
<PAGE>
ALLIANCE/REGENT SECTOR
[LOGO](R) OPPORTUNITY FUND, 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
October 15, 1996
_________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectuses for the Fund that offers the Class A, Class B and
Class C shares of the Fund each dated October 15, 1996 and the
current Prospectus for the Fund that offers the Advisor Class
shares of the Fund dated October 15, 1996 (each such Prospectus
will be referred to collectively as the "Prospectus"). Copies of
such Prospectus may be obtained by contacting Alliance Fund
Services, Inc. at the address or the "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...................
Brokerage and Portfolio Transactions.................
General Information..................................
Report of Independent Auditors
and Financial Statement.............................
<PAGE>
Appendix: Certain Investment Practices .............
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
________________________________________________________________
DESCRIPTION OF THE FUND
________________________________________________________________
Alliance/Regent Sector Opportunity Fund, Inc. (the
"Fund") is a diversified 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 long-term growth of
capital through investment in U.S. equity securities. As a
matter of fundamental policy, the Fund will normally invest at
least 65% of its total assets in the equity securities of
companies that are (i) organized and have their principal office
in the U.S. and (ii) the equity securities of which are traded
principally in the U.S.
Investment Policies
The Fund seeks to achieve its objective by investing
predominantly in the equity securities of U.S. issuers with
market capitalizations (share price multiplied by the number of
shares outstanding) of at least one billion dollars at the time
of investment. In selecting investments for the Fund, Regent
employs on an active, continuing basis a "top-down" investment
approach based on economic analysis. This approach has four main
elements:
- The analysis of secular, i.e., long-term,
evolutionary change in the economy: which
sectors are growing as a share of gross
domestic product (GDP) and which are
contracting, and why;
- The analysis of the business cycle: what is
the current cyclical state of the economy, and
how is the course of the cycle likely to
affect stock price performance;
- Valuation in the stock market: what
profitability and growth prospects are
discounted by current stock prices;
2
<PAGE>
- Earnings growth and momentum: for what
sectors, industries and companies are earnings
estimates increasing, and for which are they
declining.
On the basis of this analysis, Regent identifies
and emphasizes those sectors and industries expected to show
superior performance. Regent believes that economic change
creates industry-level factors which are responsible for a
significant portion of the movements in individual stock
prices, and its sector analysis emphasizes anticipation of
developments that cause these factors to change and thus
influence stock prices. Regent then combines its sector-
level analysis with company-level fundamental analysis in
order to determine which companies within favored sectors
are most suitable for inclusion in portfolios under its
management. Differentiating factors among specific
companies include, among other things, earnings growth,
stock price valuation, management experience and expertise,
product development, and other related factors.
Regent expects the average market capitalization of
companies represented in the Fund's portfolio normally to be
in the range of the larger market capitalizations of
companies comprising the Standard and Poor's 500 Composite
Stock Price Index (the "S&P 500"). The average market
capitalization of the Fund's portfolio may be higher or
lower than that of the S&P 500 at any given time. The
average market capitalization of the companies represented
in the S&P 500 is approximately $10 billion.
The Fund may also: (i) invest up to 5% of its
net assets in rights or warrants; (ii) purchase and sell
exchange-traded index options and stock index futures
contracts; and (iii) write covered exchange-traded call
options on common stocks unless, as a result, the amount of
its securities subject to call options would exceed 15% of
its total assets, and purchase and sell exchange-traded call
and put options on common stocks written by others, but the
total cost of all options held by the Fund (including
exchange-traded index options) may not exceed 10% of its
total assets. For additional information on the use, risks
and costs of these policies and practices see "Additional
Investment Practices." The Fund will not write put options
or invest in illiquid securities if as a result more than
15% of its net assets would be so invested.
3
<PAGE>
Additional Investment Policies and Practices
The Fund may engage in the following investment policies
and practices to the extent described above.
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
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
4
<PAGE>
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 sponsored by
the National Association of Securities Dealers, Inc., an
automated system for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers.
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.
General. The successful use of the Fund's investment
practices draws upon the Adviser's special skills and experience
with respect to such instruments and usually depends on the
Investment Adviser's ability to forecast price movements
correctly. Should prices move unexpectedly, the Fund may not
achieve the anticipated benefits of the transactions or may
realize losses and thus be in a worse position than if such
strategies had not been used. In addition, the correlation
between movements in the prices of such instruments and movements
in the prices of the securities hedged will not be perfect and
could produce unanticipated losses.
The Fund's ability to dispose of its position in
options depends on the availability of liquid markets in such
instruments. If a secondary market does not exist with respect
to an option purchased or written by the Fund, it might not be
possible to effect a closing transaction in the option (i.e.,
dispose of the option) with the result that an option purchased
by the Fund would have to be exercised in order for the Fund to
realize any profit. Therefore, no assurance can be given that
the Fund will be able to utilize these instruments effectively
5
<PAGE>
for the purposes set forth above. Furthermore, the Fund's
ability to engage in options and futures transactions may be
limited by tax considerations. See "Dividends, Distributions and
Taxes" in the Statement of Additional Information of the
Fund.
Future Developments. The 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.
Defensive Position. For temporary defensive
purposes, the Fund may vary from its investment objective during
periods in which conditions in securities markets or other
economic or political conditions warrant. During such periods,
the Fund may reduce its position in equity securities and
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, 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.
Portfolio Turnover. The Fund's investment policies
as described above (see "Investment Objective" and "Investment
Policies") are based on the Adviser's assessment of fundamentals
in the context of changing market valuations. They may therefore
involve frequent purchases and sales of shares of a particular
issuer as well as the replacement of securities. While it is
anticipated that the Fund's annual portfolio turnover rate will
not normally exceed 100%, it could, under some conditions, exceed
100%. A 100% annual turnover rate would occur, for example, if
all of the stocks in the Fund's portfolio were replaced once in a
period of one year. The Fund expects that more of its portfolio
turnover will be attributable to increases and decreases in the
size of particular portfolio positions rather than to the
complete elimination of a particular issuer's securities from the
Fund's portfolio. A higher portfolio turnover rate will cause
the Fund to realize short-term capital gains or losses on the
sale of certain securities and correspondingly greater brokerage
commission expenses than would a lower rate, which expenses must
6
<PAGE>
be borne by the Fund and its shareholders. See "Dividends,
Distributions and Taxes".
Certain Fundamental Investment Policies
The following restrictions may not be changed without a
vote of a majority of the Fund's outstanding voting securities.
As a matter of fundamental policy, the Fund may not:
(a) purchase more than 10% of the outstanding
voting securities of any of one issuer;
(b) invest 25% or more of the value of its total
assets in the same industry, except that this
restriction does not apply to securities issued or
guaranteed by the U.S. Government, its agencies and
instrumentalities;
(c) borrow money or issue senior securities except
for temporary or emergency purposes in an amount not
exceeding 5% of the value of its total assets at the
time the borrowing is made;
(d) pledge, mortgage, hypothecate or otherwise
encumber any of its assets except in connection with the
writing of call options and except to secure permitted
borrowings;
(e) participate on a joint or joint and several
basis in any securities trading account;
(f) invest in companies for the purpose of
exercising control;
(g) make loans except through the purchase of debt
obligations in accordance with its investment objective
and policies;
(h) purchase the securities of any other
investment company or investment trust, except when such
purchase is part of a merger, consolidation or
acquisition of assets; or
(i) (i) purchase or sell real estate except that
it may purchase and sell securities of companies which
deal in real estate or interests therein, (ii) purchase
or sell commodities or commodity contracts (other than
stock index futures contracts), (iii) invest in
interests in oil, gas, or other mineral exploration or
development programs, except that it may purchase and
7
<PAGE>
sell securities of companies that deal in oil, gas or
other mineral exploration or development programs, (iv)
make short sales of securities or purchase securities on
margin except for such short-term credits as may be
necessary for the clearance of transactions, or (v) act
as an underwriter of securities, except that the fund
may acquire restricted securities or securities in
private placements under circumstances in which, if such
securities were sold, the Fund might be deemed to be an
underwriter within the meaning of the Securities Act of
1933.
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 non-
fundamental investment restrictions, that it will not
(i) purchase securities of issuers which the Fund is restricted
from selling to the public without registration under the
Securities Act of 1933 (excluding 144A securities) if by any
reason thereof the value of its aggregate investment in such
securities will exceed 10% of its total assets; (ii) invest in
warrants (other than warrants acquired by the Fund as a part of a
unit or attached to securities at the time of purchase) if as a
result such warrants valued at the lower of cost or market would
exceed 5% of the value of the Fund's net assets at the time of
purchase, provided that not more than 2% of the Fund's net assets
at the time of purchase may be invested in warrants not listed on
the New York Stock Exchange or the American Stock Exchange;
(iii) purchase or retain the securities of any issuer if the
officers, directors or trustees of the Fund, its advisors or
managers owning beneficially more than one half of one percent of
the securities of an issuer together own beneficially more than
5% of the securities of that issuer; and (iv) purchase or retain
the securities of any issuer if the officers, directors or
trustees of the Fund, its advisors, or managers owning
beneficially more than one half of one percent of the securities
of an issuer together own beneficially more than 5% of the
securities of that issuer.
Whenever any investment restriction states a maximum
percentage of the Fund's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after, and as a
result of the Fund's acquisition of, such securities or other
assets. Accordingly, any later increase or decrease in
percentage beyond the specified limitation resulting from a
change in values or net assets will not be considered a violation
of any such maximum.
8
<PAGE>
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
Directors and Officers
The Directors and principal officers of the Fund, their
ages and their primary occupations during the past five years are
set forth below. Each such Director and officer is also a
director, trustee or officer of other registered investment
companies sponsored by the Adviser. 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,* 50, Chairman of the Board and
President, is the President, Chief Operating Officer and a
Director of ACMC,** with which he has been associated since prior
to 1991.
RUTH BLOCK, 64, was formerly Executive Vice President
and the Chief Insurance Officer of The Equitable Life Assurance
Society of the United States ("Equitable"). She is a Director of
Ecolab Incorporated (specialty chemicals) and Amoco Corporation
(oil and gas). Her address is P.O. Box 4653, Stamford,
Connecticut 06903.
DAVID H. DIEVLER, 65, was formerly Chairman of the Board
and President of the Fund and a Senior Vice President of ACMC
with which he had been associated since prior to 1991 through
1994. He is currently an independent consultant. His address is
P.O. Box 167, Spring Lake, New Jersey 07762.
JOHN H. DOBKIN, 53, has been the President of Historic
Hudson Valley (historic preservation) since 1991. Previously, he
was Director of the National Academy of Design. From 1988 to
1992 he was a Director of ACMC. His address is 105 West 55th
Street, New York, New York 10019.
WILLIAM H. FOULK, JR., 62, was formerly Senior Manager
of Barrett Associates, Inc., a registered investment adviser, and
President of Competrol (BJI) Limited and Crescent Diversified
____________________
* An interested person of the Fund as defined in the 1940 Act.
** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of the Adviser, and to the predecessor
general partner of the Adviser of the same name.
9
<PAGE>
Limited (private investments) since prior to 1991. His address
is 2 Hekma Road, Greenwich, Connecticut 06831.
DR. JAMES M. HESTER, 71, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide
Corporation. He was formerly President of New York University,
the New York Botanical Garden and Rector of the United Nations
University. His address is 45 East 89th Street, New York, New
York 10128.
CLIFFORD L. MICHEL, 56, is a partner in the law firm of
Cahill Gordon & Reindel, with which he has been associated since
prior to 1991. He is also Chief Executive Officer of Wenonah
Development Company (investments) and a Director of Placer Dome,
Inc. (mining) and Faber-Castell Corporation (writing products).
His address is St. Bernard's Road, Gladstone, New Jersey 07934.
DONALD G. ROBINSON, 62, was a partner and member of the
Executive Committee of the law firm of Orrick, Herrington &
Sutcliffe from July 1987 to December 1994. He has been of
counsel since January 1995. His address is 599 Lexington Avenue,
New York, New York 10002.
Officers
JOHN D. CARIFA, President, see biography above.
EUGENE J. LANCARIC, [ ], Senior Vice President, is a
Senior Vice President and Chief Investment Officer of Regent and
has been employed at Regent since April 1994. Prior thereto he
was a research analyst at Strategic Economics Decisions Inc. in
Menlo Park California, an investment software development firm,
since prior to 1991.
THOMAS BARDONG, 50, Vice President, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1991.
DANIEL V. PANKER, 57, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1991.
EDMUND P. BERGAN, JR., 46, Secretary, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS") and a Vice
President and Assistant General Counsel of ACMC, with which he
has been associated since prior to 1991.
DOMENICK PUGLIESE, 35, Assistant Secretary, is a Vice
President and Associate General Counsel of AFD, with which he has
been associated since May 1995. Previously, he was Vice
10
<PAGE>
President and Counsel of Concord Holding Corporation since 1994,
Vice President and Associate General Counsel of Prudential
Securities since 1991 and an Associate with Battle Fowler, since
prior to 1991.
MARK D. GERSTEN, 45, Treasurer and Chief Financial
Officer, is a Senior Vice President of AFS, with which he has
been associated since prior to 1991.
VINCENT S. NOTO, 31, Controller, is an Assistant Vice
President of AFS, with which he has been associated since
1991.
The aggregate compensation to be paid by the Fund to
each of the Directors during its current fiscal year ending
August 31, 1997 (estimating future payments based upon existing
arrangements), and the aggregate compensation paid to each of the
Directors during calendar year 1995 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 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. Each of the Directors is a
director or trustee of one or more other registered investment
companies in the Alliance Fund Complex.
11
<PAGE>
Total Number of Funds
in the Alliance Fund
Total Complex, Including
Aggregate Compensation the Fund, as to
Name of Director Compensation from the Alliance which the Director is
of the Fund from the Fund* Fund Complex** a Director or Trustee
________________ ______________ _________________ _____________________
John D. Carifa $ -0- $ -0- 49
Ruth Block 3,000 159,000 36
David H. Dievler 3,000 179,200 42
John H. Dobkin 3,000 117,200 29
William H. Foulk, Jr. 3,000 143,500 30
Dr. James M. Hester 3,000 156,000 37
Clifford L. Michel 3,000 131,500 36
[Donald G. Robinson 3,000 60,500 10
____________________
* The information in this column represents an estimate of
amounts to be paid during the Fund's current fiscal year.
** The information in this column represents amounts actually
paid during calendar year 1995.
As of October 15, 1996 the Directors and officers of the
Fund as a group owned less than 1% of the shares of the Fund.
Adviser
Alliance Capital Management L.P. ("Alliance"), a New
York Stock Exchange listed company 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 and control of the Fund's Board of Directors.
The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1996 of more than $168 billion (of which more than $53 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. As of June 30, 1996, the
Adviser was retained as an investment manager of employee benefit
plan assets for 33 of the FORTUNE 100 companies. As of that
date, the Adviser and its subsidiaries employed approximately
1,450 employees who operated out of domestic offices and the
12
<PAGE>
offices of subsidiaries in Bombay, Istanbul, London, Paris, Sao
Paolo, Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore.
The 51 registered investment companies comprising more than 100
separate investment portfolios managed by the Adviser currently
have more than two million shareholders.
In rendering its services, the Adviser will act through
its Regent Investor Services Division ("Regent"). Regent was
established in 1994, when Alliance acquired Regent's predecessor,
Regent Investor Services, Inc., which was founded in 1982.
Regent now has approximately $2.4 billion in assets under
management on behalf of individuals, endowments, foundations,
trusts, corporations and retirement funds.
The Regent employee who will be responsible for the day-
to-day management of the Fund's portfolio is Eugene J. Lancaric.
Mr. Lancaric is a Senior Vice President and the Chief Investment
Officer of Regent and has been employed by Regent since April
1994. Prior thereto, and from before 1991, he was a Research
Analyst at Strategic Economic Decisions Inc. in Menlo Park,
California, an investment software development firm.
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of June 30, 1996,
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 57.% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of June 30, 1996, approximately 33% and
10% of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including employees
of the Adviser who serve as Directors of the Fund.
As of September 6, 1996, AXA and its subsidiaries owned
approximately 60.7% of the issued and outstanding shares of
capital stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically, with activities
in more than 20 countries, including France, the United States,
Australia, the United Kingdom, Canada and other countries,
principally in Western Europe and the Asia/Pacific area. AXA is
also engaged in asset management, investment banking, securities
13
<PAGE>
trading, brokerage, real estate and other financial services
activities in the United States, as well as in Western Europe and
the Asia/Pacific area.
Based on information provided by AXA, as of September 9,
1996, 36.3% of the issued ordinary shares (representing 49.1% of
the voting power) of AXA were owned directly or indirectly by
Finaxa, a French holding company ("Finaxa"). As of September 9,
1996, 61.2% of the voting shares (representing 73.5% of the
voting power) of Finaxa were owned by five French mutual
insurance companies (the "Mutuelles AXA") (one of which, AXA
Assurances I.A.R.D. Mutuelle, owned 34.8% of the voting shares of
Finaxa (representing 40.6% of the voting power), and 23.7% of the
voting shares (representing 15.0% of the voting power) were owned
by Banque Paribas, a French bank. Including the ordinary shares
directly or indirectly owned by Finaxa, the Mutuelles AXA
directly or indirectly owned 42.0% of the issued ordinary shares
(representing 56.8% of the voting power) of AXA as of
September 9, 1996. Acting as a group, the Mutuelles AXA control
AXA and Finaxa. In addition, as of September 9, 1996, 7.8% of
the issued ordinary shares of AXA without the power to vote were
owned by subsidiaries of AXA.
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.
Under the Advisory Agreement, the Fund pays the Adviser
a fee at the annual rate of .75% of the value of the average
daily net assets of the Fund. The fee is accrued daily and paid
monthly.
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 provides that the Adviser will
reimburse the Fund for its net expenses (exclusive of interest,
taxes, brokerage, expenditures pursuant to the Distribution
14
<PAGE>
Services Agreement described below, and extraordinary expenses,
all to the extent permitted by applicable state securities laws
and regulations) which in any year exceed the limits prescribed
by any state in which the Fund's shares are qualified for sale.
The Fund may not qualify its shares for sale in every state. The
Fund believes that at present the most restrictive state expense
ratio limitation imposed by any state in which the Fund has
qualified its shares for sale is 2.5% of the first $30 million of
the mutual fund's average net assets, 2.0% of the next
$70 million of its average net assets and 1.5% of its average net
assets in excess of $100 million. Expense reimbursements, if
any, are accrued daily and paid monthly.
The Advisory Agreement became effective on October 15,
1996. The Advisory Agreement will continue in effect until
September 30, 1998 and thereafter for successive twelve-month
periods (computed from each October 1), provided that such
continuance is 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 Act.
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 ACM Institutional Reserves, Inc.,
AFD Exchange Reserves, The Alliance Fund, Inc., Alliance All-Asia
Investment Fund, Inc., Alliance Balanced Shares, Inc., Alliance
Bond Fund, Inc., Alliance Capital Reserves, Alliance Developing
Markets Fund, Inc., 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 Income Builder Fund, Inc.,
Alliance International Fund, Alliance Limited Maturity Government
15
<PAGE>
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
Short-Term Multi-Market Trust, Inc., Alliance Technology Fund,
Inc., Alliance Utility Income Fund, Inc., Alliance Variable
Products Series Fund, Inc., Alliance World Income Trust, Inc.,
Alliance Worldwide Privatization Fund, Inc., The Alliance
Portfolios, Fiduciary Management Associates and The Hudson River
Trust, all registered open-end investment companies; and to ACM
Government Income Fund, Inc., 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
Global Environment 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.
________________________________________________________________
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 to permit the Fund to pay distribution services
fees to defray expenses associated with distribution of its Class
A, Class B 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 adopted by the
Commission under the Act (the "Rule 12b-1 Plan").
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
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
16
<PAGE>
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/or distribution services fee provide
for the financing of the distribution of the relevant class of
the Fund's shares.
Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Directors of the
Fund on a quarterly basis. Also, the Agreement provides that the
selection and nomination of Directors who are not "interested
persons" of the Fund, as defined in the 1940 Act, are committed
to the discretion of such disinterested Directors then in
office.
The Agreement became effective on __________, 1996. The
Agreement will continue in effect for successive twelve-month
periods with respect to Class A, Class B, Class C and Advisor
Class shares (computed from each [ ] 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 this 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.
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.
In the event that the Agreement 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.
All material amendments to the Agreement must be
approved by a vote of the Directors or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
17
<PAGE>
either case, by a majority of the disinterested Directors, cast
in person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class or
classes affected. The Agreement may be terminated (a) by the
Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting
separately by class or by a majority vote of the Directors who
are not "interested persons" as defined in the 1940 Act, or
(b) by the Principal Underwriter. To terminate the Agreement,
any party must give the other parties 60 days' written notice; to
terminate the Rule 12b-1 Plan only, the Fund need give no notice
to the Principal Underwriter. The Agreement will terminate
automatically in the event of its assignment.
Transfer Agency Agreement
Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, 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 and Class C shares is higher than
the transfer agency fee with respect to the Class A and Advisor
Class shares, reflecting the additional costs associated with the
Class B and Class C contingent deferred sales charge.
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 will be 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
18
<PAGE>
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.
Investors may purchase and hold Advisor Class shares of
the Fund 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, pursuant to which each investor pays an asset-based
fee at an annual rate of at least .50% of the assets in the
investor's account, to the sponsor, or its affiliate or agent,
(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 or (iii) by the categories of investors
described in clauses (i), (ii) and (iii) 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, all of
whom are not eligible to purchase and hold Advisor Class shares).
If you are a Fund 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 in the Advisor Class Prospectus and this
Statement of Additional Information. 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.
Investors may purchase shares of the Fund either through
selected dealers, agents or financial representatives or directly
through the Principal Underwriter. 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. Shares may also be sold in foreign
countries where permissible. 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. 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
19
<PAGE>
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. A Fund business day
is any day on which the Exchange is open for trading.
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 value of
the Class A and Advisor Class shares, and the per share net asset
value of the Class A shares may be lower than that of the 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 purchase 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 representatives 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 is
responsible for transmitting such orders by 5:00 p.m. If the
selected dealer, agent or financial representatives, as
applicable 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
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.
20
<PAGE>
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 "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,
including EQ Financial Consultants, Inc., formerly Equico
Securities, Inc., an affiliate of the Principal Underwriter, 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, cash or other incentives
will be conditioned upon the sale of a specified minimum dollar
amount of the shares of the Fund and/or other Alliance Mutual
Funds, as defined below, during a specific period of time. 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 and their immediate family
members to urban or resort 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.
21
<PAGE>
Class A, Class B, Class C and Advisor Class shares each
represent an interest in the same portfolio of investments of the
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
do Class A shares, and Advisor Class shares do not bear such a
fee, (iii) Class B shares and Class C shares bear higher transfer
agency costs than do Class A shares and Advisor Class, (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 shareholders and the Advisor Class shareholders
and the Class A shareholders, the Class B shareholders 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***
Class A, Class B and Class C shares have the following
alternative purchase arrangements: Class A shares are sold to
investors choosing the initial sales charge alternative, Class B
shares are sold to investors choosing the deferred sales charge
alternative, and Class C shares are sold to investors choosing
the asset-based sales charge alternative. These alternative
purchase arrangements 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
____________________
*** Advisor Class shares are sold only to investors described
above in this section under "--General."
22
<PAGE>
Fund, the accumulated distribution services fee and contingent
deferred sales charges on Class B shares prior to conversion, or
the accumulated distribution services fee and contingent deferred
sales charges 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 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) for more than $250,000 for
Class B 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 $5,000,000 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 on Class A shares 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.
23
<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.
Class A Shares
The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below.
Sales Charge
________________________
Discount or
Commission
As % of to Dealers
As % of the or Agents
Net Public As % of
Amount of Amount Offering Offering
Purchase Invested Price 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
24
<PAGE>
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 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 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
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, (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 of 1933, as amended.
Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$50,000 subject to the schedule of sales charges set forth above
25
<PAGE>
at a price based upon the net asset value of Class A shares of
the Fund on October 15, 1996.
Net Asset Value per Class A Share at $10.00
_________, 1996
Class A Per Share Sales Charge
4.25% of offering price 4.44% of
net asset value per share) .44
______
Class A Per Share Offering Price to
the public $10.44
======
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 such
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
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:
26
<PAGE>
AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Developing Markets 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 Income Builder Fund, Inc.
Alliance International Fund
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.
-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
-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/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Portfolios
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Strategic Balanced Fund
-Alliance Short-Term U.S. Government Fund
27
<PAGE>
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "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 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
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 a 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 the 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
28
<PAGE>
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 a 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
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 Alliance Fund Services, Inc.
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
29
<PAGE>
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of 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 reinstatement 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. The
reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased,
except that the privilege may be used more than once in
connection with transactions whose sole purpose is to transfer a
shareholder's interest in the Fund to his or her individual
retirement account or other qualified retirement plan account.
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.
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 any 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
30
<PAGE>
full-time employees of the Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates; officers and
directors of ACMC, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; officers, directors and
present full-time employees of selected dealers or agents; or the
spouse, sibling, direct ancestor or direct descendent
(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 sales are made 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; certain employee
benefit plans for employees of the Adviser, the Principal
Underwriter, Alliance Fund Services, Inc. and their affiliates;
(iv) persons participating in a fee-based program,
sponsored and maintained by a registered broker-dealer and
approved by the Principal Underwriter, pursuant to which such
persons pay an asset-based fee to such broker-dealer, or its
affiliate or agent, for services in the nature of investment
advisory or administrative service;
(v) 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
(vi) employer-sponsored qualified pensions 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.
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.
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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 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
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).
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 %
Years Since Purchase of Dollar Amount Subject to Charge
____________________ ________________________________________
Less than one 4%
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One 3%
Two 2%
Three 1%
Four or more 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 the
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.
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.
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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 than Class A shares, and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class
A 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
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
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<PAGE>
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.
Conversion of Advisor Class Shares to Class A Shares
Advisor Class shares may be held solely through the fee-
based program accounts and employee benefit plans described above
under "Purchase of Shares--General," by investment advisory
clients of, and certain other persons associated with, the
Adviser and its affiliates or the Fund. If (i) a holder of
Advisor Class shares ceases to participate in a fee-based program
or plan 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 and without notice to the shareholder, other than
the notice contained in the Advisor Class Prospectus and this
Statement of Additional Information, 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
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 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 and have a higher expense ratio than Advisor Class
shares. As a result, Class A shares 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
35
<PAGE>
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 which may be applicable
to Class A, Class B or 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
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
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<PAGE>
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 stock
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
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
fund transfer once in any 30 day period, (except for certain
omnibus accounts) 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 Alliance Fund Services, Inc.
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
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<PAGE>
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. Except for certain
omnibus or as noted below, each Fund shareholder is eligible to
request redemption by check, once in any 30-day period, 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. Telephone redemption by check 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. A shareholder otherwise eligible for
telephone redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application found in the
Prospectus.
Telephone Redemptions--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 Alliance Fund Services, Inc. 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 Alliance Fund Services, Inc. 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. Neither the Fund
nor the Adviser, the Principal Underwriter or Alliance Fund
Services, Inc. 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 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
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<PAGE>
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. 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
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
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<PAGE>
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 Transfer
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 Alliance Fund Services, Inc. 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 Alliance). In
addition, (i) present officers and full-time employees of the
Adviser, (ii) present Directors or Trustees of any Alliance
Mutual Fund and (iii) certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, Alliance
Fund Services, Inc. and their affiliates may on a tax-free basis,
exchange Class A 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 Alliance Fund Services, Inc. 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
40
<PAGE>
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 Alliance Fund Services, Inc. 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 in this section are taxable
transactions for Federal 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. Exchanges 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
Alliance Fund Services, Inc., receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application 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 Alliance Fund Services, Inc. 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
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<PAGE>
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 Alliance Fund Services, Inc. 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 Alliance Fund Services, Inc. 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 Alliance Fund Services, Inc. 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.
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 Alliance Fund Services,
Inc. at the "Literature" telephone number on the cover of this
Statement of Additional Information, or write to:
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<PAGE>
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 a qualified plan reaches $5 million
on or before December 15 in any year, all Class B shares or Class
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.
403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirements 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
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<PAGE>
and for annual maintenance. A portion of these fees is remitted
to Alliance Fund Services, Inc. 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 Alliance
Fund Services, Inc.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund accounts,
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 his or her 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 Alliance Fund
Services, Inc. at the address or the "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 Alliance
Fund Services, Inc. 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.
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 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
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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 Alliance Fund Services, Inc. at the address or
the "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 shareholders 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 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. Redemption 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.
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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 confirmation of each purchase and redemption. By
contacting his or her broker or Alliance Fund Services, Inc., a
shareholder can arrange for copies of his or her account
statements to be sent to another person.
________________________________________________________________
NET ASSET VALUE
________________________________________________________________
Shares of the Fund will be priced at the net asset value
per share next determined after receipt of a purchase or
redemption order. The net asset value per share is computed in
accordance with the Fund's Articles of Incorporation and By-Laws,
at the next close of regular trading on the Exchange (currently
4:00 p.m. Eastern time) following receipt of a purchase or a
redemption order on each Fund business day on which such an order
is received and trading in the types of securities in which the
Fund invests might materially affect the value of the Fund's
shares and on such other days as the Directors of the Fund deem
necessary in order to comply with Rule 22c-1 under the 1940
Act.
The assets belonging to the Class A shares, the Class B
shares, the Class C shares and the 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
accrued expenses and liabilities allocated to that class from the
assets belonging to that class.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
United States Federal Income Taxation of Dividends and
Distributions
General. The Fund intends to qualify and elect to be
treated 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
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(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; (ii) derive less than
30% of its gross income in each taxable year from the sale or
other disposition within three months of their acquisition by the
Fund of stocks, securities, options, futures or forward contracts
and foreign currencies (or options, futures or forward contracts
on foreign currencies) that are not directly related to the
Fund's principal business of investing in stock or securities (or
options and futures with respect to stocks or securities); and
(iii) 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). These requirements, among other things,
may limit the Fund's ability write and purchase options and
futures contracts.
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
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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. 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 and excise taxes. 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.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders will be taxable to the shareholders as long-term
capital gains, irrespective of the length of time a shareholder
may have held his Fund shares. 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.
It is the present policy of the Fund to distribute to
shareholders all net investment income 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.
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 such
48
<PAGE>
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. However, if a shareholder has held shares
in the Fund for six months or less and during that period has
received a distribution taxable to the shareholder as a long-term
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 dividend. 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 taxable 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 United States
Shareholder's United States federal income tax liability or
refunded.
United States Federal Income Taxation of the Fund
The following discussion relates to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.
Passive Foreign Investment Companies. If the Fund owns
shares in a foreign corporation that constitutes a "passive
foreign investment company" (a "PFIC") for federal income tax
purposes and the Fund does not elect to treat the foreign
corporation as a "qualified electing fund" within the meaning of
the Code, the Fund may be subject to United States federal income
taxation on a portion of any "excess distribution" it receives
49
<PAGE>
from the PFIC or any gain it derives from the disposition of such
shares, even if such income is distributed as a taxable dividend
by the Fund to its shareholders. The Fund may also be subject to
additional interest charges in respect of deferred taxes arising
from such distributions or gains. Any tax paid by the Fund as a
result of its ownership of shares in a PFIC will not give rise to
any deduction or credit to the Fund or to any shareholder. A
PFIC means any foreign corporation if, for the taxable year
involved, either (i) it derives at least 75% of its gross income
from "passive income" (including, but not limited to, interest,
dividends, royalties, rents and annuities), or (ii) on average,
at least 50% of the value (or adjusted tax basis, if elected ) of
the assets held by the corporation produce "passive income." The
Treasury has issued proposed regulations which would provide a
"marked to market" election solely with respect to gain inherent
in PFIC stock held by a regulated investment company, such as the
Fund, which does not elect to treat the PFIC as a "qualified
electing fund." If the proposed regulations are adopted in final
form and the election provided therein were to be made by the
Fund, the Fund would recognize a gain as of the last business day
of its taxable year equal to the excess of the fair market value
of each share of stock in the PFIC over the Fund's adjusted tax
basis in that share. This gain, which would be treated as
derived from securities held by the Fund for at least three
months, generally would not be subject to the deferred tax and
interest charge amounts to which it might otherwise be subject,
as discussed above, in the event of an "excess distribution" or
gain with regard to shares of a PFIC. If the Fund purchases
shares in a PFIC and the Fund does elect to treat the foreign
corporation as a "qualified electing fund" under the Code, the
Fund may be required to include in its income each year a portion
of the ordinary income and net capital gains of the foreign
corporation, even if this income is not distributed to the Fund.
Any such income would be subject to the 90% and calendar year
distribution requirements described above.
Options and Futures Contracts. Certain listed options
and regulated futures contractsare considered "section 1256
contracts" for federal income tax purposes. Section 1256
contracts held by the Fund at the end of each taxable year will
be "marked to market" and treated for federal income tax purposes
as though sold for fair market value on the last business day of
such taxable year. Gain or loss realized by the Fund on section
1256 contracts will be considered 60% long-term and 40% short-
term capital gain or loss. The Fund can elect to exempt its
section 1256 contracts which are part of a "mixed straddle" (as
described below) from the application of section 1256.
With respect to equity options or options traded over-
the-counter, gain or loss realized by the Fund upon the lapse or
sale of such options held by the Fund will be either long-term or
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short-term capital gain or loss depending upon the Fund's holding
period with respect to such option. However, gain or loss
realized upon the lapse or closing out of such options that are
written by the Fund will be treated as short-term capital gain or
loss. In general, if the Fund exercises an option, or an option
that the Fund has written is exercised, gain or loss on the
option will not be separately recognized but the premium received
or paid will be included in the calculation of gain or loss upon
disposition of the property underlying the option.
Tax Straddles. Any option or futures contract or other
position entered into or held by the Fund in conjunction with any
other position held by the Fund may constitute a "straddle" for
federal income tax purposes. A straddle of which at least one,
but not all, the positions are section 1256 contracts may
constitute a "mixed straddle". In general, straddles are subject
to certain rules that may affect the character and timing of the
Fund's gains and losses with respect to straddle positions by
requiring, among other things, that (i) loss realized on
disposition of one position of a straddle not be recognized to
the extent that the Fund has unrealized gains with respect to the
other position in such straddle; (ii) the Fund's holding period
in straddle positions be suspended while the straddle exists
(possibly resulting in gain being treated as short-term capital
gain rather than long-term capital gain); (iii) losses recognized
with respect to certain straddle positions which are part of a
mixed straddle and which are non-section 1256 positions be
treated as 60% long-term and 40% short-term capital loss;
(iv) losses recognized with respect to certain straddle positions
which would otherwise constitute short-term capital losses be
treated as long-term capital losses; and (v) the deduction of
interest and carrying charges attributable to certain straddle
positions may be deferred. The Treasury Department is authorized
to issue regulations providing for the proper treatment of a
mixed straddle where at least one position is ordinary and at
least one position is capital. No such regulations have yet been
issued. Various elections are available to the Fund which may
mitigate the effects of the straddle rules, particularly with
respect to mixed straddles. In general, the straddle rules
described above do not apply to any straddles held by the Fund
all of the offsetting positions of which consist of section 1256
contracts.
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
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consult their counsel for further information as to the United
States tax consequences of receipt of income from the Fund.
Other Taxation
As noted above, the Fund may be subject to other state
and local taxes.
________________________________________________________________
BROKERAGE AND 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
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price paid or received by the Fund or the size of the position
obtainable for the Fund.
Allocations are made by the officers of the Fund or of
the Adviser. Purchases and sales of portfolio securities are
determined by the Adviser and are placed with broker-dealers by
the order department of the Adviser.
The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
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.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
Capitalization
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
53
<PAGE>
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 Investment Advisory Contract and changes in investment
policy, shares of each portfolio would vote as a separate
series.
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
State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110 ("State Street") will act as
the Fund's custodian. The Fund's securities and cash are held
under a custodian agreement by State Street. Rules adopted under
the 1940 Act permit the Fund to maintain its securities and cash
in the custody of certain eligible banks and securities
depositories. Pursuant to those rules, the Fund's portfolio of
securities and cash, when invested in securities of foreign
countries, will be held by its subcustodians, subject to approval
by the Board of Directors of the Fund as and when appropriate in
accordance with the rules of the Securities and Exchange
Commission. Selection of the subcustodians will be made by the
Board of Directors of the Fund following a consideration of a
number of factors, including, but not limited to, the reliability
and financial stability of the institution, the ability of the
institution to capably perform custodial services of the Fund,
the reputation of the institution in its national market, the
political and economic stability of the countries in which the
subcustodians will be located, and risks of potential
nationalization or exportation of Fund assets. In addition, the
1940 Act requires that foreign bank subcustodians, among other
things, have shareholder equity in excess of $200,000,000, have
no lien on the Fund's asset and maintain adequate and accessible
records.
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Principal Underwriter
Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter, and as such may solicit orders from the
public to purchase 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 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, New
York, New York. Seward & Kissel 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 "total
return." Computed separately for each class, the Fund's "total
return" is its average annual compounded total return for its
most recently completed one, five and ten year periods (or the
period since the Fund's inception). The Fund's total return for
such a period is computed by finding, through the use of a
formula prescribed by the Securities and Exchange 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 paid and the maximum sales charge applicable to
purchases of Fund shares is assumed to have been paid.
The Fund's total return is computed separately for
Class A, Class B, Class C and Advisor Class shares. The Fund's
total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and
quality of the securities in the Fund's portfolio and its
expenses. Total return information is useful in reviewing the
Fund's performance, but such information may not provide a basis
for comparison with bank deposits or other investments which pay
55
<PAGE>
a fixed yield for a stated period of time. An investor's
principal invested in the Fund is not fixed and will fluctuate in
response to prevailing market conditions.
Advertisements quoting performance ratings of the Fund
as measured by financial publications or independent
organizations such as Lipper Analytical Services, 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 Barrons, Business Week, Changing Times, Forbes,
Investor's Daily, Money Magazine, The New York Times and The Wall
Street Journal 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
Securities and Exchange Commission under the Securities Act of
1933. Copies of the Registration Statement may be obtained at a
reasonable charge from the Securities and Exchange Commission or
may be examined, without charge, at the offices of the Securities
and Exchange Commission in Washington, D.C.
56
00250232.AI3
<PAGE>
________________________________________________________________
APPENDIX:
CERTAIN INVESTMENT PRACTICES
________________________________________________________________
The following investment practices in which the Fund is
authorized to engage may not be currently permitted under the
laws or regulations or may otherwise be unavailable in many
countries. The Fund intends to engage in these investment
practices to the extent such practices become available and
permissible in the future.
Options
The Fund may write covered put and call options and
purchase put and call options on securities of the types in which
it is permitted to invest that are traded on U.S. and foreign
securities exchanges and over-the-counter, including options on
market indices. The Fund will only write "covered" put and call
options unless such options are written for cross-hedging
purposes. There are no specific limitations on the Fund's
writing and purchasing of options.
The Fund may purchase put options to hedge against a
decline in the value of its portfolio. By using put options in
this way, the Fund will reduce any profit it might otherwise have
realized in the underlying security by the amount of the premium
paid for the put option and by transaction costs. The Fund may
purchase call options to hedge against an increase in the price
of securities that the Fund anticipates purchasing in the future.
The premium paid for the call option plus any transaction costs
will reduce the benefit, if any, realized by the Fund upon
exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to
the Fund.
A put option gives the purchaser of such option, upon
payment of a premium, the right to deliver a specified amount of
a security to the writer of the option on or before a fixed date
at a predetermined price. A call option gives the purchaser of
the option, upon payment of a premium, the right to call upon the
writer to deliver a specified amount of a security on or before a
fixed date at a predetermined price. A call option written by
the Fund is "covered" if the Fund owns the underlying security
covered by the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or
for additional cash consideration held in a segregated account by
its custodian) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund
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holds a call on the same security and in the same principal
amount as the call written where the exercise price of the call
held (i) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash and
liquid high-grade debt securities in a segregated account with
its custodian. A put option written by the Fund is "covered" if
the Fund maintains cash or liquid high-grade debt securities with
a value equal to the exercise price in a segregated account with
its custodian, or else holds a put on the same security and in
the same principal amount as the put written where the exercise
price of the put held is equal to or greater than the exercise
price of the put written. The premium paid by the purchaser of
an option will reflect, among other things, the relationship of
the exercise price to the market price and volatility of the
underlying security, the remaining term of the option, supply and
demand and interest rates.
A call option is for cross-hedging purposes if the Fund
does not own the underlying security but seeks to provide a hedge
against a decline in value in another security which the Fund
owns or has the right to acquire. In such circumstances, the
Fund collateralizes its obligation under the option by
maintaining in a segregated account with the Fund's custodian
cash or liquid securities in an amount not less than the market
value of the underlying security, marked to market daily. The
Fund would write a call option for cross- hedging purposes,
instead of writing a covered call option, when the premium to be
received from the cross-hedge transaction would exceed that which
would be received from writing a covered call option, while at
the same time achieving the desired hedge.
In purchasing a call option, the Fund would be in a
position to realize a gain if, during the option period, the
price of the underlying security increased by an amount in excess
of the premium paid. It would realize a loss if the price of the
underlying security declined or remained the same or did not
increase during the period, by more than the amount of the
premium. In purchasing a put option, the Fund would be in a
position to realize a gain if, during the option period, the
price of the underlying security declined by an amount in excess
of the premium paid. It would realize a loss if the price of the
underlying security increased or remained the same or did not
decrease during that period by more than the amount of the
premium. If a put or call option purchased by the Fund were
permitted to expire without being sold or exercised, its premium
would be lost by the Fund.
If a put option written by the Fund were exercised, the
Fund would be obligated to purchase the underlying security at
the exercise price. If a call option written by the Fund were
A-2
<PAGE>
exercised, the Fund would be obligated to sell the underlying
security at the exercise price. The risk involved in writing a
put option is that there could be a decrease in the market value
of the underlying security caused by rising interest rates or
other factors. If this occurred, the option could be exercised
and the underlying security would then be sold by the option
holder to the Fund at a higher price than its current market
value. The risk involved in writing a call option is that there
could be an increase in the market value of the underlying
security caused by declining interest rates or other factors. If
this occurred, the option could be exercised and the underlying
security would then be sold by the Fund at a lower price than its
current market value. These risks could be reduced by entering
into a closing transaction prior to the option expiration dates
if a liquid market is available. The Fund retains the premium
received from writing a put or call option whether or not the
option is exercised.
The Fund may purchase or write options on securities of
the types in which it is permitted to invest in privately
negotiated (i.e., over-the-counter) transactions. The Fund will
effect such transactions only with investment dealers and other
financial institutions (such as commercial banks or savings and
loan institutions) deemed creditworthy by the Adviser, and the
Adviser has adopted procedures for monitoring the
creditworthiness of such entities. Options purchased or written
by the Fund in negotiated transactions are illiquid and it may
not be possible for the Fund to effect a closing transaction at a
time when the Adviser believes it would be advantageous to do so.
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
exercises 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. There are no specific limitations on the Fund's
purchasing and selling of options on securities indices.
The writer of an option may have no control over when
the underlying securities must be sold, in the case of a call
option, or purchased, in the case of a put option, since with
regard to certain options, the writer may be assigned an exercise
notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains
the amount of the premium. This amount, of course, may, in the
case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period.
If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option
A-3
<PAGE>
is exercised, the writer must fulfill the obligation to purchase
the underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.
The writer of a listed option that wishes to terminate
its obligation may effect a "closing purchase transaction." This
is accomplished by buying an option of the same series as the
option previously written. The effect of the purchase is that
the writer's position will be cancelled by the clearing
corporation. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option.
Likewise, an investor who is the holder of a listed option may
liquidate its position by effecting a "closing sale transaction."
This is accomplished by selling an option of the same series as
the option previously purchased. There is no guarantee that
either a closing purchase or a closing sale transaction can be
effected in any particular situation.
Effecting a closing transaction in the case of a written
call option will permit the Fund to write another call option on
the underlying security with either a different exercise price or
expiration date or both, or in the case of a written put option
will permit the Fund to write another put option to the extent
that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction
will permit the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other Fund
investments. If the Fund desires to sell a particular security
from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale
of the security.
The Fund will realize a profit from a closing
transaction if the price of the transaction is less than the
premium received from writing the option or is more than the
premium paid to purchase the option; the Fund will realize a loss
from a closing transaction if the price of the transaction is
more than the premium received from writing the option or is less
than the premium paid to purchase the option. Because increases
in the market price of a call option will generally reflect
increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
An option position may be closed out only where there
exists a secondary market for an option of the same series. If a
secondary market does not exist, it might not be possible to
effect closing transactions in particular options with the result
that the Fund would have to exercise the options in order to
realize any profit. If the Fund is unable to effect a closing
A-4
<PAGE>
purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it
delivers the underlying security upon exercise. Reasons for the
absence of a liquid secondary market include the following:
(i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national
securities exchange ("National Exchange") on opening transactions
or closing transactions or both, (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal
operations on an National Exchange, (v) the facilities of an
National Exchange or the Options Clearing Corporation may not at
all times be adequate to handle current trading volume, or
(vi) one or more National Exchanges could, for economic or other
reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that
National Exchange (or in that class or series of options) would
cease to exist, although outstanding options on that National
Exchange that had been issued by the Options Clearing Corporation
as a result of trades on that National Exchange would continue to
be exercisable in accordance with their terms.
The Fund may write options in connection with buy-and-
write transactions; that is, the Fund may purchase a security and
then write a call option against that security. The exercise
price of the call the Fund determines to write will depend upon
the expected price movement of the underlying security. The
exercise price of a call option may be below ("in-the-money"),
equal to ("at-the-money") or above ("out-of-the-money") the
current value of the underlying security at the time the option
is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the
underlying security will remain flat or decline moderately during
the option period. Buy-and-write transactions using at-the-money
call options may be used when it is expected that the price of
the underlying security will remain fixed or advance moderately
during the option period. Buy-and-write transactions using out-
of-the-money call options may be used when it is expected that
the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to
the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are
exercised in such transactions, the Fund's maximum gain will be
the premium received by it for writing the option, adjusted
upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the
options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in
part, or entirely, by the premium received.
A-5
<PAGE>
The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Fund's gain will be limited to the premium received. If
the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the
position or take delivery of the security at the exercise price
and the Fund's return will be the premium received from the put
option minus the amount by which the market price of the security
is below the exercise price. Out-of-the-money, at-the-money, and
in-the-money put options may be used by the Fund in the same
market environments that call options are used in equivalent buy-
and-write transactions.
Stock Index Futures
The Fund may purchase and sell stock index futures as a
hedge against movements in the equity markets. 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. There are several risks
in connection with the use of stock index futures by the Fund as
a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the stock index
futures and movements in the price of the securities which are
the subject of the hedge. The price of the stock index futures
may move more than or less than the price of the securities being
hedged. If the price of the stock index futures moves less than
the price of the securities which are the subject of the hedge,
the hedge will not be fully effective but, if the price of the
securities being hedged has moved in an unfavorable direction,
the Fund would be in a better position than if it had not hedged
at all. If the price of the securities being hedged has moved in
a favorable direction, this advantage will be partially offset by
the loss on the index future. If the price of the future moves
more than the price of the stock, the Fund will experience either
a loss or gain on the future which will not be completely offset
by movements in the price of the securities which are subject to
the hedge. To compensate for the imperfect correlation of
movements in the price of securities being hedged and movements
in the price of the stock index futures, the Fund may buy or sell
stock index futures contracts in a greater dollar amount than the
dollar amount of securities being hedged if the volatility over a
particular time period of the prices of such securities has been
greater than the volatility over such time period of the index,
or if otherwise deemed to be appropriate by the Adviser.
Conversely, the Fund may buy or sell fewer stock index futures
A-6
<PAGE>
contracts if the volatility over a particular time period of the
prices of the securities being hedged is less than the volatility
over such time period of the stock index, or it is otherwise
deemed to be appropriate by the Adviser. It is also possible
that, when the Fund has sold futures to hedge its portfolio
against a decline in the market, the market may advance and the
value of securities held in the Fund may decline. If this
occurred, the Fund would lose money on the futures and also
experience a decline in value in its portfolio securities.
However, over time the value of a diversified portfolio should
tend to move in the same direction as the market indices upon
which the futures are based, although there may be deviations
arising from differences between the composition of the Fund and
the stocks comprising the index.
Where futures are purchased to hedge against a possible
increase in the price of stock before the Fund is able to invest
its cash (or cash equivalents) in stocks (or options) in an
orderly fashion, it is possible that the market may decline
instead. If the Fund then concludes not to invest in stock or
options at that time because of concern as to possible further
market decline or for other reasons, the Fund will realize a loss
on the futures contract that is not offset by a reduction in the
price of securities purchased.
In addition to the possibility that there may be an
imperfect correlation, or no correlation at all, between
movements in the stock index futures and the portion of the
portfolio being hedged, the price of stock index futures may not
correlate perfectly with movement in the stock index due to
certain market distortions. Rather than meeting additional
margin deposit requirements, investors may close futures
contracts through offsetting transactions which could distort the
normal relationship between the index and futures markets.
Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortion in the futures market, and because of the imperfect
correlation between the movements in the stock index and
movements in the price of stock index futures, a correct forecast
of general market trends by the investment adviser may still not
result in a successful hedging transaction over a short time
frame.
Positions in stock index futures may be closed out only
on an exchange or board of trade which provides a secondary
market for such futures. Although the Fund intends to purchase
or sell futures only on exchanges or boards of trade where there
appear to be active secondary markets, there is no assurance that
A-7
<PAGE>
a liquid secondary market on any exchange or board of trade will
exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures investment
position, and in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not
be sold until the futures contract can be terminated. In such
circumstances, an increase in the price of the securities, if
any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee
that the price of the securities will in fact correlate with the
price movements in the futures contract and thus provide an
offset on a futures contract.
U.S. futures contracts have been designed by exchanges
which have been designated "contracts markets" by the Commodity
Futures Trading Commission ("CFTC"), and must be executed through
a futures commission merchant, or brokerage firm, which is a
member of the relevant contract market. Futures contracts trade
on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange. The
Fund is not a commodity pool and all transactions in futures
contracts and options on futures contracts engaged in by the Fund
must constitute bona fide hedging or other permissible
transactions in accordance with the rules and regulations
promulgated by the CFTC.
At the same time a futures contract is purchased or
sold, the Fund must allocate cash or securities as a deposit
payment ("initial deposit"). It is expected that the initial
deposit would be approximately 1 l/2% to 5% of a contract's face
value. Daily thereafter, the futures contract is valued and the
payment of "variation margin" may be required, since each day the
Fund would provide or receive cash that reflects any decline or
increase in the contract's value.
At the time of delivery of securities pursuant to such a
contract, adjustments are made to recognize differences in value
arising from the delivery of securities with a different price or
interest rate from that specified in the contract. In some (but
not many) cases, securities called for by a futures contract may
not have been issued when the contract was written.
Although futures contracts by their terms call for the
actual delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
A-8
<PAGE>
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation
to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled
through a clearinghouse associated with the exchange on which the
contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.
The Fund's Custodian will place cash not available for
investment or liquid securities in a separate account of the Fund
having a value equal to the aggregate amount of the Fund's
commitments under futures contracts.
General
The Fund's ability to dispose of its position in futures
and options contracts will depend on the availability of liquid
markets in such instruments. It is impossible to predict the
amount of trading interest that may exist in various types of
futures and options contracts. If a secondary market does not
exist with respect to an option purchased or written by the Fund
over-the-counter, it might not be possible to effect a closing
transaction in the option (i.e., dispose of the option) with the
result that (i) an option purchased by the Fund would have to be
exercised in order for the Fund to realize any profit and
(ii) the Fund may not be able to sell portfolio securities
covering an option written by the Fund until the option expires
or it delivers the underlying futures contract upon exercise.
Therefore, no assurance can be given that the Fund will be able
to utilize these instruments effectively for the purposes set
forth above. Furthermore, the Fund's ability to engage in
options and futures transactions may be limited by tax
considerations. See "Taxation-United States Federal Income
Taxes-General."
Future Developments
The Fund may, following written notice to its
shareholders, take advantage of other investment practices which
are not at present contemplated for use by the Fund or which
currently are not available but which may be developed, to the
extent such investment practices are both consistent with the
Fund's investment objective and legally permissible for the Fund.
Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described above.
A-9
00250232.AI3
<PAGE>
<PAGE>
Alliance/Regent Sector Opportunity Fund, Inc.
Statement of Assets and Liabilities
October 7, 1996
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . $100,300
Deferred organization expenses (Note A). . . . . . 299,453
Total assets . . . . . . . . . . . . . . . . . . . 399,753
LIABILITIES
Organization expenses payable (Note A). . 299,453
NET ASSETS
(Applicable to 10 shares of Class A common stock
issued and outstanding, 10 shares of Class B common
stock issued and outstanding, 10 shares of Class C
common stock issued and outstanding, and 10,000
shares of Class Y common stock issued and
outstanding, each with $.001 par value and
3,000,000,000 shares authorized.) . . . . . . . . . $100,300
________
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($100/10 shares issued and outstanding). . . . $10.00
Sales charge--4.25% of public offering price. . .44
Maximum offering price . . . . . . . . . . . . $10.44
======
Class B Shares
Net asset value and redemption price per share
($100/10 shares issued and outstanding). . . . $10.00
======
Class C Shares
Net asset value and redemption price per share
($100/10 shares issued and outstanding). . $10.00
======
<PAGE>
<PAGE>
Class Y Shares
Net asset value and redemption price per share
($100,000/10,000 shares issued and outstanding). . $10.00
======
See notes to Statement of Assets and Liabilities
Alliance/Regent Sector Opportunity Fund, Inc.
Notes to Statement of Assets and Liabilities
October 7, 1996
Note A-Organization
Alliance/Regent Sector Opportunity Fund, Inc. (the "Fund") was
organized as a Maryland corporation on July 15, 1996 and is
registered under the Investment Company Act of 1940 as an
open-end, diversified management investment company. The Fund
has had no operations other than the sale to Alliance Capital
Management L.P. (the "Adviser") of 10 shares of Class A common
stock for the amount of $100, 10 shares of Class B common
stock for the amount of $100, 10 shares of Class C common
stock for the amount of $100 and 10,000 shares of Class Y
common stock for the amount of $100,000, in each case on
October 7, 1996. The Fund currently offers four classes of
shares. Class A shares are sold with an initial sales charge
imposed at the time of purchase. Class B shares are sold with
a contingent deferred sales charge imposed on most redemptions
made within four years of purchase and higher distribution
fees. Class C shares are sold with a contingent deferred
sales charge imposed on redemptions made within one year of
purchase and higher distribution fees. Advisor shares are
sold without any initial or contingent deferred sales charge
and without ongoing distribution expenses. Costs incurred and
to be incurred in connection with the organization and initial
registration of the Fund will be paid initially by the
Advisor. The Fund will reimburse the Advisor for such costs,
which will be deferred and amortized by the Fund over the
period of benefit, not to exceed 60 months from the date the
Fund commences investment operations. If any of the initial
shares of the Fund are redeemed by a holder thereof during
such amortization period, the proceeds will be reduced by the
unamortized organization expenses in the same ratio as the
number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
<PAGE>
<PAGE>
Note B-Investment Advisory, Transfer Agency and Distribution
Services Agreements
Under the terms of an Investment Advisory Agreement, the Fund
will pay the Advisor a management fee at an annual rate of
.75% of the Fund's average daily net assets. Such fee will be
accrued daily and paid monthly.
The Advisor has agreed to reimburse the Fund to the extent
that the aggregate expenses (exclusive of interest, taxes,
brokerage, distribution services fees and extraordinary
expenses, all to the extent permitted by applicable state law
and regulation) exceed the limits prescribed by any state in
which the Fund's shares are qualified for sale. The Fund
believes that the most restrictive expense ratio limitation
imposed by any state is 2.5% of the first $30 million of its
average net assets, 2% of the next $70 million of its average
net assets and 1.5% of its average net assets in excess of
$100 million. Expense reimbursements, if any, will be accrued
daily and paid monthly.
The Fund has entered into a Distribution Services Agreement
(the "Agreement") with Alliance Fund Distributors, Inc., (the
"Principal Underwriter"), a wholly-owned subsidiary of the
Advisor. The Agreement provides that with respect to Class A
shares, Class B shares and Class C shares, the Principal
Underwriter will use amounts payable under the Agreement in
their entirety for distribution assistance and promotional
activities. The Agreement also provides that the Advisor may
use its own resources to finance the distribution of the
Fund's shares.
The Fund will compensate Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Advisor) for performing
transfer agency-related services for the Fund.
2
<PAGE>
Report of Independent Auditors
Shareholder and Board of Directors
Alliance/Regent Sector Opportunity Fund, Inc.
We have audited the accompanying statement of assets and
liabilities of Alliance/Regent Sector Opportunity Fund, Inc.
as of October 7, 1996. This statement of assets and
liabilities is the responsibility of the Fund's management.
Our responsibility is to express an opinion on this
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether this statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures
in the statement of assets and liabilities. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall statement of assets and liabilities
presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities
referred to above presents fairly, in all material respects,
the financial position of Alliance/Regent Sector Opportunity
Fund, Inc. at October 7, 1996, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
October 10, 1996
00250232/AI3
3
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements
Included in the Registrant's Statement of Additional
Information:
Statement of Assets and Liabilities.
Notes to Financial Statements.
Report of Independent Auditors.
Included in Part C of the Registration Statement: All
other financial statements or schedules are not required
or the required information is shown in the Statement of
Assets and Liabilities or the notes thereto.
(b) Exhibits
(1) (a) Copy of Articles of Incorporation.1
(b) Articles of Amendment.
(2) Copy of By-Laws of the Registrant.1
(3) Not applicable.
(4) (a) Form of Share Certificate for Class A Shares.
(b) Form of Share Certificate for Class B Shares.
(c) Form of Share Certificate for Class C Shares.
(d) Form of Share Certificate for Advisor Class
Shares.
________________________
1. Incorporated by reference from Registrant's Registration
Statement on Form N-1A (File Nos. 333-08193 and 811-07709)
filed with the Securities and Exchange Commission on July
16, 1996.
C-1
<PAGE>
(5) Copy of proposed Advisory Agreement between the
Registrant and Alliance Capital Management L.P.
(6) (a) Copy of proposed Distribution Services
Agreement between the Registrant and Alliance
Fund Distributors, Inc.
(b) Form of Selected Dealer Agreement between
Alliance Fund Distributors, Inc. and selected
dealers offering shares of Registrant.
(c) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected
agents making available shares of Registrant.
(7) Not applicable.
(8) Copy of proposed Custodian Contract between the
Registrant and State Street Bank and Trust Company.
(9) Copy of proposed Transfer Agency Agreement between
the Registrant and Alliance Fund Services, Inc.
(10) (a) Opinion and Consent of Seward & Kissel.
(b) Opinion and Consent of Venable, Baetjer and
Howard, LLP.
(11) Consent of Independent Auditors.
(12) Not applicable.
(13)Investment representation letter of Alliance
Capital Management L.P.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6(a) hereto.
___________________________
3. To be filed in a post-effective amendment.
C-2
<PAGE>
(16) Schedule for computation of performance quotations.3
(18) Rule 18f-3 Plan.
ITEM 25. Persons Controlled by or under Common Control with
Registrant.
The Registrant is a recently organized corporation and
Alliance Capital Management L.P. owns 100% of its issued
and outstanding common stock.
ITEM 26. Number of Holders of Securities.
One. The Registrant is a recently organized corporation
and Alliance Capital Management L.P. owns 100% of its
issued and outstanding common stock.
ITEM 27. 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 1 hereto, Article VII
and Article VIII of Registrant's By-Laws, filed as
Exhibit 2 hereto, and Section 10 of the proposed
Distribution Services Agreement, filed as Exhibit 6(a)
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 5 hereto.
C-3
<PAGE>
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2,
1980), the Registrant will indemnify its directors,
officers, investment manager and principal underwriters
only if (1) a final decision on the merits was issued by
the court or other body before whom the proceeding was
brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office ("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the facts,
that the indemnitee was not liable by reason of
disabling conduct, by (a) the vote of a majority of a
quorum of the directors who are neither "interested
persons" of the Registrant as defined in section
2(a)(19) of the Investment Company Act of 1940 nor
parties to the proceeding ("disinterested, non-party
directors"), or (b) an independent legal counsel in a
written opinion. The Registrant will advance attorneys
fees or other expenses incurred by its directors,
officers, investment adviser or principal underwriters
in defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless it
is ultimately determined that he is entitled to
indemnification and, as a condition to the advance,
(1) the indemnitee shall provide a security for his
undertaking, (2) the Registrant shall be insured against
losses arising by reason of any lawful advances, or
(3) a majority of a quorum of disinterested, non-party
C-4
<PAGE>
directors of the Registrant, or an independent legal
counsel in a written opinion, shall determine, based on
a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.
The Registrant participates in a joint
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 to
the Adviser.
ITEM 28. Business and Other Connections of Investment 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.
ITEM 29. Principal Underwriters.
(a) Alliance Fund Distributors, Inc. is 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:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
C-5
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
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 Income Builder Fund, Inc.
Alliance International Fund
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, Inc. 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 Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
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 Offices Positions and Offices
Name With Underwriter With Registrant
____ ____________________ _____________________
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel, and
Secretary
Daniel J. Dart Senior Vice President
C-6
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Kimberly A. Gardner Senior Vice President
Geoffrey L. Hyde Senior Vice President
Richard S. Khaleel Senior Vice President
Barbara J. Krumseik Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Jamie A. Atkinson Vice President
Warren C. Babcock, III Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
William P. Beanblossum Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
C-7
Richard W. Dabney Vice President
John F. Dolan Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President &
Controller
Andrew L. Gangolf Vice President Secretary
& Assistant General
Counsel
Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer
Joseph W. Gibson Vice President
Troy L. Glawe Vice President
Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Thomas K. Intoccia Vice President
Robert H. Joseph, Jr. Vice President & Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Donna M. Lamback Vice President
C-8
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Shawn P. McClain Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President &
Associate General
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Joseph T. Tocyloski Vice President
Neil S. Wood Vice President
C-9
Emilie D. Wrapp Vice President &
Special Counsel
Maria L. Carreras Assistant Vice President
John W. Cronin Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Kalen H. Holliday Assistant Vice President
Edward W. Kelly Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President &
Assistant Treasurer
Thomas F. Monnerat Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Carol H. Rappa Assistant Vice President
Lisa Robinson-Cronin Assistant Vice President
Robert M. Smith Assistant Vice President
Wesley S. Williams Assistant Vice President
Mark R. Manley Assistant Vice President
(c) Not applicable. Registrant is a newly organized
corporation.
ITEM 30. 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
C-10
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 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
(b) Registrant undertakes to file a Post-Effective
Amendment, using financial statements which need not be
certified, within four to six months from the effective
date of its Securities Act of 1933 Registration
Statement.
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-11
00250231.AK4
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York
and the State of New York, on the 15th day of October 1996.
Alliance/Regent Sector Opportunity Fund,
Inc.
/s/ John D. Carifa
__________________________________
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to its Registration Statement
has been signed below by the following persons in the capacities
and on the date indicated.
Signature Title Date
_____________ __________ ________
(1)Principal Executive Officer:
/s/ John D. Carifa Chairman and October 15, 1996
______________________ President
John D. Carifa
(2) Principal Financial
and Accounting Officer:
/s/ Mark D. Gersten Treasurer October 15, 1996
_____________________ and Chief
Mark D. Gersten Financial
Officer
(3) Sole Director:
By: /s/ Edmund P. Bergan, Jr. Senior Vice October 15, 1996
_____________________________ President, General
Edmund P. Bergan, Jr. Counsel and Secretary
C-12
00250232.AI3
Index To Exhibits
(4) (a) Form of Share Certificate for Class A
Shares............................................
(b) Form of Share Certificate for Class B
Shares............................................
(c) Form of Share Certificate for Class C
Shares............................................
(d) Form of Share Certificate for Advisor
Class Shares......................................
(5) Copy of proposed Advisory Agreement between
the Registrant and Alliance Capital
Management L.P.........................................
(6) (a) Copy of proposed Distribution Services
Agreement between the Registrant and
Alliance Fund Distributors, Inc...................
(b) Form of Selected Dealer Agreement
between Alliance Fund Distributors,
Inc. and selected dealers offering
shares of Registrant..............................
(c) Form of Selected Agent Agreement
between Alliance Fund Distributors,
Inc. and selected agents making
available shares of Registrant....................
(8) Copy of proposed Custodian Contract between
the Registrant and State Street Bank and
Trust Company..........................................
(9) Copy of proposed Transfer Agency Agreement
between the Registrant and Alliance Fund
Services, Inc..........................................
(10) (a) Opinion and Consent of Seward & Kissel............
(b) Opinion and Consent of Venable,
Baetjer and Howard, LLP...........................
(11) Consent of Independent Auditors........................
C-13
00250232.AI3
(13) Investment representation letter of
Alliance Capital Management L.P........................
(18) Rule 18f-3 Plan........................................
00250232.AI3
<PAGE>
Alliance/Regent Sector Opportunity Fund, Inc.
Class A Common Stock
Incorporated Under the Laws of the State of Maryland
Account No. Alpha Code CUSIP
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON
STOCK OF THE PAR VALUE OF $.001 EACH OF -- ALLIANCE
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.-CLASS A COMMON
STOCK -- transferable on the books of the said Corporation by the
holder hereof in person, or by duly authorized attorney, upon
surrender of this Certificate duly endorsed. This Certificate
and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of Incorporation
and By-Laws of the said Corporation and amendments thereto,
copies of which are on file in the offices of the Corporation and
Transfer Agent, to all of which the holder by the acceptance
hereof assents.
The Corporation is authorized to issue more than one
class of capital stock. The Corporation will furnish a full
statement of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
of the stock of each class which the Corporation is authorized to
issue to any stockholder on request and without charge.
This Certificate is not valid until countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the
facsimile signatures of its proper officers and its facsimile
seal to be affixed hereto.
Dated:
______________________
Secretary
______________________
Chairman
<PAGE>
The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed
as though they were written out in full according to applicable
laws or regulations:
TEN IN COM - as tenants in common
TEN BY ENT - as tenants by the entities
JTWROS - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFTS TO MA - Uniform Gifts to Minor Act
Additional abbreviations not shown in the above list may
be used.
* * * * * * * * *
FOR VALUE RECEIVED, I, We hereby sell, assign, and transfer unto
________________________________________________________________
shares represented by the within certificate and hereby
irrevocably constitute and appoint: ____________________________
attorney to transfer said shares upon the books of said
Corporation with full power of substitution in the premises.
Dated:
NOTE THE SIGNATURE(S) ON THIS ASSIGNMENT
MUST CORRESPOND EXACTLY WITH THE NAME(S)
AS INDICATED ON THE BACK OF THIS CERTIFICATE.
__________________________
(Signature of Seller)
SIGNATURE(S) GUARANTEED
__________________________
(Signature of Co-Owner)
NOTE SIGNATURE(S) MUST BE GUARANTEED BY
A COMMERCIAL BANK (not a savings bank) OR
BY A MEMBER FIRM OF THE NEW YORK, BOSTON,
PHILADELPHIA, MIDWEST OR PACIFIC STOCK
EXCHANGES.
_______________________________
-2-
00250232.AG4
<PAGE>
Alliance/Regent Sector Opportunity Fund, Inc.
Class B Common Stock
Incorporated Under the Laws of the State of Maryland
Account No. Alpha Code CUSIP
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS B COMMON
STOCK OF THE PAR VALUE OF $.001 EACH OF -- ALLIANCE
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.-CLASS B COMMON
STOCK -- transferable on the books of the said Corporation by the
holder hereof in person, or by duly authorized attorney, upon
surrender of this Certificate duly endorsed. This Certificate
and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of Incorporation
and By-Laws of the said Corporation and amendments thereto,
copies of which are on file in the offices of the Corporation and
Transfer Agent, to all of which the holder by the acceptance
hereof assents.
The Corporation is authorized to issue more than one
class of capital stock. The Corporation will furnish a full
statement of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
of the stock of each class which the Corporation is authorized to
issue to any stockholder on request and without charge.
This Certificate is not valid until countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the
facsimile signatures of its proper officers and its facsimile
seal to be affixed hereto.
Dated:
______________________
Secretary
______________________
Chairman
<PAGE>
The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed
as though they were written out in full according to applicable
laws or regulations:
TEN IN COM - as tenants in common
TEN BY ENT - as tenants by the entities
JTWROS - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFTS TO MA - Uniform Gifts to Minor Act
Additional abbreviations not shown in the above list may
be used.
* * * * * * * * *
FOR VALUE RECEIVED, I, We hereby sell, assign, and transfer unto
________________________________________________________________
shares represented by the within certificate and hereby
irrevocably constitute and appoint: ____________________________
attorney to transfer said shares upon the books of said
Corporation with full power of substitution in the premises.
Dated:
NOTE THE SIGNATURE(S) ON THIS ASSIGNMENT
MUST CORRESPOND EXACTLY WITH THE NAME(S)
AS INDICATED ON THE BACK OF THIS CERTIFICATE.
__________________________
(Signature of Seller)
SIGNATURE(S) GUARANTEED
__________________________
(Signature of Co-Owner)
NOTE SIGNATURE(S) MUST BE GUARANTEED BY
A COMMERCIAL BANK (not a savings bank) OR
BY A MEMBER FIRM OF THE NEW YORK, BOSTON,
PHILADELPHIA, MIDWEST OR PACIFIC STOCK
EXCHANGES.
_______________________________
-2-
00250232.AG3
<PAGE>
Alliance/Regent Sector Opportunity Fund, Inc.
Class C Common Stock
Incorporated Under the Laws of the State of Maryland
Account No. Alpha Code CUSIP
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS C COMMON
STOCK OF THE PAR VALUE OF $.001 EACH OF -- ALLIANCE
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.-CLASS C COMMON
STOCK -- transferable on the books of the said Corporation by the
holder hereof in person, or by duly authorized attorney, upon
surrender of this Certificate duly endorsed. This Certificate
and the shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of Incorporation
and By-Laws of the said Corporation and amendments thereto,
copies of which are on file in the offices of the Corporation and
Transfer Agent, to all of which the holder by the acceptance
hereof assents.
The Corporation is authorized to issue more than one
class of capital stock. The Corporation will furnish a full
statement of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
of the stock of each class which the Corporation is authorized to
issue to any stockholder on request and without charge.
This Certificate is not valid until countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the
facsimile signatures of its proper officers and its facsimile
seal to be affixed hereto.
Dated:
______________________
Secretary
______________________
Chairman
<PAGE>
The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed
as though they were written out in full according to applicable
laws or regulations:
TEN IN COM - as tenants in common
TEN BY ENT - as tenants by the entities
JTWROS - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFTS TO MA - Uniform Gifts to Minor Act
Additional abbreviations not shown in the above list may
be used.
* * * * * * * * *
FOR VALUE RECEIVED, I, We hereby sell, assign, and transfer unto
________________________________________________________________
shares represented by the within certificate and hereby
irrevocably constitute and appoint: ____________________________
attorney to transfer said shares upon the books of said
Corporation with full power of substitution in the premises.
Dated:
NOTE THE SIGNATURE(S) ON THIS ASSIGNMENT
MUST CORRESPOND EXACTLY WITH THE NAME(S)
AS INDICATED ON THE BACK OF THIS CERTIFICATE.
__________________________
(Signature of Seller)
SIGNATURE(S) GUARANTEED
__________________________
(Signature of Co-Owner)
NOTE SIGNATURE(S) MUST BE GUARANTEED BY
A COMMERCIAL BANK (not a savings bank) OR
BY A MEMBER FIRM OF THE NEW YORK, BOSTON,
PHILADELPHIA, MIDWEST OR PACIFIC STOCK
EXCHANGES.
_______________________________
-2-
00250232.AG6
<PAGE>
Alliance/Regent Sector Opportunity Fund, Inc.
Advisor Class Common Stock
Incorporated Under the Laws of the State of Maryland
Account No. Alpha Code CUSIP
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF ADVISOR CLASS
COMMON STOCK OF THE PAR VALUE OF $.001 EACH OF -- ALLIANCE
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.-ADVISOR CLASS
COMMON STOCK -- transferable on the books of the said Corporation
by the holder hereof in person, or by duly authorized attorney,
upon surrender of this Certificate duly endorsed. This
Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Articles of
Incorporation and By-Laws of the said Corporation and amendments
thereto, copies of which are on file in the offices of the
Corporation and Transfer Agent, to all of which the holder by the
acceptance hereof assents. The Advisor Class Common Stock is
designated in the Charter of the Corporation as "Class Y Common
Stock."
The Corporation is authorized to issue more than one
class of capital stock. The Corporation will furnish a full
statement of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption
of the stock of each class which the Corporation is authorized to
issue to any stockholder on request and without charge.
This Certificate is not valid until countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Corporation has caused the
facsimile signatures of its proper officers and its facsimile
seal to be affixed hereto.
Dated:
______________________
Secretary
______________________
Chairman
<PAGE>
The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed
as though they were written out in full according to applicable
laws or regulations:
TEN IN COM - as tenants in common
TEN BY ENT - as tenants by the entities
JTWROS - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFTS TO MA - Uniform Gifts to Minor Act
Additional abbreviations not shown in the above list may
be used.
* * * * * * * * *
FOR VALUE RECEIVED, I, We hereby sell, assign, and transfer unto
________________________________________________________________
shares represented by the within certificate and hereby
irrevocably constitute and appoint: ____________________________
attorney to transfer said shares upon the books of said
Corporation with full power of substitution in the premises.
Dated:
NOTE THE SIGNATURE(S) ON THIS ASSIGNMENT
MUST CORRESPOND EXACTLY WITH THE NAME(S)
AS INDICATED ON THE BACK OF THIS CERTIFICATE.
__________________________
(Signature of Seller)
SIGNATURE(S) GUARANTEED
__________________________
(Signature of Co-Owner)
NOTE SIGNATURE(S) MUST BE GUARANTEED BY
A COMMERCIAL BANK (not a savings bank) OR
BY A MEMBER FIRM OF THE NEW YORK, BOSTON,
PHILADELPHIA, MIDWEST OR PACIFIC STOCK
EXCHANGES.
_______________________________
-2-
00250232.AG5
ADVISORY AGREEMENT
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.
1345 Avenue Of The Americas
New York, New York 10105
[ ], 1996
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We, the undersigned Alliance/Regent Sector
Opportunity Fund, Inc. herewith confirm our agreement with
you as follows:
1. We are an open-end, non-diversified management
investment company registered under the Investment Company
Act of 1940, as amended (the "Act"). We are currently
authorized to issue separate classes of shares and our
Directors are authorized to reclassify and issue any
unissued shares to any number of additional classes or
series (portfolios) each having its own investment
objective, policies and restrictions, all as more fully
described in the prospectus and the statement of additional
information constituting parts of the Registration Statement
filed on our behalf under the Securities Act of 1933, as
amended, and the Act. We propose to engage in the business
of investing and reinvesting the assets of each of our
portfolios in securities ("the portfolio assets") of the
type and in accordance with the limitations specified in our
Charter, By-Laws, Registration Statement on Form N-1A filed
with the Securities and Exchange Commission under the
Securities Act of 1933 and the Act ("Registration
Statement"), and any representations made in our prospectus
and statement of additional information, all in such manner
and to such extent as may from time to time be authorized by
our Board of Directors. We enclose copies of the documents
listed above and will from time to time furnish you with any
amendments thereof.
2. (a) We hereby employ you to manage the
investment and reinvestment of the portfolio assets as above
specified and, without limiting the generality of the
foregoing, to provide management and other services
specified below.
(b) You will make decisions with respect to
all purchases and sales of the portfolio assets. To carry
out such decisions, you are hereby authorized, as our agent
and attorney-in-fact, for our account and at our risk and in
our name, to place orders for the investment and
reinvestment of the portfolio assets. In all purchases,
sales and other transactions in the portfolio assets you are
authorized to exercise full discretion and act for us in the
2
same manner and with the same force and effect as we might
or could do with respect to such purchases, sales or other
transactions, as well as with respect to all other things
necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors
at each meeting thereof all changes in the portfolio assets
since the prior report, and will also keep us in touch with
important developments affecting the portfolio assets and on
your own initiative will furnish us from time to time with
such information as you may believe appropriate for this
purpose, whether concerning the individual issuers whose
securities are included in the portfolio assets, the
industries in which they engage, or the conditions
prevailing in the economy generally. You will also furnish
us with such statistical and analytical information with
respect to the portfolio assets as you may believe
appropriate or as we reasonably may request. In making such
purchases and sales of the portfolio assets, you will bear
in mind the policies set from time to time by our Board of
Directors as well as the limitations imposed by our Charter
and in our Registration Statement, the limitations in the
Act and of the Internal Revenue Code of 1986, as amended, in
respect of regulated investment companies and the investment
3
objective, policies and restrictions applicable to each of
our portfolios.
(d) It is understood that you will from time
to time employ or associate with yourselves such persons as
you believe to be particularly fitted to assist you in the
execution of your duties hereunder, the cost of performance
of such duties to be borne and paid by you. No obligation
may be incurred on our behalf in any such respect. During
the continuance of this agreement and at our request you
will provide to us persons satisfactory to our Board of
Directors to serve as our officers. You or your affiliates
will also provide persons, who may be our officers, to
render such clerical, accounting and other services to us as
we may from time to time request of you. Such personnel may
be employees of you or your affiliates. We will pay to you
or your affiliates the cost of such personnel for rendering
such services to us, provided that all time devoted to the
investment or reinvestment of the portfolio assets shall be
for your account. Nothing contained herein shall be
construed to restrict our right to hire our own employees or
to contract for services to be performed by third parties.
Furthermore, you or your affiliates shall furnish us without
charge with such management supervision and assistance and
such office facilities as you may believe appropriate or as
we may reasonably request subject to the requirements of any
4
regulatory authority to which you may be subject. You or
your affiliates shall also be responsible for the payment of
any expenses incurred in promoting the sale of our shares
(other than the portion of the promotional expenses to be
borne by us in accordance with an effective plan pursuant to
Rule 12b-1 under the Act and the costs of printing our
prospectuses and other reports to shareholders and fees
related to registration with the Securities and Exchange
Commission and with state regulatory authorities).
3. It is further agreed that you shall be
responsible for the portion of the net expenses of each of
our portfolios (except interest, taxes, brokerage, fees paid
in accordance with an effective plan pursuant to Rule 12b-1
under the Act, expenditures which are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses, all to the extent permitted by
applicable state law and regulation) incurred by us during
each of our fiscal years or portion thereof that this
agreement is in effect between us which, as to a portfolio,
in any such year exceeds the limits applicable to such
portfolio under the laws or regulations of any state in
which our shares are qualified for sale (reduced pro rata
for any portion of less than a year). We hereby confirm
that, subject to the foregoing, we shall be responsible and
hereby assume the obligation for payment of all our other
5
expenses, including: (a) payment of the fee payable to you
under paragraph 5 hereof; (b) custody, transfer and dividend
disbursing expenses; (c) fees of directors who are not your
affiliated persons; (d) legal and auditing expenses; (e)
clerical, accounting and other office costs; (f) the cost of
personnel providing services to us, as provided in
subparagraph (d) of paragraph 2 above; (g) costs of printing
our prospectuses and shareholder reports; (h) cost of
maintenance of our corporate existence; (i) interest
charges, taxes, brokerage fees and commissions; (j) costs of
stationery and supplies; (k) expenses and fees related to
registration and filing with the Securities and Exchange
Commission and with state regulatory authorities; and (l)
such promotional shareholder servicing and other expenses as
may be contemplated by an effective plan pursuant to Rule
12b-1 under the Act provided, however, that our payment of
such promotional expenses shall be in the amounts, and in
accordance with the procedures, set forth in such plan.
4. We shall expect of you, and you will give us
the benefit of, your best judgment and efforts in rendering
these services to us, and we agree as an inducement to your
undertaking these services that you shall not be liable
hereunder for any mistake of judgment or in any event
whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect, or purport to
6
protect, you against any liability to us or to our security
holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
5. In consideration of the foregoing, we will pay
you a monthly fee at an annualized rate of .75% of our
average daily net assets. Such fee shall be payable in
arrears on the last day of each calendar month for services
performed hereunder during such month. If our initial
Registration Statement is declared effective by the
Securities and Exchange Commission after the beginning of a
month or this agreement terminates prior to the end of a
month, such fee shall be prorated according to the
proportion which such portion of the month bears to the full
month.
6. This agreement shall become effective on the
date hereof and shall remain in effect until [ ],
1998 and may be continued for successive twelve-month
periods (computed from each [ ] 1 thereafter)
with respect to each portfolio provided that such
continuance is specifically approved at least annually by
the Board of Directors or by the vote of a majority of the
outstanding voting securities of such portfolio (as defined
in the Act), and, in either case, by a majority of the Board
7
of Directors who are not parties to this agreement or
interested persons, as defined in the Act, of any party to
this agreement (other than as Directors of our corporation),
provided further, however, that if the continuation of this
agreement is not approved as to a portfolio, you may
continue to render to such portfolio the services described
herein in the manner and to the extent permitted by the Act
and the rules and regulations thereunder. Upon the
effectiveness of this agreement, it shall supersede all
previous agreements between us covering the subject matter
hereof. This agreement may be terminated with respect to
any portfolio at any time, without the payment of any
penalty, by vote of a majority of the outstanding voting
securities (as so defined) of such portfolio, or by a vote
of the Board of Directors on 60 days' written notice to you,
or by you with respect to any portfolio on 60 days' written
notice to us.
7. This agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged by
you and this agreement shall terminate automatically in the
event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and
"sale" as used in this paragraph shall have the meanings
ascribed thereto by governing law and any interpretation
8
thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
8. (a) Except to the extent necessary to perform
your obligations hereunder, nothing herein shall be deemed
to limit or restrict your right, or the right of any of your
employees, or any of the officers or directors of Alliance
Capital Management Corporation, your general partner, who
may also be a Director, officer or employee of ours, or
persons otherwise affiliated with us (within the meaning of
the Act) to engage in any other business or to devote time
and attention to the management or other aspects of any
other business, whether of a similar or dissimilar nature,
or to render services of any kind to any other trust,
corporation, firm, individual or association.
(b) You will notify us of any change in the
general partners of your partnership within a reasonable
time after such change.
9. If you cease to act as our investment adviser,
or, in any event, if you so request in writing, we agree to
take all necessary action to change our name to a name not
including the term "Alliance." You may from time to time
make available without charge to us for our use such marks
or symbols owned by you, including marks or symbols
containing the term "Alliance" or any variation thereof, as
you may consider appropriate. Any such marks or symbols so
9
made available will remain your property and you shall have
the right, upon notice in writing, to require us to cease
the use of such mark or symbol at any time.
10. This Agreement shall be construed in
accordance with the laws of the State of New York, provided,
however, that nothing herein shall be construed as being
inconsistent with the Act.
10
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
ALLIANCE/REGENT SECTOR OPPORTUNITY
FUND, INC.
By__________________________
Agreed to and accepted
as of the date first set forth above
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its general
partner
By_______________________________
11
00250232.AE0
DISTRIBUTION SERVICES AGREEMENT
AGREEMENT made as of , 1996 between
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC., a Maryland
corporation (the "Fund"), and ALLIANCE FUND DISTRIBUTORS,
INC., a Delaware corporation (the "Underwriter").
WITNESSETH
WHEREAS, the Fund is registered under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"), as a non-diversified, open-end management
investment company and it is in the interest of the Fund to
offer its shares for sale continuously;
WHEREAS, the Underwriter is a securities firm
engaged in the business of selling shares of investment
companies either directly to purchasers or through other
securities dealers;
WHEREAS, the Fund and the Underwriter wish to enter
into an agreement with each other with respect to the
continuous offering of the Fund's shares in order to promote
the growth of the Fund and facilitate the distribution of
its shares;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Appointment of the Underwriter. The
Fund hereby appoints the Underwriter as the principal
underwriter and distributor of the Fund to sell to the
public shares of its Class A Common Stock (the "Class A
shares"), Class B Common Stock (the "Class B shares"), Class
C Common Stock (the "Class C shares"), Advisor Class Common
Stock (the "Advisor Class shares") and shares of such other
class or classes as the Fund and the Underwriter shall from
time to time mutually agree in writing shall become subject
to this Agreement (the "New shares") (the Class A shares,
the Class B shares, the Class C shares, the Advisor Class
shares and New shares being collectively referred to herein
as the "shares") and hereby agrees during the term of this
Agreement to sell shares to the Underwriter upon the terms
and conditions herein set forth."
SECTION 2. Exclusive Nature of Duties. The
Underwriter shall be the exclusive representative of the
Fund to act as principal underwriter and distributor of the
shares except that the rights given under this Agreement to
the Underwriter shall not apply to shares issued in
connection with (a) the merger or consolidation of any other
investment company with the Fund, (b) the Fund's acquisition
by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company or (c) the
reinvestment in shares by the Fund's shareholders of
dividends or other distributions.
SECTION 3. Purchase of Shares from the Fund.
(a) The Underwriter shall have the right to buy
from the Fund the shares needed to fill unconditional orders
for shares of the Fund placed with the Underwriter by
investors or securities dealers, depository institutions or
other financial intermediaries acting as agent for their
customers. The price which the Underwriter shall pay for
the shares so purchased from the Fund shall be the net asset
value, determined as set forth in Section 3(d) hereof, used
in determining the public offering price on which such
orders are based.
(b) The shares are to be resold by the Underwriter
to investors at a public offering price, as set forth in
Section 3(c) hereof, or to securities dealers, depository
institutions or other financial intermediaries acting as
agent for their customers having agreements with the
Underwriter upon the terms and conditions set forth in
Section 8 hereof.
(c) The public offering price of the shares, i.e.,
the price per share at which the Underwriter or selected
dealers or selected agents (each as defined in Section 8(a)
below) may sell shares to the public, shall be the public
offering price determined in accordance with the then
current Prospectus and Statement of Additional Information
of the Fund (the "Prospectus" and "Statement of Additional
Information," respectively) under the Securities Act of
1933, as amended (the "Securities Act"), relating to such
shares, but not to exceed the net asset value at which the
Underwriter is to purchase such shares, plus, in the case of
Class A shares, an initial sales charge equal to a specified
percentage or percentages of the public offering price of
the Class A shares as set forth in the Prospectus. Class A
shares may be sold without such a sales charge to certain
classes of persons as from time to time set forth in the
Prospectus and Statement of Additional Information. All
payments to the Fund hereunder shall be made in the manner
set forth in Section 3(f) hereof.
2
(d) The net asset value of shares of the Fund
shall be determined by the Fund, or any agent of the Fund,
as of the close of regular trading on the New York Stock
Exchange on each Fund business day in accordance with the
method set forth in the Prospectus and Statement of
Additional Information and guidelines established by the
Directors of the Fund.
(e) The Fund reserves the right to suspend the
offering of its shares at any time in the absolute
discretion of its Directors.
(f) The Fund, or any agent of the Fund designated
in writing to the Underwriter by the Fund, shall be promptly
advised by the Underwriter of all purchase orders for shares
received by the Underwriter. Any order may be rejected by
the Fund; provided, however, that the Fund will not
arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of shares. The Fund (or its
agent) will confirm orders upon their receipt, will make
appropriate book entries and upon receipt by the Fund (or
its agent) of payment thereof, will deliver deposit receipts
or certificates for such shares pursuant to the instructions
of the Underwriter. Payment shall be made to the Fund in
New York Clearing House funds. The Underwriter agrees to
cause such payment and such instructions to be delivered
promptly to the Fund (or its agent).
SECTION 4. Repurchase or Redemption of
Shares by the Fund.
(a) Any of the outstanding shares may be tendered
for redemption at any time, and the Fund agrees to redeem or
repurchase the shares so tendered in accordance with its
obligations as set forth in Section 8(d) of ARTICLE FIFTH of
its Articles of Incorporation and in accordance with the
applicable provisions set forth in the Prospectus and
Statement of Additional Information. The price to be paid
to redeem or repurchase the shares shall be equal to the net
asset value calculated in accordance with the provisions of
Section 3(c) hereof, less any applicable sales charge. All
payments by the Fund hereunder shall be made in the manner
set forth below. The redemption or repurchase by the Fund
of any of the Class A shares purchased by or through the
Underwriter will not affect the initial sales charge secured
by the Underwriter or any selected dealer or compensation
paid to any selected agent (unless such selected dealer or
selected agent has otherwise agreed with the Underwriter),
in the course of the original sale, regardless of the length
of the time period between purchase by an investor and his
tendering for redemption or repurchase.
3
The Fund (or its agent) shall pay the total amount
of the redemption price and, except as may be otherwise
required by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD") and any
interpretations thereof ("NASD rules and interpretations"),
the deferred sales charges, if any, pursuant to the
instructions of the Underwriter in New York Clearing House
funds on or before the seventh business day subsequent to
its having received the notice of redemption in proper form.
(b) Redemption of shares or payment may be
suspended at times when the New York Stock Exchange is
closed, when trading thereon is closed, when trading thereon
is restricted, when an emergency exists as a result of which
disposal by the Fund of securities owned by it is not
reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net
assets, or during any other period when the Securities and
Exchange Commission, by order, so permits.
SECTION 5. Plan of Distribution.
(a) It is understood that Sections 5, 12, and 16
hereof together constitute a plan of distribution (the
"Plan") within the meaning of Rule 12b-1 adopted by the
Securities and Exchange Commission under the Investment
Company Act ("Rule 12b-1").
(b) Except as may be required by NASD rules and
interpretations, the Fund will pay to the Underwriter each
month a distribution services fee with respect to each
portfolio of the Fund ("Portfolio") that will not exceed, on
an annualized basis, .30% of the aggregate average daily net
assets of the Fund attributable to the Class A shares, 1.00%
of the aggregate average daily net assets of the Fund
attributable to the Class B shares and 1.00% of the
aggregate average daily net assets of the Fund attributable
to the Class C shares. With respect to each Portfolio, the
distribution services fee will be used in its entirety by
the Underwriter to make payments (i) to compensate broker-
dealers or other persons for providing distribution
assistance, (ii) to otherwise promote the sale of shares of
each Portfolio, including payment for the preparation,
printing and distribution of prospectuses and sales
literature or other promotional activities, and (iii) to
compensate broker-dealers, depository institutions and other
financial intermediaries for providing administrative,
accounting and other services with respect to each
Portfolio's shareholders. A portion of the distribution
services fee that will not exceed, on an annualized basis,
.25% of the aggregate average daily net assets of the Fund
4
attributable to each of the Class A shares, Class B shares
and Class C shares will constitute a service fee that will
be used by the Underwriter for personal service and/or the
maintenance of shareholder accounts within the meaning of
NASD rules and interpretations.
(c) Alliance Capital Management L.P., the Fund's
investment adviser (the "Adviser"), may make payments from
time to time from its own resources for the purposes
described in Section 5(b) hereof.
(d) Payments to broker-dealers, depository
institutions and other financial intermediaries for the
purposes set forth in Section 5(b) are subject to the terms
and conditions of the written agreements between the
Underwriter and each broker-dealer, depository institution
or other financial intermediary. Such agreements will be in
a form satisfactory to the Directors of the Fund.
(e) The Treasurer of the Fund will prepare and
furnish to the Fund's Directors, and the Directors will
review, at least quarterly, a written report complying with
the requirements of Rule 12b-1 setting forth all amounts
expended hereunder and the purposes for which such
expenditures were made.
(f) The Fund is not obligated to pay any
distribution expense in excess of the distribution services
fee described above in Section 5(b) hereof. Any expenses of
distribution of the Fund's Class A shares accrued by the
Underwriter in one fiscal year of the Fund may not be paid
from distribution services fees received from the Fund in
respect of Class A shares in another fiscal year. Any
expenses of distribution of the Fund's Class B shares or
Class C shares accrued by the Underwriter in one fiscal year
of the Fund may be carried forward and paid from
distribution services fees received from the Fund in respect
of such class of shares in another fiscal year. No portion
of the distribution services fees received from the Fund in
respect of Class A shares may be used to pay any interest
expense, carrying charges or other financing costs or
allocation of overhead of the Underwriter. The distribution
services fees received from the Fund in respect of Class B
shares and Class C shares may be used to pay interest
expenses, carrying charges and other financing costs or
allocation of overhead of the Underwriter to the extent
permitted by Securities and Exchange Commission rules,
regulations or Securities and Exchange Commission staff no-
action or interpretative positions in effect from time to
time. In the event this Agreement is terminated by either
party or is not continued with respect to a class as
5
provided in Section 12 below: (i) no distribution services
fees (other than current amounts accrued but not yet paid)
will be owed by the Fund to the Underwriter with respect to
that class, and (ii) the Fund will not be obligated to pay
the Underwriter for any amounts expended hereunder not
previously reimbursed by the Fund from distribution services
fees in respect of shares of such class or recovered through
deferred sales charges. The distribution services fee of a
particular class may not be used to subsidize the sale of
shares of any other class.
SECTION 6. Duties of the Fund.
(a) The Fund shall furnish to the Underwriter
copies of all information, financial statements and other
papers that the Underwriter may reasonably request for use
in connection with the distribution of shares of the Fund,
and this shall include one certified copy, upon request by
the Underwriter, of all financial statements prepared for
the Fund by independent public accountants. The Fund shall
make available to the Underwriter such number of copies of
the Prospectus as the Underwriter shall reasonably request.
(b) The Fund shall take, from time to time, but
subject to the necessary approval of its shareholders, all
necessary action to fix the number of authorized shares and
such steps as may be necessary to register the same under
the Securities Act, to the end that there will be available
for sale such number of shares as the Underwriter reasonably
may be expected to sell.
(c) The Fund shall use its best efforts to qualify
and maintain the qualification of an appropriate number of
its shares under the securities laws of such states as the
Underwriter and the Fund may approve. Any such
qualification may be withheld, terminated or withdrawn by
the Fund at any time in its discretion. As provided in
Section 9(b) hereof, the expense of qualification and
maintenance of qualification shall be borne by the Fund.
The Underwriter shall furnish such information and other
material relating to its affairs and activities as may be
required by the Fund in connection with such qualification.
(d) The Fund will furnish, in reasonable
quantities upon request by the Underwriter, copies of annual
and interim reports of the Fund.
SECTION 7. Duties of the Underwriter.
(a) The Underwriter shall devote reasonable time
and effort to effect sales of shares of the Fund, but shall
6
not be obligated to sell any specific number of shares. The
services of the Underwriter to the Fund hereunder are not to
be deemed exclusive and nothing in this Agreement shall
prevent the Underwriter from entering into like arrangements
with other investment companies so long as the performance
of its obligations hereunder is not impaired thereby.
(b) In selling shares of the Fund, the Underwriter
shall use its best efforts in all material respects duly to
conform with the requirements of all federal and state laws
relating to the sale of such securities. Neither the
Underwriter, any selected dealer, any selected agent nor any
other person is authorized by the Fund to give any
information or to make any representations, other than those
contained in the Fund's Registration Statement on Form N-1A
(the "Registration Statement"), as amended from time to
time, under the Securities Act and the Investment Company
Act or the Prospectus and Statement of Additional
Information or any sales literature specifically approved in
writing by the Fund.
(c) The Underwriter shall adopt and follow
procedures, as approved by the officers of the Fund, for the
confirmation of sales to investors and selected dealers, the
collection of amounts payable by investors and selected
dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the
requirements of the NASD, as such requirements may from time
to time exist.
SECTION 8. Selected Dealer and Agent Agreements.
(a) The Underwriter shall have the right to enter
into selected dealer agreements with securities dealers of
its choice ("selected dealers") and selected agent
agreements with depository institutions and other financial
intermediaries of its choice ("selected agents") for the
sale of shares and fix therein the portion of the sales
charge that may be allocated to the selected dealers and
selected agents; provided, that the Fund shall approve the
forms of agreements with selected dealers and selected
agents and the selected dealer and selected agent
compensation set forth therein and shall evidence such
approval by filing said forms and amendments thereto as
exhibits to its then currently effective Registration
Statement. Shares sold to selected dealers or through
selected agents shall be for resale by such selected dealers
and selected agents only at the public offering price set
forth in the Prospectus and Statement of Additional
Information.
7
(b) Within the United States, the Underwriter
shall offer and sell shares only to such selected dealers as
are members in good standing of the NASD.
SECTION 9. Payment of Expenses.
(a) The Fund shall bear all costs and expenses of
the Fund, including fees and disbursements of its counsel
and auditors, in connection with the preparation and filing
of its Registration Statement and Prospectus and Statement
of Additional Information, and all amendments and
supplements thereto, and preparing and mailing annual and
interim reports and proxy materials to shareholders
(including but not limited to the expense of setting in type
any such registration statements, prospectuses, annual or
interim reports or proxy materials).
(b) The Fund shall bear the cost of expenses of
qualification of shares for sale, and, if necessary or
advisable in connection therewith, of qualifying the Fund as
an issuer or as a broker or dealer, in such states of the
United States or other jurisdiction as shall be selected by
the Fund and the Underwriter pursuant to Section 6(c) hereof
and the cost and expenses payable to each such state for
continuing qualification therein until the Fund decides to
discontinue such qualification pursuant to Section 6(c)
hereof.
SECTION 10. Indemnification.
(a) The Fund agrees to indemnify, defend and hold
the Underwriter, and any person who controls the Underwriter
within the meaning of Section 15 of the Securities Act, free
and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) which the Underwriter or any such controlling
person may incur, under the Securities Act, or under common
law or otherwise, arising out of or based upon any alleged
untrue statement of a material fact contained in the Fund's
Registration Statement, Prospectus or Statement of
Additional Information in effect from time to time under the
Securities Act or arising out of or based upon any alleged
omission to state a material fact required to be stated in
any one thereof or necessary to make the statements in any
one thereof not misleading; provided, however, that in no
event shall anything herein contained be so construed as to
protect the Underwriter against any liability to the Fund or
its security holders to which the Underwriter would
otherwise be subject by reason of willful misfeasance, bad
8
faith or gross negligence in the performance of its duties,
or by reason of the Underwriter's reckless disregard of its
obligations and duties under this Agreement. The Fund's
agreement to indemnify the Underwriter and any such
controlling person as aforesaid is expressly conditioned
upon the Fund's being notified of the commencement of any
action brought against the Underwriter or any such
controlling person, such notification to be given by letter
or by telegram addressed to the Fund at its principal office
in New York, New York, and sent to the Fund by the person
against whom such action is brought within ten days after
the summons or other first legal process shall have been
served. The failure to so notify the Fund of the
commencement of any such action shall not relieve the Fund
from any liability which it may have to the person against
whom such action is brought by reason of any such alleged
untrue statement or omission otherwise than on account of
the indemnity agreement contained in this Section 10. The
Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, and to retain counsel of
good standing chosen by the Fund and approved by the
Underwriter. In the event the Fund does not elect to assume
the defense of any such suit and retain counsel of good
standing approved by the Underwriter, the defendant or
defendants in such suit shall bear the fees and expenses of
any additional counsel retained by any of them; but in case
the Fund does not elect to assume the defense of any such
suit, or in case the Underwriter does not approve of counsel
chosen by the Fund, the Fund will reimburse the Underwriter
or the controlling person or persons named as defendant or
defendants in such suit, for the fees and expenses of any
counsel retained by the Underwriter or such persons. The
indemnification agreement contained in this Section 10 shall
remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Underwriter or
any controlling person and shall survive the sale of any of
the Fund's shares made pursuant to subscriptions obtained by
the Underwriter. This agreement of indemnity will inure
exclusively to the benefit of the Underwriter, to the
benefit of its successors and assigns, and to the benefit of
any controlling persons and their successors and assigns.
The Fund agrees promptly to notify the Underwriter of the
commencement of any litigation or proceeding against the
Fund in connection with the issue and sale of any of its
shares.
(b) The Underwriter agrees to indemnify, defend
and hold the Fund, its several officers and directors, and
any person who controls the Fund within the meaning of
Section 15 of the Securities Act, free and harmless from and
against any and all claims, demands, liabilities, and
9
expenses (including the cost of investigating or defending
such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Fund, its
officers or directors, or any such controlling person may
incur under the Securities Act or under common law or
otherwise, but only to the extent that such liability, or
expense incurred by the Fund, its officers, directors or
such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged
untrue statement of a material fact contained in information
furnished in writing by the Underwriter to the Fund for use
in its Registration Statement, Prospectus or Statement of
Additional Information in effect from time to time under the
Securities Act, or shall arise out of or be based upon any
alleged omission to state a material fact in connection with
such information required to be stated in the Registration
Statement, Prospectus or Statement of Additional Information
or necessary to make such information not misleading. The
Underwriter's agreement to indemnify the Fund, its officers
and directors, and any such controlling person as aforesaid
is expressly conditioned upon the Underwriter being notified
of the commencement of any action brought against the Fund,
its officers or directors or any such controlling person,
such notification to be given by letter or telegram
addressed to the Underwriter at its principal office in New
York, and sent to the Underwriter by the person against whom
such action is brought, within ten days after the summons or
other first legal process shall have been served. The
Underwriter shall have a right to control the defense of
such action, with counsel of its own choosing, satisfactory
to the Fund, if such action is based solely upon such
alleged misstatement or omission on its part, and in any
other event the Underwriter and the Fund, and their officers
and directors or such controlling person, shall each have
the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify
the Underwriter of the commencement of any such action shall
not relieve the Underwriter from any liability which it may
have to the Fund, to its officers and trustees, or to such
controlling person by reason of any such untrue statement or
omission on the part of the Underwriter otherwise than on
account of the indemnity agreement contained in this Section
10.
SECTION 11. Notification by the Fund.
The Fund agrees to advise the Underwriter
immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to the Fund's Registration
10
Statement, Prospectus or Statement of Additional Information
or for additional information,
(b) in the event of the issuance by the Securities
and Exchange Commission of any stop order suspending the
effectiveness of the Fund's Registration Statement,
Prospectus or Statement of Additional Information or the
initiation of any proceeding for that purpose,
(c) of the happening of any material event which
makes untrue any statement made in the Fund's Registration
Statement, Prospectus or Statement of Additional Information
or which requires the making of a change in any one thereof
in order to make the statements therein not misleading, and
(d) of all actions of the Securities and Exchange
Commission with respect to any amendments to the Fund's
Registration Statement, Prospectus or Statement of
Additional Information which may from time to time be filed
with the Securities and Exchange Commission under the
Securities Act.
SECTION 12. Term of Agreement.
(a) This Agreement shall become effective on the
date hereof and shall continue in effect until
, 1997, and thereafter for successive twelve-
month periods (computed from each 1) with
respect to each class; provided, however, that such
continuance is specifically approved at least annually by
the Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities (as defined in
the Investment Company Act) of that class, and, in either
case, by a majority of the Directors of the Fund who are not
parties to this Agreement or interested persons, as defined
in the Investment Company Act, of any such party (other than
as directors of the Fund) and who have no direct or indirect
financial interest in the operation of the Plan or any
agreement related thereto; provided further, however, that
if the continuation of this Agreement is not approved as to
a class or a Portfolio, the Underwriter may continue to
render to such class or Portfolio the services described
herein in the manner and to the extent permitted by the Act
and the rules and regulations thereunder. Upon
effectiveness of this Agreement, it shall supersede all
previous agreements between the parties hereto covering the
subject matter hereof. This Agreement may be terminated (i)
by the Fund with respect to any class or Portfolio at any
time, without the payment of any penalty, by the vote of a
majority of the outstanding voting securities (as so
defined) of such class or Portfolio, or by a vote of a
11
majority of the Directors of the Fund who are not interested
persons, as defined in the Investment Company Act, of the
Fund (other than as directors of the Fund) and have no
direct and indirect financial interest in the operation of
the Plan or any agreement related thereto, in any such event
on sixty days' written notice to the Underwriter; provided,
however, that no such notice shall be required if such
termination is stated by the Fund to relate only to Sections
5 and 16 hereof (in which event Sections 5 and 16 shall be
deemed to have been severed herefrom and all other
provisions of this Agreement shall continue in full force
and effect), or (ii) by the Underwriter with respect to any
Portfolio on sixty days' written notice to the Fund.
(b) This Agreement may be amended at any time with
the approval of the Directors of the Fund, provided that (i)
any material amendments of the terms hereof will become
effective only upon approval as provided in the first
proviso of the first sentence of Section 12(a) hereof, and
(ii) any amendment to increase materially the amount to be
expended for distribution services fees pursuant to Section
5(b) hereof will be effective only upon the additional
approval by a vote of a majority of the outstanding voting
securities as defined in the Investment Company Act of the
class or Portfolio affected.
SECTION 13. No Assignment. This Agreement may not
be transferred, assigned, sold or in any manner hypothecated
or pledged by either party hereto and this Agreement shall
terminate automatically in the event of any such transfer,
assignment, sale, hypothecation or pledge. The terms
"transfer", "assignment", and "sale" as used in this
paragraph shall have the meanings ascribed thereto by
governing law and any interpretation thereof contained in
rules or regulations promulgated by the Securities and
Exchange Commission thereunder.
SECTION 14. Notices. Any notice required or
permitted to be given hereunder by either party to the other
shall be deemed sufficiently given if sent by registered
mail, postage prepaid, addressed by the party giving such
notice to the other party at the last address furnished by
such other party to the party given notice, and unless and
until changed pursuant to the foregoing provisions hereof
addressed to the Fund or the Underwriter.
SECTION 15. Governing Law. The provisions of this
Agreement shall be, to the extent applicable, construed and
interpreted in accordance with the laws of the State of New
York.
12
SECTION 16. Disinterested Directors of the Fund.
While the Agreement is in effect, the selection and
nomination of the Directors who are not "interested persons"
of the Fund (as defined in the Investment Company Act) will
be committed to the discretion of such disinterested
Directors.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement.
ALLIANCE/REGENT SECTOR
OPPORTUNITY FUND, INC.
By
ALLIANCE FUND DISTRIBUTORS,
INC.
By
Accepted as to
Sections 5, 12 and 16
as of , 1996:
ALLIANCE CAPITAL MANAGEMENT L.P.
By Alliance Capital Management Corporation,
General Partner
By
13
00250232.AE1
<PAGE>
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(800) 221-5672
(LOGO)
, 199
Selected Dealer Agreement
For Broker/Dealers (other than Bank Subsidiaries)
Dear Sirs:
As the principal underwriter of shares of certain
registered investment companies presently or hereafter managed by
Alliance Capital Management L.P., shares of which companies are
distributed by us pursuant to our Distribution Services
Agreements with such companies (the "Funds"), we invite you to
participate as principal in the distribution of shares of any and
all of the Funds upon the following terms and conditions:
1. You are to offer and sell such shares only at the
public offering prices which shall be currently in effect, in
accordance with the terms of the then current prospectuses and
statements of additional information of the Funds. You agree to
act only as principal in such transactions and shall not have
authority to act as agent for the Funds, for us, or for any other
dealer in any respect. All orders are subject to acceptance by
us and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the
total sales charges and discount to selected dealer, if any,
shall be as stated in each Fund's then current prospectus.
Such sales charges and discount to selected dealers are
subject to reductions under a variety of circumstances as
described in each Fund's then current prospectus and statement of
additional information. To obtain these reductions, we must be
notified when the sale takes place which would qualify for the
reduced charge.
There is no sales charge or discount to selected dealers
on the reinvestment of dividends.
3. As a selected dealer, you are hereby authorized
(i) to place orders directly with the Funds for their shares to
be resold by us to you subject to the applicable terms and
<PAGE>
conditions governing the placement of orders by us set forth in
the Distribution Services Agreement between each Fund and us and
subject to the applicable compensation provisions set forth in
each Fund's then current prospectus and statement of additional
information and (ii) to tender shares directly to the Funds or
their agent for redemption subject to the applicable terms and
conditions set forth in the Distribution Services Agreement.
4. Repurchases of shares will be made at the net asset
value of such shares in accordance with the then current
prospectuses and statements of additional information of the
Funds.
5. You represent that you are a member of the National
Association of Securities Dealers, Inc. and that you agree to
abide by the Rules of Fair Practice of such Association.
6. This Agreement is in all respects subject to
Rule 26 of the rules of Fair Practice of the National Association
of Securities Dealers, Inc. which shall control any provisions to
the contrary in this Agreement.
7. You agree:
(a) To purchase shares only from us or only from
your customers.
(b) To purchase shares from us only for the
purpose of covering purchase orders already
received or for your own bona fide investment.
(c) That you will not purchase any shares from
your customers at prices lower than the
redemption or repurchase prices then quoted by
the Fund. You shall, however, be permitted to
sell shares for the account of their record
owners to the Funds at the repurchase prices
currently established for such shares and may
charge the owner a fair commission for handing
the transaction.
(d) That you will not withhold placing customers'
orders for shares so as to profit yourself as
a result of such withholding.
(e) That if any shares confirmed to you hereunder
are redeemed or repurchased by any of the
Funds within seven business days after such
confirmation of your original order, you shall
forthwith refund to us the full discount
allowed to you on such sales. We shall notify
2
<PAGE>
you of such redemption or repurchase within
ten days from the date of delivery of the
request therefor or certificates to us or such
Fund. Termination or cancellation of this
Agreement shall not relieve you or us from the
requirements of this subparagraph.
8. We shall not accept from you any conditional orders
for shares. Delivery of certificates for shares purchased shall
be made by the Funds only against receipt of the purchase price,
subject to deduction for the discount reallowed to you and our
portion of the sales charge on such sales. If payment for the
shares purchased is not received within the time customary for
such payments, the sale may be cancelled forthwith without any
responsibility or liability on our part or on the part of the
Funds (in which case you will be responsible for any loss,
including loss of profit, suffered by the Funds resulting from
your failure to make payment as aforesaid), or, at our option, we
may sell the shares ordered back to the Funds (in which case we
may hold you responsible for any loss, including loss of profit
suffered by us resulting from your failure to make payment as
aforesaid).
9. You will not offer or sell any of the shares except
under circumstances that will result in compliance with the
applicable Federal and State securities laws and in connection
with sales and offers to sell shares you will furnish to each
person to whom any such sale or offer is made a copy of the
applicable then current prospectus. We shall be under no
liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing herein
contained, however, shall be deemed to be a condition,
stipulation or provision binding any persons acquiring any
security to waive compliance with any provision of the Securities
Act of 1933, or of the Rules and Regulations of the Securities
and Exchange Commission, or to relieve the parties hereto from
any liability arising under the Securities Act of 1933.
10. From time to time during the term of this Agreement
we may make payments to you pursuant to one or more of the
distribution plans adopted by certain of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act")
in consideration, with respect to each such Fund, of your
furnishing distribution services hereunder and providing
administrative, accounting and other services, including personal
service and/or the maintenance of shareholder accounts. We have
no obligation to make any such payments and you waive any such
payment until we receive monies therefor from the Fund. Any such
payments made pursuant to this Section 10 shall be subject to the
following terms and conditions:
3
<PAGE>
(a) Any such payments shall be in such amounts as
we may from time to time advise you in writing
but in any event not in excess of the amounts
permitted by the plan in effect with respect
to each particular Fund. Any such payments
shall be in addition to the selling
concession, if any, allowed to you pursuant to
this Agreement. Such payments shall include a
service fee in the amount of .25 of 1% per
annum of the average daily net assets of
certain Funds attributable to your clients.
Any such service fee shall be paid to you
solely for personal service and/or the
maintenance of shareholder accounts.
(b) The provisions of this Section 10 relate to
the plan adopted by a particular Fund pursuant
to Rule 12b-1. In accordance with Rule 12b-1,
any person authorized to direct the
disposition of monies paid or payable by a
Fund pursuant to this Section 10 shall provide
the Fund's Board of Directors, and the
Directors shall review, at least quarterly, a
written report of the amounts so expended and
the purposes for which such expenditures were
made.
(c) The provisions of this Section 10 applicable
to each Fund shall remain in effect for not
more than a year and thereafter for successive
annual periods only so long as such
continuance is specifically approved at least
annually in conformity with Rule 12b-1 and the
Act. The provisions of this Section 10 shall
automatically terminate with respect to a
particular Plan in the event of the assignment
(as defined by the Act) of this Agreement, in
the event such Plan terminates or is not
continued or in the event this Agreement
terminates or ceases to remain in effect. In
addition, the provisions of this Section 10
may be terminated at any time, without
penalty, by either party with respect to any
particular Plan on not more than 60 days' nor
less than 30 days' written notice delivered or
mailed by registered mail, postage prepaid, to
the other party.
11. No person is authorized to make any representations
concerning shares of the Funds except those contained in the
current prospectus, statement of additional information, and
4
<PAGE>
printed information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply prospectuses
and statements of additional information, reasonable quantities
of reports to shareholders, supplemental sales literature, sales
bulletins, and additional information as issued. You agree to
distribute prospectuses and reports to shareholders of the Funds
to your customers in compliance with the applicable requirements,
except to the extent that we expressly undertake to do so on your
behalf. You agree not to use other advertising or sales material
relating to the Funds, unless approved in writing by us in
advance of such use. Any printed information furnished by us
other than the then current prospectus and statement of
additional information for each Fund, periodic reports and proxy
solicitation materials are our sole responsibility and not the
responsibility of the Funds, and you agree that the Funds shall
have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.
12. In connection with your distribution of shares of a
Fund, you shall conform to such written compliance standards as
we have provided you in the past or may from time to time provide
to you in the future.
13. We, our affiliates and the Funds shall not be
liable for any loss, expense, damages, costs or other claim
arising out of any redemption or exchange pursuant to telephone
instructions from any person or our refusal to execute such
instructions for any reason.
14. Either party to this Agreement may cancel this
Agreement by giving written notice to the other. Such notice
shall be deemed to have been given on the date on which it was
either delivered personally to the other party or any officer or
member thereof, or was mailed postpaid or delivered to a
telegraph office for transmission to the other party at his or
its address as shown below. This Agreement may be amended by us
at any time and your placing of an order after the effective date
of any such amendment shall constitute your acceptance thereof.
5
<PAGE>
15. This Agreement shall be construed in accordance
with the laws of the State of New York and shall be binding upon
both parties thereto when signed by us and accepted by you in the
space provided below.
Very truly yours,
ALLIANCE FUND DISTRIBUTORS, INC.
By:_____________________________
(Authorized Signature)
Bank or Firm Name _______________________________________________
Address _________________________________________________________
City _____________________ State ____________ Zip Code __________
ACCEPTED BY (signature) _____________________ Title _____________
Name (print) ________________________________ Title _____________
Date _____________________ 199__ Phone # ________________________
Please return two signed copies of this Agreement (one of
which will be signed above by us and thereafter returned to you)
in the accompanying return envelope to:
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105
6
00250232.AG8
<PAGE>
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(800) 221-5672
(LOGO)
, 199
Selected Agent Agreement
For Depository Institutions and Their Subsidiaries
Dear Sirs:
As the principal underwriter of shares of certain
registered investment companies presently or hereafter managed by
Alliance Capital Management L.P., shares of which companies are
distributed by us pursuant to our Distribution Services
Agreements with such companies (the "Funds"), we invite you,
acting as agent for your customers, to make available to your
customers shares of any or all of the Funds upon the following
terms and conditions:
1. The customers in question will be for all purposes
your customers. We shall execute transactions in shares of the
Funds for each of your customers only upon your authorization, it
being understood in all cases that (a) you are acting as the
agent for the customer; (b) each transaction is initiated solely
upon the order of the customer; (c) each transaction is for the
account of the customer and not for your account; (d) the
transactions are without recourse against you by the customer;
(e) except as we otherwise agree, each transaction is effected on
a fully disclosed basis; (f) as between you and the customer, the
customer will have full beneficial ownership of the shares;
(g) you shall provide no investment advice and exercise no
investment discretion regarding the purchase, sale, or redemption
of the shares; and (h) you shall make appropriate disclosure to
your customers that any Fund's shares are not endorsed by you, do
not constitute your obligation and are not entitled to federal
deposit insurance.
2. You are to sell shares of the Funds only at the
public offering prices which shall be currently in effect, in
accordance with the terms of the then current prospectuses and
statements of additional information of the Funds. You agree to
act only as agent for your customers in such transactions and
shall not have authority to act as agent for the Funds or for us
<PAGE>
in any respect. All orders are subject to acceptance by us and
become effective only upon confirmation by us.
3. On each purchase of shares of a Fund authorized by
you, the total sales charge and commission, if any, shall be as
stated in the Fund's then current prospectus. Such sales charges
and commissions are subject to reductions under a variety of
circumstances as described in each Fund's then current prospectus
and statement of additional information. To obtain such a
reduction, you must provide us with such information as we may
request to establish that a particular transaction qualifies for
the reduction. There is no sales charge or commission to
selected agents on the reinvestment of dividends.
4. As a selected agent, you are hereby authorized
(i) to place orders directly with the Funds for their shares to
be resold by us through you subject to the applicable terms and
conditions governing the placement of orders by us set forth in
the Distribution Services Agreement between each Fund and us and
subject to the applicable compensation provisions set forth in
each Fund's then current prospectus and statement of additional
information, and (ii) to tender shares directly to the Funds or
their agent for redemption or repurchase subject to the
applicable terms and conditions set forth in the Distribution
Services Agreement.
5. Redemptions and repurchases of shares will be made
at the net asset value of such shares in accordance with the then
current prospectuses and statements of additional information of
the Funds.
6. You represent that you are either:
(a) a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended
(the "1934 Act"), duly authorized to engage in
the transactions to be performed hereunder and
not required to register as a broker-dealer
pursuant to the 1934 Act; or
(b) a bank (as so defined) or an affiliate of a
bank, in either case registered as a broker-
dealer pursuant to the 1934 Act and a member
of the National Association of Securities
Dealers, Inc., and that you agree to abide by
the rules and regulations of the National
Association of Securities Dealers, Inc.
2
<PAGE>
7. You agree:
(a) to order shares of the Funds only from us and
to act as agent only for your customers;
(b) to order shares from us only for the purpose
of covering purchase orders already received;
(c) that you will not purchase any shares from
your customers at prices lower than the
redemption or repurchase prices then quoted by
the Funds, provided, however, that you shall
be permitted to sell shares for the accounts
of their record owners to the Funds at the
repurchase prices currently established for
such shares and may charge the owner a fair
commission for handling the transaction;
(d) that you will not withhold placing customers'
orders for shares so as to profit yourself as
a result of such withholding; and
(e) that if any shares confirmed through you
hereunder are redeemed or repurchased by any
of the Funds within seven business days after
such confirmation of your original order, you
shall forthwith refund to us the full
commission reallowed to you on such sales. We
shall notify you of such redemption or
repurchase within ten days from the date of
delivery of the request therefor or
certificates to us or such Fund. Termination
or cancellation of this Agreement shall not
relieve you or us from the requirements of
this subparagraph.
8. We shall not accept from you any conditional orders
for shares. Delivery of certificates for shares purchased shall
be made by the Funds only against receipt of the purchase price,
subject to deduction for the commission reallowed to you and our
portion of the sales charge on such sale. If payment for the
shares purchased is not received within the time customary for
such payments, the sale may be cancelled forthwith without any
responsibility or liability on our part or on the part of the
Funds (in which case you will be responsible for any loss,
including loss of profit, suffered by the Funds resulting from
your failure to make payment as aforesaid).
9. You will not accept orders for shares of any of the
Funds except under circumstances that will result in compliance
with the applicable Federal and State securities laws and banking
3
<PAGE>
laws, and in connection with sales of shares to your customers
you will furnish, unless we agree otherwise, to each customer who
has ordered shares a copy of the applicable then current
prospectus. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by us
herein. Nothing herein contained, however, shall be deemed to be
a condition, stipulation or provision binding any persons
acquiring any security to waive compliance with any provision of
the Securities Act of 1933 or of the rules and regulations of the
Securities and Exchange Commission, or to relieve the parties
hereto from any liability arising under the Securities Act of
1933.
10. From time to time during the term of this Agreement
we may make payments to you pursuant to one or more of the
distribution plans adopted by certain of the Funds pursuant to
rule 12b-1 under the Investment Company Act of 1940 (the "Act"),
to compensate you with respect to the shareholder accounts of
your customers in such Funds for providing administrative,
accounting and other services, including personal service and/or
the maintenance of such accounts. We have no obligation to make
any such payments and you waive any such payment until we receive
monies therefor from the fund. Any such payments made pursuant
to this Section 10 shall be subject to the following terms and
conditions:
(a) Any such payments shall be in such amounts as
we may from time to time advise you in writing
but in any event not in excess of the amounts
permitted by the plan in effect with respect
to each particular Fund. Such payments shall
include a service fee in the amount of .25 of
1% per annum of the average daily net assets
of certain Funds attributable to your clients.
Any such service fee shall be paid to you
solely for personal service and/or the
maintenance of shareholder accounts.
(b) The provisions of this Section 10 relate to
the plan adopted by a particular Fund pursuant
to Rule 12b-1. In accordance with Rule 12b-1,
any person authorized to direct the
disposition of monies paid or payable by a
Fund pursuant to this Section 10 shall provide
the Fund's Board of Directors, and the
Directors shall review, at lest quarterly, a
written report of the amounts so expended and
the purposes for which such expenditures were
made.
4
<PAGE>
(c) The provisions of this Section 10 applicable
to each Fund remain in effect for not more
than a year and thereafter for successive
annual periods only so long as such
continuance is specifically approved at least
annually in conformity with Rule 12b-1 and the
Act. The provisions of this Section 10 shall
automatically terminate with respect to a
particular Plan in the event of the assignment
(as defined by the Act) of this Agreement, in
the event such Plan terminates or is not
continued or in the event this Agreement
terminates or ceases to remain in effect. In
addition, the provisions of this Section 10
may be terminated at any time, without
penalty, by either party with respect to any
particular Plan on not more than 60 days' nor
less than 30 days' written notice delivered or
mailed by registered mail, postage prepaid, to
the other party.
11. No person is authorized to make any representation
concerning shares of the Funds except those contained in the
current prospectus, statement of additional information, and
printed information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply prospectuses
and statements of additional information, reasonable quantities
of reports to shareholders, supplemental sales literature, sales
bulletins, and additional information as issued. You agree to
distribute prospectuses and reports to shareholders of the Funds
to your customers in compliance with applicable requirements,
except to the extent that we expressly undertake to do so on your
behalf. You agree not to use other advertising or sales material
relating to the Funds except in compliance with all laws and
regulations applicable to you and unless approved in writing by
us in advance of such use. Any printed information furnished by
us other than the then current prospectus and statement of
additional information for each Fund, periodic reports and proxy
solicitation materials are our sole responsibility and not the
responsibility of the Funds, and you agree that the Funds shall
have no liability or responsibility to you in these respects
unless expressly assumed in connection therewith.
12. In connection with your making shares of a Fund
available to your customers, you shall conform to such written
compliance standards as we have provided you in the past or may
from time to time provide to you in the future.
13. We, our affiliates and the Funds shall not be
liable for any loss, expense, damages, costs or other claim
arising out of any redemption or exchange pursuant to telephone
5
<PAGE>
instructions from any person or our refusal to execute such
instructions for any reason.
14. Either party to this Agreement may cancel this
Agreement by giving written notice to the other. Such notice
shall be deemed to have been given as of the date on which it was
either delivered personally to the other party or any officer or
member thereof, or was mailed postpaid or delivered to a
telegraph office for transmission to the other party at his or
its address as shown below. This Agreement may be amended by us
at any time and your placing of an order after the effective date
of any such amendment shall constitute your acceptance thereof.
If you are a bank or an affiliate of a bank, this Agreement will
automatically terminate if you cease to be, or the bank of which
you are an affiliate ceases to be, a bank as defined in the 1934
Act.
15. This Agreement shall be construed in accordance
with the laws of the State of New York and shall be binding upon
both parties hereto when signed by us and accepted by you in the
space provided below.
Very truly yours,
ALLIANCE FUND DISTRIBUTORS, INC.
By:_____________________________
(Authorized Signature)
Bank or Firm Name _______________________________________________
Address _________________________________________________________
City _____________________ State ____________ Zip Code __________
ACCEPTED BY (signature) _____________________ Title _____________
Name (print) ________________________________ Title _____________
Date _____________________ 199__ Phone # ________________________
Please return two signed copies of this Agreement (one of
which will be signed by us and thereafter returned to you)
in the accompanying return envelope to:
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105
6
00250232.AG7
<PAGE>
CUSTODIAN CONTRACT
This Contract between Alliance/Regent Sector Opportunity
Fund, Inc., a corporation organized and existing under the laws
of Maryland, having its principal place of business at 500 Plaza
Drive, Secaucus, New Jersey 07094, hereinafter called the "Fund",
and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin
Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH: That in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of
its assets, including securities it desires to be held in places
within the United States ("domestic securities") and securities
it desires to be held outside the United States ("foreign
securities") pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income,
payments of principal or capital distributions received by it
with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or
treasury shares of capital stock, $ par value, ("Shares") of the
Fund as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall from time to time employ one or
more sub-custodians located in the United States, but only in
accordance with an applicable vote by the Board of Directors of
the Fund, and provided that the Custodian shall have no more or
less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Custodian may employ
as sub-custodians for the Fund's securities and other assets the
foreign banking institutions and foreign securities depositories
designated in Schedule "A" hereto but only in accordance with the
provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property,
<PAGE>
to be held by it in the United States, including all
domestic investments owned by the Fund, other than (a)
securities which are maintained pursuant to Section 2.10 in
a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of
the Treasury and certain federal agencies (each, a "U.S.
Securities System") and (b) commercial paper of an issuer
for which the Custodian acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper
System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and
deliver domestic securities owned by the Fund held by the
Custodian or in a U.S. Securities System account of the
Custodian or in the Custodian's Direct Paper book-entry
system account ("Direct Paper System Account") only upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities for the account of the
Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Fund;
3) In the case of a sale effected through a U.S.
Securities System, in accordance with the provisions of
Section 2.10 hereof;
4) To the depository agent in connection with tender or
other similar offers for portfolio securities of the
Fund;
5) To the issuer thereof or its agent when such securities
are called, redeemed, retired or otherwise become
payable; provided that, in any such case, the cash or
other consideration is to be delivered to the
Custodian;
6) To the issuer thereof or its agent, for transfer into
the name of the Fund or into the name of any nominee or
nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other
evidence representing the same aggregate face amount or
2
<PAGE>
number of units; provided that, in any such case, the
new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Fund, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities
prior to receiving payment for such securities except
as may arise from the Custodian's own negligence or
willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the
new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities
made by the Fund, but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Fund, which may be in the form of
cash or obligations issued by the United States
government, its agencies or instrumentalities, except
that in connection with any loans for which collateral
is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of
the Treasury, the Custodian will not be held liable or
responsible for the delivery of securities owned by the
Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of assets by
the Fund, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement under the Fund, the Custodian and a broker-
dealer registered under the Securities Exchange Act of
1934 (the "Exchange Act") and a member of The National
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Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements
in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission and or any
Contract Market, or any similar organization or
organizations, regarding account deposits in connection
with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in
connection with distributions in kind, as may be
described from time to time in the Fund's currently
effective prospectus and statement of additional
information ("prospectus"), in satisfaction of requests
by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or
an Assistant Secretary, specifying the securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered
in the name of the Fund or in the name of any nominee of the
Fund or of any nominee of the Custodian which nominee shall
be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be
used in common with other registered investment companies
having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-
custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Fund under the
terms of this Contract shall be in "street name" or other
good delivery form. If, however, the Fund directs the
4
<PAGE>
Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely
collect income due the Fund on such securities and to notify
the Fund on a best efforts basis only of relevant corporate
actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts in the United States in
the name of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the
account of the Fund, other than cash maintained by the Fund
in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited by it to
its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it
may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between
the Fund and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions, make federal funds available
to the Fund as of specified times agreed upon from time to
time by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are
deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all
income and other payments with respect to United States
registered securities held hereunder to which the Fund shall
be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all
income and other payments with respect to United States
bearer securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent
thereof and shall credit such income, as collected, to the
Fund's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
5
<PAGE>
interest when due on securities held hereunder. Income due
the Fund on United States securities loaned pursuant to the
provisions of Section 2.2(10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Fund with
such information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the Custodian
of the income to which the Fund is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay
out monies of the Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Fund but only (a) against the delivery of such
securities, or evidence of title to such options, futures
contracts or options on futures contracts, to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Fund
or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in
the case of a purchase effected through a U.S. Securities
System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the conditions
set forth in Section 2. 11; (d) in the case of repurchase
agreements entered into between the Fund and the Custodian,
or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt
evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Fund or
(e) for transfer to a time deposit account of the Fund in
any bank, whether domestic or foreign; such transfer may be
effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions
from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
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<PAGE>
3) For the redemption or repurchase of Shares issued by the
Fund as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments
for the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be
in whole or part capitalized or treated as deferred
expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect
of securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase
of domestic securities for the account of the Fund is made
by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian.
2.9 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time remove)
any other bank or trust company which is itself qualified
under the Investment Company Act of 1940, as amended, to act
as a custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from time
to time direct; provided, however, that the appointment of
any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Securities in U.S. Securities Systems. The
Custodian may deposit and/or maintain domestic securities
owned by the Fund in a clearing agency registered with the
7
<PAGE>
Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal
agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules
and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep domestic securities of the Fund
in a U.S Securities System provided that such
securities are represented in an account ("Account") of
the Custodian in the U.S. Securities System which shall
not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to domestic
securities of the Fund which are maintained in a U.S.
Securities System shall identify by book-entry those
securities belonging to the Fund;
3) The Custodian shall pay for domestic securities
purchased for the account of the Fund upon (i) receipt
of advice from the U.S. Securities System that such
securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer
domestic securities sold for the account of the Fund
upon (i) receipt of advice from the U.S. Securities
System that payment for such securities has been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund.
Copies of all advices from the U.S. Securities System
of transfers of domestic securities for the account of
the Fund shall identify the Fund, be maintained for the
Fund by the Custodian and be provided to the Fund at
its request. Upon request, the Custodian shall furnish
the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions
in the U.S. Securities System for the account of the
Fund.
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control
8
<PAGE>
and procedures for safeguarding domestic securities
deposited in the U.S. Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 13
hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for any loss or damage to the Fund resulting from
use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their
employees or from failure of the Custodian or any such
agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of
the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim
against the U.S. Securities System or any other person
which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Fund
has not been made whole for any such loss or damage
and/or maintain securities owned by the Fund in the
Direct Paper System of the Custodian subject to the
following provisions:
1) No transaction relating to securities in the Direct
Paper System Will be effected in the absence of Proper
Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
represented in an account ("Account") of the Custodian
in the Direct Paper System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities
of the Fund which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the Fund;
4) The Custodian shall pay for securities purchased for
the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such payment
and transfer of securities to the account of the Fund.
The Custodian shall transfer securities sold for the
account of the Fund upon the making of an entry on the
records of the Custodian to reflect such transfer and
receipt of payment for the account of the Fund;
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<PAGE>
5) The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund, in
the form of a written advice or notice, of Direct Paper
on the next business day following such transfer and
shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on
its system of internal accounting control as the Fund
may reasonably request from time to time;
2.12 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government in
connection with options purchased, sold or written by the
Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purposes of
compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board
of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be
proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
10
<PAGE>
respect to domestic securities of the Fund held by it and in
connection with transfers of such securities.
2.14 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities
are registered otherwise than in the name of the Fund or a
nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall
promptly deliver to the Fund such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.15 Communications Relating to Fund Portfolio Securities.
Subject to the provisions of Section 2.3, the Custodian
shall transmit promptly to the Fund all written information
(including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights
in connection therewith and notices of exercise of call and
put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the
Custodian from issuers of the domestic securities being held
for the Fund. With respect to tender or exchange offers, the
Custodiam shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the
domestic securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange
offer. If the Fund desires to take action with respect to
any tender offer, exchange offer or any other similar
transaction, the Fund shall notify the Custodian at least
three business days prior to the date on which the Custodian
is to take such action.
2.16 Reports to Fund by Independent Public Accountants. The
Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with reports by independent public
accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including
domestic securities deposited and or maintained in a U.S.
Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that
any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the
reports shall so state.
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States
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<PAGE>
3.1 Appointment of Foreign Sub-Custodian. the Fund hereby
authorizes and instructs the Custodian to employ as sub-
custodians for the Fund's securities and other assets
maintained outside the United States the foreign banking
institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of
this Contract, together with a certified resolution of the
Fund's Board of Directors, the Custodian and the Fund may
agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodian.
Upon receipt of Proper Instructions, the Fund may instruct
the Custodian to cease the employment of any one or more
such sub-custodians for maintaining custody of the Fund's
assets.
3.2 Assets to be Held. The Custodian shall limit the securities
and other assets maintained in the custody of the foreign
sub-custodians to: (a) "foreign securities", as defined in
paragraph (c)(l) of Rule 17f-5 under the Investment Company
Act of 1940, and (b) cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be
reasonably necessary to effect the Fund's foreign securities
transactions. The Custodian shall identify on its books as
belonging to the Fund, the foreign securities of the Fund
held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund, assets
of the Fund shall be maintained in a clearing agency which
acts as a securities depository or in a book-entry system
for the central handling of securities located outside the
United States (each, a "Foreign Securities System") only
through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms
hereof (Foreign Securities Systems and U.S. Securities
Systems are collectively referred to herein as the
"Securities System'.). Where possible, such arrangements
shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities and
other non-cash property for all of its customers, including
the Fund, with a foreign sub-custodian in a single account
that is identified as belonging to the Custodian for the
benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and
other non-cash property of the Fund which are maintained in
such account shall identify by book-entry those securities
and other non-cash property belonging to the Fund and (ii)
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<PAGE>
the Custodian shall require that securities and other non-
cash property so held by the foreign be held separately from
any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each
agreement with a foreign banking institution shall provide
that: (a) the Fund's assets will not be subject to any
right, charge, security interest, lien or claim of any kind
in favor of the foreign banking institution or its creditors
or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership of the Fund's
assets will be freely transferable without the payment of
money or value other than for custody or administration; (c)
adequate records will be maintained identifying the assets
as belonging to the Fund; (d) officers of or auditors
employed by, or other representatives of the Custodian,
including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given
access to the books and records of the foreign banking
institution relating to its actions under its agreement with
the Custodian; and (e) assets of the Fund held by the
foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request
of the Fund, the Custodian will use its best efforts to
arrange for the independent accountants of the Fund to be
afforded access to the books and records of any foreign
banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance
of such foreign banking institution under its agreement with
the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund
from time to time, as mutually agreed upon, statements in
respect of the securities and other assets of the Fund held
by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's
securities and other assets and advices or notifications of
any transfers of securities to or from each custodial
account maintained by a foreign banking institution for the
Custodian on behalf of the Fund indicating, as to securities
acquired for the Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as
otherwise provided in paragraph (b) of this Section 3.8, the
provision of Sections 2.2 and 2.7 of this Contract shall
apply, mutatis mutandis to the foreign securities of the
Fund held outside the United States by foreign sub-
custodians. (b) Notwithstanding any provision of this
13
<PAGE>
Contract to the contrary, settlement and payment for
securities received for the account of the Fund and delivery
of securities maintained for the account of the Fund may be
effected in accordance with the customary established
securities trading or securities processing practices and
procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-
custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of
this Contract, and the Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such
securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement
pursuant to which the Custodian employs a foreign banking
institution as a foreign sub-custodian shall require the
institution to exercise reasonable care in the performance
of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage,
cost, expense, liability or claim arising out of or in
connection with the institution's performance of such
obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian
with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage,
cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for
the acts or omissions of a foreign banking institution to
the same extent as set forth with respect to sub-custodians
generally in this Contract and, regardless of whether assets
are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of
a U.S. bank as contemplated by paragraph 3.13 hereof, the
Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise
exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody
duties to State Street London Ltd., the Custodian shall not
be relieved of any responsibility to the Fund for any loss
due to such delegation, except such loss as may result from
(a) political risk (including, but not limited to, exchange
14
<PAGE>
control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed
hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the
Custodian to advance cash or securities for any purpose
including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the
Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities
in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall
be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of the Fund assets to
the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish
annually to the Fund, during the month of June, information
concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and
scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event that
the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of
any foreign sub-custodian not the subject of an exemptive
order from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there appears to
be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting
principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth
in this Contract, the provisions hereof shall not apply
where the custody of the Fund assets are maintained in a
foreign branch of a banking institution which is a "bank" as
defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of
said Act. The appointment of any such branch as a sub-
custodian shall be governed by paragraph I of this Contract.
15
<PAGE>
(b) Cash held for the Fund in the United Kingdom shall be
maintained in an interest bearing account established for
the Fund with the Custodian's London branch, which account
shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on
the Fund or the Custodian as custodian of the Fund by the
tax law of the United States of America or any state or
political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of jurisdictions other
than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and
governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such
information.
4. Payments for Repurchases or Redemptions and Sales of Share
of the Fund
From such funds as may be available for the purpose but
subject to the limitations of the Articles of Incorporation and
any applicable votes of the Board of Directors of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the
Fund, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian
shall honor checks drawn on the Custodian by a holder of Shares,
which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to
time between the Fund and the Custodian.
The Custodian shall receive from the Distributor for the
Fund's Shares or from the Transfer Agent of the Fund and deposit
into the Fund's account such payments as are received for Shares
of the Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund and the
16
<PAGE>
Transfer Agent of any receipt by it of payments for Shares of the
Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or
initialled by one or more person or persons as the Board of
Directors shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by
the Board of Directors of the Fund accompanied by a detailed
description of procedures approved by the Board of Directors,
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that
the Board of Directors and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets. For
purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-
party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to
its duties under this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise
directed by the Board of Directors of the Fund.
17
<PAGE>
7. Evidence of Authority
The Custodian shall be protected in acting upon any
instructions, request, consent, certificate or other instrument
or paper believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may receive
and accept a certified copy of a vote of the Board of Directors
of the Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors pursuant
to the Articles of Incorporation as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Directors of the Fund to keep the books of account of the Fund
and/or compute the net asset value per share of the outstanding
shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such
net asset value per share. If so directed, the Custodian shall
also calculate daily the net income of the Fund as described in
the Fund's currently effective prospectus and shall advise the
Fund and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components. The
calculations of the net asset value per share and the daily
income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.
9. Records
The Custodian shall create and maintain all records relating
to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such
records shall be the property of the Fund and shall at all times
during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of
the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply
the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between
the Fund and the Custodian, include certificate numbers in such
tabulations.
18
<PAGE>
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund
may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the
preparation of the Fund's Form N-lA, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Fund and the Custodian.
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith
without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or
willful misconduct or the negligence or willful misconduct of a
sub-custodian or agent, the Custodian shall be without liability
to the Fund for any loss, liability, claim or expense resulting
from or caused by; (i) events or circumstances beyond the
reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or
expropriation, imposition of currency controls or restrictions,
the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or
technological failures or interruptions, computer viruses or
communications disruptions, acts of war or terrorism, riots,
revolutions, work stoppages, natural disasters or other similar
events or acts; (ii) errors by the Fund or the investment Advisor
19
<PAGE>
in their instructions to the Custodian provided such instructions
have been in accordance with this Contract; (iii) the insolvency
of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or
other commercially prevalent payment or clearing system to
deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with
securities sold; (v) any delay or failure of any company,
corporation, or other body in charge of registering or
transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus,
dividends and rights and other accretions or benefits; (vi)
delays or inability to perform its duties due to any disorder in
market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or
future law or regulation or order of the United States of
America, or any state thereof, or any other country, or political
subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a
foreign banking institution to the same extent as set forth with
respect to sub-custodians generally in this Contract.
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the opinion of the Custodian, result in
the Custodian or its nominee assigned to the Fund being liable
for the payment of money or incurring liability of some other
form, the Fund, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates,
subsidiaries or agents, to advance cash or securities for any
purpose (including but not limited to securities settlements,
foreign exchange contracts and assumed settlement) or in the
event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available
cash and to dispose of the Fund assets to the extent necessary to
obtain reimbursement.
In no event shall the Custodian be liable for indirect,
special or consequential damages.
20
<PAGE>
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than thirty (30) days after the date of such delivery or
mailing; provided, however that the Custodian shall not act under
Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Directors of the Fund has approved the initial use of a
particular U.S. Securities System, as required by Rule 17f-4
under the Investment Company Act of 1940, as amended and that the
Custodian shall not act under Section 2.11 hereof in the absence
of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors has approved the
initial use of the Direct Paper System; provided further,
however, that the Fund shall not amend or terminate this Contract
in contravention of any applicable federal or state regulations,
or any provision of the Articles of Incorporation, and further
provided, that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event
at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian shall be appointed by the Board of
Directors of the Fund, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors of the Fund, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
21
<PAGE>
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Directors
shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian
shall have the right to deliver to a bank or trust company, which
is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000,
all securities, funds and other properties held by the Custodian
and all instruments held by the Custodian relative thereto and
all other property held by it under this Contract and to transfer
to an account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such
period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall
remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the
Articles of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be
an amendment of this Contract.
16. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the Commonwealth
of Massachusetts.
22
<PAGE>
17. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the Custodian
relating to the custody of the Fund's assets.
18. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks
which hold securities for the account of customers to respond to
requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held
by the bank unless the beneficial owner has expressly objected to
disclosure of this information. In order to comply with the rule,
the Custodian needs the Fund to indicate whether it authorizes
the Custodian to provide the Fund's name, address, and share
position to requesting companies whose securities the Fund owns.
If the Fund tells the Custodian "no", the Custodian will not
provide this information to requesting companies. If the Fund
tells the Custodian "yes" or does not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities
owned by the Fund or any funds or accounts established by the
Fund. For the Fund's protection, the Rule prohibits the
requesting company from using the Fund's name and address for any
purpose other than corporate communications. Please indicate
below whether the Fund consents or objects by checking one of the
alternatives below.
YES [ ] The Custodian is authorized to release the Fund's
name, address, and share positions.
NO [X] The Custodian is not authorized to release the
Fund's name, address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the day of , 1996.
23
<PAGE>
ATTEST ALLIANCE/REGENT SECTOR
OPPORTUNITY FUND, INC.
___________________________ ____________________________
ATTEST STATE STREET BANK AND TRUST
COMPANY
___________________________ ____________________________
Executive Vice President
24
<PAGE>
Schedule A
The following foreign banking institutions and foreign
securities depositories have been approved by the Board of
Directors of Alliance/Regent Sector Opportunity Fund, Inc. for
use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
___________________________
Fund's Authorized Officer
Date: _____________________
25
<PAGE>
Schedule A
17f-5 Approval
The Board of Directors Trustees of Alliance/Regent Sector
Opportunity Fund, Inc. has approved certain foreign banking
institutions and foreign securities depositories within State
Street's Global Custody Network for use as subcustodians for the
Fund's securities, cash and cash equivalents held outside of the
United States. Board approval is as indicated by the Fund's
Authorized Officer:
Fund
Officer
Initials Country Subcustodian Central Depository
______ Argentina Citibank, N.A. Caja de Valores
S.A.
______ Australia Westpac Banking Corporation Austraclear
Limited;
Reserve Bank
Information
Transfer System
(RITS)
______ Austria GiroCredit Bank Aktiengesell- Oesterreichische
schaf der Sparkassen Kontrollbank AG
(Wertpapiersammelbank
Division)
______ Bangladesh Standard Chartered Bank None
______ Belgium Generale Bank Caisse
Interprofessionnelle
de Depots et de
Virements de Titres
S.A. (CIK);
______ Botswana Barclays Bank of Botswana None
Limited
______ Brazil Citibank, N.A. Bolsa de Valores de
Sao Paulo
(Bovespa);
Banco Central do
26
<PAGE>
Brasil, Systema
Especial de
Liquidarno e
Custodia (SELIC)
27
<PAGE>
Fund
Officer
Initials Country Subcustodian Central Depository
______ Canada Canada Trustco Mortgage The Canadian
Company Depository for
Securities Limited
(CDS)
______ Chile Citibank, N.A. None
______ People's The Hongkong and Shanghai Shanghai Securities
Republic of Banking Corporation Limited, Clearing and
China Shanghai and Shenzhen branches Registration
Corporation (SSCCRC);
Shenzhen Securities
Central Clearing
Co., Ltd. (SSCC)
______ Colombia Cititrust Colombia S.A. None
Sociedad Fidicaria
______ Cyprus Barclays Bank PLC None
Cyprus Offshore Banking Unit
______ Czech Republic Ceskoslovenska Obchodni Stredisko cennych
Banka A.S. papiru (SCP)
______ Denmark Den Danske Bank Vaerdipapircentralen-
The Danish Securities
Center (VP)
______ Ecuador Citibank, N.A. None
______ Egypt National Bank of Egypt None
______ Finland Merita Bank Limited The Central Share
Register of
Finland
______ France Banque Paribas Societe
Interprofessionnelle
pour la Compensation
des Valuers
Mobilieres (SICOVAM);
Banque de France,
Saturne System
28
<PAGE>
______ Germany Dresdner Bank AG The Deutscher
Kassenverein AG
______ Ghana Barclays Bank of Ghana None
Limited
______ Greece National Bank of Greece S.A The Central
Securities Depository
(Apothetirion Titlon
(A.E.)
29
<PAGE>
Fund
Officer
Initials Country Subcustodian Central Depository
______ Hong Kong Standard Chartered Bank The Central Clearing
and Settlement
System (CCASS)
______ Hungary Citibank Budapest Rt. The Central
Depository and
Clearing House
(Budapest) Ltd.
(KELER Ltd.)
______ India Deutsche Bank AG None
______ The Hongkong and Shanghai None
Banking Corporation Limited
______ Indonesia Standard Chartered Bank None
______ Ireland Bank of Ireland None;
The Central Bank of
Ireland, The Gilt
Settlement Office
(GSO)
______ Israel Bank Hapoalim B.M. The Clearing House of
the Tel Aviv
Stock Exchange
______ Italy Morgan Guaranty Trust Company Monte Titoli S.p.A.;
(Present Subcustodian)
Banca d'Italia
______ Banque Paribas Monte Titoli S.p.A.;
(Future Subcustodian)
Banca d'Italia
______ Ivory Coast Societe Generale de Banques None
en Cote d'Ivoire
______ Japan The Daiwa Bank, Limited Japan Securities
Depository
Center (JASDEC);
______ The Fuji Bank, Limited Japan Securites
Depository
Center (JASDEC);
30
<PAGE>
Bank of Japan Net
System
______ The Sumitomo Trust & Banking Japan Securities
Co., Ltd. Depository
Center (JASDEC);
Bank of Japan Net
System
31
<PAGE>
Fund
Officer
Initials Country Subcustodian Central Depository
______ Jordan The British Bank of the None
Middle East
______ Kenya Barclays Bank of Kenya None
Limited
______ Republic of SEOULBANK Korea Securities
Korea Depository (KSD)
______ Malaysia Standard Chartered Bank Malaysian Centeral
Malaysia Berhad Depository
Sdn. Bhd. (MCD)
______ Mauritius The Hongkong and Shanghai None
Banking Corporation Limited
______ Mexico Citibank Mexico, S.A. S.D. INDEVAL, S.A.
de C.V. (Instituto
para el Deposito de
Valores);
Banco de Mexico
______ Morocco Banque Commerciale du Maroc None
______ Netherlands MeesPierson N.V. Nederlands Centraal
Instituut voor Giraal
Effectemverkeer B.V.
(NECIGEF)
______ New Zealand ANZ Banking Group New Zealand Central
(New Zealand) Limited Depository Limited
(NZCSD)
______ Norway Christiana Bank og Verdipapirsentralen -
Kreditkasse The Norwegian
Registry of
Securities (VPS)
______ Pakistan Deutsche Bank AG None
______ Peru Citibank, N.A. Caja de Valores
(CAVAL)
______ Philippines Standard Chartered Bank None
32
<PAGE>
______ Poland Citibank Poland S.A. The National
Depository of
Securities (Krajowy
Depozyt Papierow
Wartosciowych);
National Bank of
Poland
33
<PAGE>
Fund
Officer
Initials Country Subcustodian Central Depository
______ Portugal Banco Comercial Portuges Central de Valores
Mobilarios (Central)
______ Russia Credit Suisse, Zurich None
via Credit Suisse (Moscow)
Limited
______ Singapore The Development Bank of The Central
Singapore Ltd. Depository
(Pte) Limited (CDP)
______ Slovak Republic Ceskoslovenska Obchodna Stredisko Cennych
Banka A.S. Papierov (scp);
National Bank of
Slovakia
______ South Africa Standard Bank of South Africa The Central
Limited Depository Limited
______ Spain Banco Santander, S.A. Servicio de
Compensacion y
Liquidacion de
Valores, S.A.
(SCLV);
Banco de Espana,
Anotaciones en Cuenta
______ Sri Lanka The Hongkong and Shanghai Central Depository
Bannking Corporation Limited System (Pvt) Limited
______ Swaziland Barclays Bank of Swaziland None
Limited
______ Sweden Skandinaviska Enskilda Banken Vardepapperscentralen
VPC AB - The Swedish
Central Securities
Depository
______ Switzerland Union Bank of Switzerland Schweizerische
Effekten - Giro AG
(SEGA)
______ Taiwan-R.O.C. Central Trust of China The Taiwan Securities
Central
Depository Company,
34
<PAGE>
Ltd. (TSCD)
______ Thailand Standard Chartered Bank Thailand Securities
Depository
Company Limited (TSD)
35
<PAGE>
Fund
Officer
Initials Country Subcustodian Central Depository
______ Turkey Citibank, N.A. Takas ve Saklama
Bankasi A.S.
(TAKASBANK);
Central Bank of
Turkey
______ United Kingdom State Street Bank and Trust None;
The Bank of England,
The Central Gilts
Office (CGO);
The Central
Moneymarkets Office
(CMO)
______ Uruguay Citibank, N.A. None
______ Venezuela Citibank, N.A. None
______ Zambia Barclays Bank of Zambia Lusaka Central
Limited
______ Zimbabwe Barclays Bank of Zimbabwe None
Limited
______ Euroclear (The Euroclear System)/State Street London Limited
______ Cedel (Cedel Bank, societe anonyme)/State Street London Limited
Ceritified by:
__________________________________ ___________
Fund's Authorized Officer Date
36
00250232.AH1
<PAGE>
ALLIANCE/REGENT SECTOR OPPORTUNITY
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of October , 1996, between
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC., a Maryland
Corporation and an open-end investment company registered with
the Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940 (the "Investment Company Act"),
having its principal place of business at 1345 Avenue of
Americas, New York, New York 10105 (the "Fund"), and ALLIANCE
FUND SERVICES, INC., a Delaware corporation registered with the
SEC as a transfer agent under the Securities Exchange Act of
1934, having its principal place of business at 500 Plaza Drive,
Secaucus, New Jersey 07094 ("Fund Services"), provides as
follows:
WHEREAS, Fund Services has agreed to act as transfer
agent to the Fund for the purpose of recording the transfer,
issuance and redemption of shares of each series of the shares of
[common stock] of the Fund ("Shares" or "Shares of a Series"),
transferring the Shares, disbursing dividends and other
distributions to shareholders of the Fund, and performing such
other services as may be agreed to pursuant hereto;
<PAGE>
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the parties do hereby
agree as follows:
SECTION 1. The Fund hereby appoints Fund Services as
its transfer agent, dividend disbursing agent and shareholder
servicing agent for the Shares, and Fund Services agrees to act
in such capacities upon the terms set forth in this Agreement.
Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings assigned to them in SECTION 30.
SECTION 2.
(a) The Fund shall provide Fund Services with copies of
the following documents:
(1) Specimens of all forms of certificates for Shares;
(2) Specimens of all account application forms and
other documents relating to Shareholders' accounts;
(3) Copies of each Prospectus;
(4) Specimens of all documents relating to withdrawal
plans instituted by the Fund, as described in SECTION 16; and
(5) Specimens of all amendments to any of the foregoing
documents.
(b) The Fund shall furnish to Fund Services a supply of
blank Share Certificates for the Shares and, from time to time,
will renew such supply upon Fund Services' request. Blank Share
Certificates shall be signed manually or by facsimile signatures
of officers of the Fund authorized to sign by law or pursuant to
2
<PAGE>
the by-laws of the Fund and, if required by Fund Services, shall
bear the Fund's seal or a facsimile thereof.
SECTION 3. Fund Services shall make original issues of
Shares in accordance with SECTIONS 13 and 14 and the Prospectus
upon receipt of (i) Written Instructions requesting the issuance,
(ii) a certified copy of a resolution of the Fund's Directors
authorizing the issuance, (iii) necessary funds for the payment
of any original issue tax applicable to such Shares, and (iv) an
opinion of the Fund's counsel as to the legality and validity of
the issuance, which opinion may provide that it is contingent
upon the filing by the Fund of an appropriate notice with the
SEC, as required by Rule 24f-2 of the Investment Company Act, as
amended from time to time.
SECTION 4. Transfers of Shares shall be registered and,
subject to the provisions of SECTION 10 in the case of Shares
evidenced by Share Certificates, new Share Certificates shall be
issued by Fund Services upon surrender of outstanding Share
Certificates in the form deemed by Fund Services to be properly
endorsed for transfer, which form shall include (i) all necessary
endorsers' signatures guaranteed by a member firm of a national
securities exchange or a domestic commercial bank or through
other procedures mutually agreed to between the Fund and Fund
Services, (ii) such assurances as Fund Services may deem
necessary to evidence the genuineness and effectiveness of each
endorsement and (iii) satisfactory evidence of compliance with
3
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all applicable laws relating to the payment or collection of
taxes.
SECTION 5. Fund Services shall forward Share
Certificates in "non-negotiable" form by first-class or
registered mail, or by whatever means Fund Services deems equally
reliable and expeditious. While in transit to the addressee, all
deliveries of Share Certificates shall be insured by Fund
Services as it deems appropriate. Fund Services shall not mail
Share Certificates in "negotiable" form, unless requested in
writing by the Fund and fully indemnified by the Fund to Fund
Services' satisfaction.
SECTION 6. In registering transfers of Shares, Fund
Services may rely upon the Uniform Commercial Code as in effect
from time to time in the State in which the Fund is incorporated
or organized or, if appropriate, in the State of New Jersey;
provided, that Fund Services may rely in addition or
alternatively on any other statutes in effect in the State of New
Jersey or in the state under the laws of which the Fund is
incorporated or organized that, in the opinion of Fund Services'
counsel, protect Fund Services and the Fund from liability
arising from (i) not requiring complete documentation in
connection with an issuance or transfer, (ii) registering a
transfer without an adverse claim inquiry, (iii) delaying
registration for purposes of an adverse claim inquiry or (iv)
refusing registration in connection with an adverse claim.
4
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SECTION 7. Fund Services may issue new Share
Certificates in place of those lost, destroyed or stolen, upon
receiving indemnity satisfactory to Fund Services; and may issue
new Share Certificates in exchange for, and upon surrender of,
mutilated Share Certificates as Fund Services deems appropriate.
SECTION 8. Unless otherwise directed by the Fund, Fund
Services may issue or register Share Certificates reflecting the
signature, or facsimile thereof, of an officer who has died,
resigned or been removed by the Fund. The Fund shall file
promptly with Fund Services' approval, adoption or ratification
of such action as may be required by law or by Fund Services.
SECTION 9. Fund Services shall maintain customary stock
registry records for Shares of each Series noting the issuance,
transfer or redemption of Shares and the issuance and transfer of
Share Certificates. Fund Services may also maintain for Shares
of each Series an account entitled "Unissued Certificate
Account," in which Fund Services will record the Shares, and
fractions thereof, issued and outstanding from time to time for
which issuance of Share Certificates has not been requested.
Fund Services is authorized to keep records for Shares of each
Series containing the names and addresses of record of
Shareholders, and the number of Shares, and fractions thereof,
from time to time owned by them for which no Share Certificates
are outstanding. Each Shareholder will be assigned a single
account number for Shares of each Series, even though Shares for
5
<PAGE>
which Certificates have been issued will be accounted for
separately.
SECTION 10. Fund Services shall issue Share
Certificates for Shares only upon receipt of a written request
from a Shareholder and as authorized by the Fund. If Shares are
purchased or transferred without a request for the issuance of a
Share Certificate, Fund Services shall merely note on its stock
registry records the issuance or transfer of the Shares and
fractions thereof and credit or debit, as appropriate, the
Unissued Certificate Account and the respective Shareholders'
accounts with the Shares. Whenever Shares, and fractions
thereof, owned by Shareholders are surrendered for redemption,
Fund Services may process the transactions by making appropriate
entries in the stock transfer records, and debiting the Unissued
Certificate Account and the record of issued Shares outstanding;
it shall be unnecessary for Fund Services to reissue Share
Certificates in the name of the Fund.
SECTION 11. Fund Services shall also perform the usual
duties and function required of a stock transfer agent for a
corporation, including but not limited to (i) issuing Share
Certificates as treasury Shares, as directed by Written
Instructions, and (ii) transferring Share Certificates from one
Shareholder to another in the usual manner. Fund Services may
rely conclusively and act without further investigation upon any
list, instruction, certification, authorization, Share
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Certificate or other instrument or paper reasonably believed by
it in good faith to be genuine and unaltered, and to have been
signed, countersigned or executed or authorized by a duly-
authorized person or persons, or by the Fund, or upon the advice
of counsel for the Fund or for Fund Services. Fund Services may
record any transfer of Share Certificates which it reasonably
believes in good faith to have been duly authorized, or may
refuse to record any transfer of Share Certificates if, in good
faith, it reasonably deems such refusal necessary in order to
avoid any liability on the part of either the Fund or Fund
Services.
SECTION 12. Fund Services shall notify the Fund of any
request or demand for the inspection of the Fund's share records.
Fund Services shall abide by the Fund's instructions for granting
or denying the inspection; provided, however, Fund Services may
grant the inspection without such instructions if it is advised
by its counsel that failure to do so will result in liability to
Fund Services.
SECTION 13. Fund Services shall observe the following
procedures in handling funds received:
(a) Upon receipt at the office designated by the Fund
of any check or other order drawn or endorsed to the Fund or
otherwise identified as being for the account of the Fund, and,
in the case of a new account, accompanied by a new account
application or sufficient information to establish an account as
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<PAGE>
provided in the Prospectus, Fund Services shall stamp the
transmittal document accompanying such check or other order with
the name of the Fund and the time and date of receipt and shall
forthwith deposit the proceeds thereof in the custodial account
of the Fund.
(b) In the event that any check or other order for the
purchase of Shares is returned unpaid for any reason, Fund
Services shall, in the absence of other instructions from the
Fund, advise the Fund of the returned check and prepare such
documents and information as may be necessary to cancel promptly
any Shares purchased on the basis of such returned check and any
accumulated income dividends and capital gains distributions paid
on such Shares.
(c) As soon as possible after 4:00 p.m., Eastern time
or at such other times as the Fund may specify in Written or Oral
Instructions for any Series (the "Valuation Time") on each
Business Day, Fund Services shall obtain from the Fund's Adviser
a quotation (on which it may conclusively rely) of the net asset
value, determined as of the Valuation Time on that day. On each
Business Day, Fund Services shall use the net asset value(s)
determined by the Fund's Adviser to compute the number of Shares
and fractional Shares to be purchased and the aggregate purchase
proceeds to be deposited with the Custodian. As necessary but no
more frequently than daily (unless a more frequent basis is
agreed to by Fund Services), Fund Services shall place a purchase
8
<PAGE>
order with the Custodian for the proper number of Shares and
fractional Shares to be purchased and promptly thereafter shall
send written confirmation of such purchase to the Custodian and
the Fund.
SECTION 14. Having made the calculations required by
SECTION 13, Fund Services shall thereupon pay the Custodian the
aggregate net asset value of the Shares purchased. The aggregate
number of Shares and fractional Shares purchased shall then be
issued daily and credited by Fund Services to the Unissued
Certificate Account. Fund Services shall also credit each
Shareholder's separate account with the number of Shares
purchased by such Shareholder. Fund Services shall mail written
confirmation of the purchase to each Shareholder or the
Shareholder's representative and to the Fund if requested. Each
confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Stock Certificates are
outstanding (if any), the amount invested and the price paid for
the newly-purchased Shares.
SECTION 15. Prior to the Valuation Time on each
Business Day, as specified in accordance with SECTION 13, Fund
Services shall process all requests to redeem Shares and, with
respect to each Series, shall advise the Custodian of (i) the
total number of Shares available for redemption and (ii) the
number of Shares and fractional Shares requested to be redeemed.
Upon confirmation of the net asset value by the Fund's Adviser,
9
<PAGE>
Fund Services shall notify the Fund and the Custodian of the
redemption, apply the redemption proceeds in accordance with
SECTION 16 and the Prospectus, record the redemption in the stock
registry books, and debit the redeemed Shares from the Unissued
Certificates Account and the individual account of the
Shareholder.
In lieu of carrying out the redemption procedures
described in the preceding paragraph, Fund Services may, at the
request of the Fund, sell Shares to the Fund as repurchases from
Shareholders, provided that the sale price is not less than the
applicable redemption price. The redemption procedures shall
then be appropriately modified.
SECTION 16. Fund Services will carry out the following
procedures with respect to Share redemptions:
(a) As to each request received by the Fund from or on
behalf of a Shareholder for the redemption of Shares, and unless
the right of redemption has been suspended as contemplated by the
Prospectus, Fund Services shall, within seven days after receipt
of such redemption request, either (i) mail a check in the amount
of the proceeds of such redemption to the person designated by
the Shareholder or other person to receive such proceeds or, (ii)
in the event redemption proceeds are to be wired through the
Federal Reserve Wire System or by bank wire pursuant to
procedures described in the Prospectus, cause such proceeds to be
wired in Federal funds to the bank or trust company account
10
<PAGE>
designated by the Shareholder to receive such proceeds. Fund
Services shall also prepare and send a confirmation of such
redemption to the Shareholder. Redemptions in kind shall be made
only in accordance with such Written Instructions as Fund
Services may receive from the Fund. The requirements as to
instruments of transfer and other documentation, the
determination of the appropriate redemption price and the time of
payment shall be as provided in the Prospectus, subject to such
additional requirements consistent therewith as may be
established by mutual agreement between the Fund and Fund
Services. In the case of a request for redemption that does not
comply in all respects with the requirements for redemption, Fund
Services shall promptly so notify the Shareholder and shall
effect such redemption at the price in effect at the time of
receipt of documents complying with such requirements. Fund
Services shall notify the Fund's Custodian and the Fund on each
Business Day of the amount of cash required to meet payments made
pursuant to the provisions of this paragraph and thereupon the
Fund shall instruct the Custodian to make available to Fund
Services in timely fashion sufficient funds therefor.
(b) Procedures and standards for effecting and
accepting redemption orders from Shareholders by telephone or by
such check writing service as the Fund may institute may be
established by mutual agreement between Fund Services and the
Fund consistent with the Prospectus.
11
<PAGE>
(c) For purposes of redemption of Shares that have been
purchased by check within fifteen (15) days prior to receipt of
the redemption request, the Fund shall provide Fund Services with
Written Instructions concerning the time within which such
requests may be honored.
(d) Fund Services shall process withdrawal orders duly
executed by Shareholders in accordance with the terms of any
withdrawal plan instituted by the Fund and described in the
Prospectus. Payments upon such withdrawal orders and redemptions
of Shares held in withdrawal plan accounts in connection with
such payments shall be made at such times as the Fund may
determine in accordance with the Prospectus.
(e) The authority of Fund Services to perform its
responsibilities under SECTIONS 15 and 16 with respect to the
Shares of any Series shall be suspended if Fund Services receives
notice of the suspension of the determination of the net asset
value of the Series.
SECTION 17. Upon the declaration of each dividend and
each capital gains distribution by the Fund's Directors, the Fund
shall notify Fund Services of the date of such declaration, the
amount payable per Share, the record date for determining the
Shareholders entitled to payment, the payment and the
reinvestment date price.
SECTION 18. Upon being advised by the Fund of the
declaration of any income dividend or capital gains distribution
12
<PAGE>
on account of its Shares, Fund Services shall compute and prepare
for the Fund records crediting such distributions to
Shareholders. Fund Services shall, on or before the payment date
of any dividend or distribution, notify the Fund and the
Custodian of the estimated amount required to pay any portion of
a dividend or distribution which is payable in cash, and
thereupon the Fund shall, on or before the payment date of such
dividend or distribution, instruct the Custodian to make
available to Fund Services sufficient funds for the payment of
such cash amount. Fund Services will, on the designated payment
date, reinvest all dividends in additional shares and promptly
mail to each Shareholder at his address of record a statement
showing the number of full and fractional Shares (rounded to
three decimal places) then owned by the Shareholder and the net
asset value of such Shares; provided, however, that if a
Shareholder elects to receive dividends in cash, Fund Services
shall prepare a check in the appropriate amount and mail it to
the Shareholder at his address of record within five (5) business
days after the designated payment date, or transmit the
appropriate amount in Federal funds in accordance with the
Shareholder's agreement with the Fund.
SECTION 19. Fund Services shall prepare and maintain
for the Fund records showing for each Shareholder's account the
following:
13
<PAGE>
A. The name, address and tax identification number of
the Shareholder;
B. The number of Shares of each Series held by the
Shareholder;
C. Historical information including dividends paid and
date and price for all transactions;
D. Any stop or restraining order placed against such
account;
E. Information with respect to the withholding of any
portion of income dividends or capital gains distributions as are
required to be withheld under applicable law;
F. Any dividend or distribution reinvestment election,
withdrawal plan application, and correspondence relating to the
current maintenance of the account;
G. The certificate numbers and denominations of any
Share Certificates issued to the Shareholder; and
H. Any additional information required by Fund
Services to perform the services contemplated by this Agreement.
Fund Services agrees to make available upon request by the Fund
or the Fund's Adviser and to preserve for the periods prescribed
in Rule 31a-2 of the Investment Company Act any records related
to services provided under this Agreement and required to be
maintained by Rule 31a-1 of that Act, including:
(i) Copies of the daily transaction register for each
Business Day of the Fund;
14
<PAGE>
(ii) Copies of all dividend, distribution and
reinvestment blotters;
(iii) Schedules of the quantities of Shares of each
Series distributed in each state for purposes of any state's laws
or regulations as specified in Oral or Written Instructions given
to Fund Services from time to time by the Fund or its agents; and
(iv) Such other information, including Shareholder
lists, and statistical information as may be agreed upon from
time to time by the Fund and Fund Services.
SECTION 20. Fund Services shall maintain those records
necessary to enable the Fund to file, in a timely manner, form
N-SAR (Semi-Annual Report) or any successor report required by
the Investment Company Act or rules and regulations thereunder.
SECTION 21. Fund Services shall cooperate with the
Fund's independent public accountants and shall take reasonable
action to make all necessary information available to such
accountants for the performance of their duties.
SECTION 22. In addition to the services described
above, Fund Services will perform other services for the Fund as
may be mutually agreed upon in writing from time to time, which
may include preparing and filing Federal tax forms with the
Internal Revenue Service, and, subject to supervisory oversight
by the Fund's Adviser, mailing Federal tax information to
Shareholders, mailing semi-annual Shareholder reports, preparing
the annual list of Shareholders, mailing notices of Shareholders'
15
<PAGE>
meetings, proxies and proxy statements and tabulating proxies.
Fund Services shall answer the inquiries of certain Shareholders
related to their share accounts and other correspondence
requiring an answer from the Fund. Fund Services shall maintain
dated copies of written communications from Shareholders, and
replies thereto.
SECTION 23. Nothing contained in this Agreement is
intended to or shall require Fund Services, in any capacity
hereunder, to perform any functions or duties on any day other
than a Business Day. Functions or duties normally scheduled to
be performed on any day which is not a Business Day shall be
performed on, and as of, the next Business Day, unless otherwise
required by law.
SECTION 24. For the services rendered by Fund Services
as described above, the Fund shall pay to Fund Services an
annualized fee at a rate to be mutually agreed upon from time to
time. Such fee shall be prorated for the months in which this
Agreement becomes effective or is terminated. In addition, the
Fund shall pay, or Fund Services shall be reimbursed for, all
out-of-pocket expenses incurred in the performance of this
Agreement, including but not limited to the cost of stationery,
forms, supplies, blank checks, stock certificates, proxies and
proxy solicitation and tabulation costs, all forms and statements
used by Fund Services in communicating with Shareholders of the
Fund or especially prepared for use in connection with its
16
<PAGE>
services hereunder, specific software enhancements as requested
by the Fund, costs associated with maintaining withholding
accounts (including non-resident alien, Federal government and
state), postage, telephone, telegraph (or similar electronic
media) used in communicating with Shareholders or their
representatives, outside mailing services, microfiche/microfilm,
freight charges and off-site record storage. It is agreed in
this regard that Fund Services, prior to ordering any form in
such supply as it estimates will be adequate for more than two
years' use, shall obtain the written consent of the Fund. All
forms for which Fund Services has received reimbursement from the
Fund shall be the property of the Fund.
SECTION 25. Fund Services shall not be liable for any
taxes, assessments or governmental charges that may be levied or
assessed on any basis whatsoever in connection with the Fund or
any Shareholder, excluding taxes assessed against Fund Services
for compensation received by it hereunder.
SECTION 26.
(a) Fund Services shall at all times act in good faith
and with reasonable care in performing the services to be
provided by it under this Agreement, but shall not be liable for
any loss or damage unless such loss or damage is caused by the
negligence, bad faith or willful misconduct of Fund Services or
its employees or agents.
17
<PAGE>
(b) The Fund shall indemnify and hold Fund Services
harmless from all loss, cost, damage and expense, including
reasonable expenses for counsel, incurred by it resulting from
any claim, demand, action or suit in connection with the
performance of its duties hereunder, or as a result of acting
upon any instruction reasonably believed by it to have been
properly given by a duly authorized officer of the Fund, or upon
any information, data, records or documents provided to Fund
Services or its agents by computer tape, telex, CRT data entry or
other similar means authorized by the Fund; provided that this
indemnification shall not apply to actions or omissions of Fund
Services in cases of its own bad faith, willful misconduct or
negligence, and provided further that if in any case the Fund may
be asked to indemnify or hold Fund Services harmless pursuant to
this Section, the Fund shall have been fully and promptly advised
by Fund Services of all material facts concerning the situation
in question. The Fund shall have the option to defend Fund
Services against any claim which may be the subject of this
indemnification, and in the event that the Fund so elects it will
so notify Fund Services, and thereupon the Fund shall retain
competent counsel to undertake defense of the claim, and Fund
Services shall in such situations incur no further legal or other
expenses for which it may seek indemnification under this
paragraph. Fund Services shall in no case confess any claim or
make any compromise in any case in which the Fund may be asked to
18
<PAGE>
indemnify Fund Services except with the Fund's prior written
consent.
Without limiting the foregoing:
(i) Fund Services may rely upon the advice of the Fund
or counsel to the Fund or Fund Services, and upon statements of
accountants, brokers and other persons believed by Fund Services
in good faith to be expert in the matters upon which they are
consulted. Fund Services shall not be liable for any action
taken in good faith reliance upon such advice or statements;
(ii) Fund Services shall not be liable for any action
reasonably taken in good faith reliance upon any Written
Instructions or certified copy of any resolution of the Fund's
Directors, including a Written Instruction authorizing Fund
Services to make payment upon redemption of Shares without a
signature guarantee; provided, however, that upon receipt of a
Written Instruction countermanding a prior Instruction that has
not been fully executed by Fund Services, Fund Services shall
verify the content of the second Instruction and honor it, to the
extent possible. Fund Services may rely upon the genuineness of
any such document, or copy thereof, reasonably believed by Fund
Services in good faith to have been validly executed;
(iii) Fund Services may rely, and shall be protected by
the Fund in acting, upon any signature, instruction, request,
letter of transmittal, certificate, opinion of counsel,
statement, instrument, report, notice, consent, order, or other
19
<PAGE>
paper or document reasonably believed by it in good faith to be
genuine and to have been signed or presented by the purchaser,
the Fund or other proper party or parties; and
(d) Fund Services may, with the consent of the Fund,
subcontract the performance of any portion of any service to be
provided hereunder, including with respect to any Shareholder or
group of Shareholders, to any agent of Fund Services and may
reimburse the agent for the services it performs at such rates as
Fund Services may determine; provided that no such reimbursement
will increase the amount payable by the Fund pursuant to this
Agreement; and provided further, that Fund Services shall remain
ultimately responsible as transfer agent to the Fund.
SECTION 27. The Fund shall deliver or cause
to be delivered over to Fund Services (i) an accurate list of
Shareholders, showing each Shareholder's address of record,
number of Shares of each Series owned and whether such Shares are
represented by outstanding Share Certificates or by non-
certificated Share accounts and (ii) all Shareholder records,
files, and other materials necessary or appropriate for proper
performance of the functions assumed by under this Agreement
(collectively referred to as the "Materials"). The Fund shall
indemnify Fund Services and hold it harmless from any and all
expenses, damages, claims, suits, liabilities, actions, demands
and losses arising out of or in connection with any error,
omission, inaccuracy or other deficiency of such Materials, or
20
<PAGE>
out of the failure of the Fund to provide any portion of the
Materials or to provide any information in the Fund's possession
needed by Fund Services to knowledgeably perform its functions;
provided the Fund shall have no obligation to indemnify Fund
Services or hold it harmless with respect to any expenses,
damages, claims, suits, liabilities, actions, demands or losses
caused directly or indirectly by acts or omissions of Fund
Services or the Fund's Adviser.
SECTION 28. This Agreement may be amended from time to
time by a written supplemental agreement executed by the Fund and
Fund Services and without notice to or approval of the
Shareholders; provided this Agreement may not be amended in any
manner which would substantially increase the Fund's obligations
hereunder unless the amendment is first approved by the Fund's
Directors, including a majority of the Directors who are not a
party to this Agreement or interested persons of any such party,
at a meeting called for such purpose, and thereafter is approved
by the Fund's Shareholders if such approval is required under the
Investment Company Act or the rules and regulations thereunder.
The parties hereto may adopt procedures as may be appropriate or
practical under the circumstances, and Fund Services may
conclusively rely on the determination of the Fund that any
procedure that has been approved by the Fund does not conflict
with or violate any requirement of its Articles of Incorporation
21
<PAGE>
or Declaration of Trust, By-Laws or Prospectus, or any rule,
regulation or requirement of any regulatory body.
SECTION 29. The Fund shall file with Fund Services a
certified copy of each operative resolution of its Directors
authorizing the execution of Written Instructions or the
transmittal of Oral Instructions and setting forth authentic
signatures of all signatories authorized to sign on behalf of the
Fund and specifying the person or persons authorized to give Oral
Instructions on behalf of the Fund. Such resolution shall
constitute conclusive evidence of the authority of the person or
persons designated therein to act and shall be considered in full
force and effect, with Fund Services fully protected in acting in
reliance therein, until Fund Services receives a certified copy
of a replacement resolution adding or deleting a person or
persons authorized to give Written or Oral Instructions. If the
officer certifying the resolution is authorized to give Oral
Instructions, the certification shall also be signed by a second
officer of the Fund.
SECTION 30. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or supplement
hereto, shall have the meanings specified below, insofar as the
context will allow.
(a) Business Day: Any day on which the Fund is open
for business as described in the Prospectus.
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<PAGE>
(b) Custodian: The term Custodian shall mean the
Fund's current custodian or any successor custodian acting as
such for the Fund.
(c) Fund's Adviser: The term Fund's Adviser shall mean
Alliance Capital Management L.P. or any successor thereto who
acts as the investment adviser or manager of the Fund.
(d) Oral Instructions: The term Oral Instructions
shall mean an authorization, instruction, approval, item or set
of data, or information of any kind transmitted to Fund Services
in person or by telephone, vocal telegram or other electronic
means, by a person or persons reasonably believed in good faith
by Fund Services to be a person or persons authorized by a
resolution of the Directors of the Fund to give Oral Instructions
on behalf of the Fund. Each Oral Instruction shall specify
whether it is applicable to the entire Fund or a specific Series
of the Fund.
(e) Prospectus: The term Prospectus shall mean a
prospectus and related statement of additional information
forming part of a currently effective registration statement
under the Investment Company Act and, as used with the respect to
Shares or Shares of a Series, shall mean the prospectuses and
related statements of additional information covering the Shares
or Shares of the Series.
(f) Securities: The term Securities shall mean bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and
23
<PAGE>
other securities and investments from time to time owned by the
Fund.
(g) Series: The term Series shall mean any series of
Shares of the common stock of the Fund that the Fund may
establish from time to time.
(h) Share Certificates: The term Share Certificates
shall mean the stock certificates for the Shares.
(i) Shareholders: The term Shareholders shall mean the
registered owners from time to time of the Shares, as reflected
on the stock registry records of the Fund.
(j) Written Instructions: The term Written
Instructions shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to
Fund Services in original writing containing original signatures,
or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or
documentary means, at the request of a person or persons
reasonably believed in good faith by Fund Services to be a person
or persons authorized by a resolution of the Directors of the
Fund to give Written Instruction shall specify whether it is
applicable to the entire Fund or a specific Series of the Fund.
SECTION 31. Fund Services shall not be liable for the
loss of all or part of any record maintained or preserved by it
pursuant to this Agreement or for any delays or errors occurring
by reason of circumstances beyond its control, including but not
24
<PAGE>
limited to acts of civil or military authorities, national
emergencies, fire, flood or catastrophe, acts of God,
insurrection, war, riot, or failure of transportation,
communication or power supply, except to the extent that Fund
Services shall have failed to use its best efforts to minimize
the likelihood of occurrence of such circumstances or to mitigate
any loss or damage to the Fund caused by such circumstances.
SECTION 32. The Fund may give Fund Services sixty (60)
days and Fund Services may give the Fund (90) days written notice
of the termination of this Agreement, such termination to take
effect at the time specified in the notice. Upon notice of
termination, the Fund shall use its best efforts to obtain a
successor transfer agent. If a successor transfer agent is not
appointed within ninety (90) days after the date of the notice of
termination, the Directors of the Fund shall, by resolution,
designate the Fund as its own transfer agent. Upon receipt of
written notice from the Fund of the appointment of the successor
transfer agent and upon receipt of Oral or Written Instructions
Fund Services shall, upon request of the Fund and the successor
transfer agent and upon payment of Fund Services' reasonable
charges and disbursements, promptly transfer to the successor
transfer agent the original or copies of all books and records
maintained by Fund Services hereunder and cooperate with, and
provide reasonable assistance to, the successor transfer agent in
25
<PAGE>
the establishment of the books and records necessary to carry out
its responsibilities hereunder.
SECTION 33. Any notice or other communication required
by or permitted to be given in connection with this Agreement
shall be in writing, and shall be delivered in person or sent by
first-class mail, postage prepaid, to the respective parties.
Notice to the Fund shall be given as follows until
further notice:
Alliance/Regent Sector Opportunity Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
Notice to Fund Services shall be given as follows until
further notice:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
SECTION 34. The Fund represents and warrants to Fund
Services that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly
authorized by resolution of the Fund's Directors. Fund Services
represents and warrants to the Fund that the execution and
delivery of this Agreement by the undersigned officer of Fund
Services has also been duly and validly authorized.
SECTION 35. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original,
and shall become effective on the last date of signature below
unless otherwise agreed by the parties. Unless sooner terminated
26
<PAGE>
pursuant to SECTION 32, this Agreement will continue until
July 31, 1997 and will continue in effect thereafter for
successive 12 month periods only if such continuance is
specifically approved at least annually by the Directors or by a
vote of the stockholders of the Fund and in either case by a
majority of the Directors who are not parties to this Agreement
or interested persons of any such party, at a meeting called for
the purpose of voting on this Agreement.
SECTION 36. This Agreement shall extend to and shall
bind the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of Fund
Services or by Fund Services without the written consent of the
Fund, authorized or approved by a resolution of the Fund's
Directors. Notwithstanding the foregoing, either party may
assign this Agreement without the consent of the other party so
long as the assignee is an affiliate, parent or subsidiary of the
assigning party and is qualified to act under the Investment
Company Act, as amended from time to time.
SECTION 38. This Agreement shall be governed by the
laws of the State of New Jersey.
27
<PAGE>
WITNESS the following signatures:
ALLIANCE/REGENT
SECTOR OPPORTUNITY FUND, INC.
BY:________________________
TITLE: President
_____________________
ALLIANCE FUND SERVICES, INC.
BY:________________________
TITLE: President
_____________________
28
00250232.AG2
<PAGE>
October 11, 1996
[Seward & Kissel Letterhead]
Alliance/Regent Sector
Opportunity Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We have acted as counsel for Alliance/Regent Sector
Opportunity Fund, Inc., a Maryland corporation (the "Company"),
in connection with the organization of the Company, the
registration of the Company under the Investment Company Act of
1940, as amended, and the registration of an indefinite number of
shares of its common stock, par value $.001 per share (the
"Common Stock"), under the Securities Act of 1933, as amended.
As counsel for the Company we have participated in the
preparation of the Registration Statement on Form N-1A relating
to such shares (the "Registration Statement") and have 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:
1. The Company is duly organized and validly
existing as a corporation in good standing under the laws of
the State of Maryland.
2. 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 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 and legally
issued and will be fully paid and nonassessable shares of
Common Stock of the Company under the laws of the State of
Maryland (assuming that the sale price of each share is not
less than the par value thereof).
As to matters of Maryland law contained in the
foregoing opinion, we have relied on the opinion of Venable,
<PAGE>
Baetjer and Howard, LLP of Baltimore, Maryland, dated
October 11, 1996, a copy of which is included in the
Registration Statement as Exhibit 10(b).
We hereby consent to the filing of this opinion
with the Securities and Exchange Commission as an exhibit to
the Registration Statement and to the reference to our firm
under the caption "General Information--Counsel" in the
Statement of Additional Information included therein.
Very truly yours,
/s/ Seward & Kissel
00250232.AH6
<PAGE>
October 11, 1996
[Venable, Baetjer and Howard, LLP Letterhead]
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
Re: Alliance/Regent Sector Opportunity Fund, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for
Alliance/Regent Sector Opportunity Fund, Inc., a Maryland
corporation (the "Fund"), in connection with the organization of
the Fund and the issuance of shares of its Class A Common Stock,
Class B Common Stock, Class C Common Stock, and Advisor Class
Common Stock, par value $.001 per share (each a "Class" and,
collectively the "Shares").
As special Maryland counsel for the Fund, we are
familiar with its Charter and Bylaws. We have examined the
prospectuses included in its Registration Statement on Form N-1A,
File Nos.333-08193; 811-07709 (the "Registration Statement"),
substantially in the form in which it is to become effective (the
"Prospectuses"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and
Taxation to the effect that the Fund is duly incorporated and
existing under the laws of the State of Maryland and is in good
standing and duly authorized to transact business in the State of
Maryland.
We have also examined and relied upon such corporate
records of the Fund and other documents and certificates with
respect to factual matters as we have deemed necessary to render
the opinion expressed herein. We have assumed, without
independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and
the conformity with originals of all documents submitted to us as
copies.
Based on such examination, we are of the opinion and so
advise you that:
1. The Fund is duly organized and validly existing as
a corporation in good standing under the laws of
the State of Maryland.
<PAGE>
2. The Shares of the Fund to be offered for sale
pursuant to the Prospectuses are, to the extent of
the respective number of Shares of each Class
authorized to be issued by the Fund in its Charter,
duly authorized and, when sold, issued and paid for
as contemplated by the Registration Statement, will
have been validly and legally issued and will be
fully paid and nonassessable under the laws of the
State of Maryland (assuming that the sale price of
each share is not less than the par value thereof).
This letter expresses our opinion with respect to the
Maryland General Corporation Law. It does not extend to the
securities or "blue sky" laws of Maryland, to federal securities
laws or to other laws.
You may rely upon our foregoing opinion in rendering
your opinion to the Fund that is to be filed as an exhibit to the
Registration Statement. We consent to the filing of this opinion
as an exhibit to the Registration Statement and to the reference
to us in the Statement of Additional Information supplementing
the Prospectuses under the caption "Counsel". We do not thereby
admit that we are "experts" within the meaning of the Securities
Act of 1933 and the regulations thereunder.
Very truly yours,
/s/ Venable, Baetjer and
Howard, LLP
00250232.AG0
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Shareholder Services-Statements and Reports" and "General
Information-Independent Auditors" and to the use of our
report dated October 10, 1996, in this Pre-Effective
Amendment to the Registration Statement (Form N-1A Nos. 333-
08193) of Alliance/Regent Sector Opportunity Fund, Inc.
/s/ Ernst & Young LLP
New York, New York
October 10, 1996
00250232/AH5
<PAGE>
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
October 11, 1996
Alliance/Regent Sector Opportunity Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Gentlemen:
In connection with our purchase of 10 shares of
Class A Common Stock, 10 shares of Class B Common Stock, 10
shares of Class C Common Stock and 10,000 shares of Advisor
Class Common Stock of Alliance/Regent Sector Opportunity
Fund, Inc. (the "Corporation") for an aggregate cash
consideration of One Hundred Thousand Three Hundred Dollars
($100,300), this will confirm that we are buying such shares
for investment for our account only, and not with a view to
reselling or otherwise distributing them.
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation,
its General Partner
By: /s/ Robert H. Joseph, Jr.
_________________________
Robert H. Joseph, Jr.
Senior Vice President and
Chief Financial Officer
00250232.AG1
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.
Plan pursuant to Rule 18f-3
under the Investment Company Act of 1940
This Plan (the "Plan") pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the "Act") of Alliance/Regent
Sector Opportunity Fund, Inc. (the "Fund") sets forth the general
characteristics of, and the general conditions under which the
Fund may offer, multiple classes of shares of its now existing
and hereafter created portfolios.1 This Plan may be revised or
amended from time to time as provided below.
Class Designations
The Fund2 may from time to time issue one or more of the
following classes of shares: Class A shares, Class B shares,
Class C shares and Advisor Class shares. Each of the four
classes of shares will represent interests in the same portfolio
of investments of the Fund and, except as described herein, shall
have the same rights and obligations as each other class. Each
class shall be subject to such investment minimums and other
conditions of eligibility as are set forth in the prospectus or
statement of additional information through which such shares are
issued, as from time to time in effect (the "Prospectus").
Class Characteristics
Class A shares are offered at a public offering price
that is equal to their net asset value ("NAV") plus an initial
sales charge, as set forth in the Prospectus. Class A shares may
also be subject to a Rule 12b-1 fee, which may include a service
fee and, under certain circumstances, a contingent deferred sales
charge ("CDSC"), as described in the Prospectus.
Class B shares are offered at their NAV, without an
initial sales charge, and may be subject to a CDSC and a Rule
____________________
1. This Plan is intended to allow the Fund to offer multiple
classes of shares to the full extent and in the manner
permitted by Rule 18f-3 under the Act (the "Rule"), subject
to the requirements and conditions imposed by the Rule.
2. For purposes of this Plan, if the Fund has existing more than
one portfolio pursuant to which multiple classes of shares
are issued, then references in this Plan to the "Fund" shall
be deemed to refer instead to each portfolio.
12b-1 fee, which may include a service fee, as described in the
Prospectus.
Class C shares are offered at their NAV, without an
initial sales charge, and may be subject to a CDSC and a Rule
12b-1 fee, which may include a service fee, as described in the
Prospectus.
Advisor Class shares are offered at their NAV, without
any initial sales charge, CDSC or Rule 12b-1 fee.
The initial sales charge on Class A shares and CDSC on
Class A, B and C shares are each subject to reduction or waiver
as permitted by the Act, and as described in the Prospectus.
Allocations to Each Class
Expense Allocations
The following expenses shall be allocated, to the extent
practicable, on a class-by-class basis: (i) Rule 12b-1 fees
payable by the Fund to the distributor or principal underwriter
of the Fund's shares (the "Distributor"), and (ii) transfer
agency costs attributable to each class. Subject to the approval
of the Fund's Board of Directors, including a majority of the
independent Directors, the following "Class Expenses" may be
allocated on a class-by-class basis: (a) printing and postage
expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxy statements to current
shareholders of a specific class,3 (b) SEC registration fees
incurred with respect to a specific class, (c) blue sky and
foreign registration fees and expenses incurred with respect to a
specific class, (d) the expenses of administrative personnel and
services required to support shareholders of a specific class
(including, but not limited to, maintaining telephone lines and
personnel to answer shareholder inquiries about their accounts or
about the Fund), (e) litigation and other legal expenses relating
to a specific class of shares, (f) Directors' fees or expenses
incurred as a result of issues relating to a specific class of
shares, (g) accounting and consulting expenses relating to a
specific class of shares, (h) any fees imposed pursuant to a non-
Rule 12b-1 shareholder services plan that relate to a specific
class of shares, and (i) any additional expenses, not including
advisory or custodial fees or other expenses related to the
____________________
3. For Advisor Class shares, the expenses of preparation,
printing and distribution of prospectuses and shareholder
reports, as well as other distribution-related expenses, will
be borne by the investment adviser of the Fund (the
"Adviser") or the Distributor from their own resources.
2
management of the Fund's assets, if these expenses are actually
incurred in a different amount with respect to a class, or if
services are provided with respect to a class that are of a
different kind or to a different degree than with respect to one
or more other classes.
All expenses not now or hereafter designated as Class
Expenses ("Fund Expenses") will be allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund.
However, notwithstanding the above, the Fund may
allocate all expenses other than Class Expenses on the basis of
relative net assets (settled shares), as permitted by Rule 18f-
3(c)(2) under the Act.
Waivers and Reimbursements
The Adviser or Distributor may choose to waive or
reimburse Rule 12b-1 fees, transfer agency fees or any Class
Expenses on a voluntary, temporary basis. Such waiver or
reimbursement may be applicable to some or all of the classes and
may be in different amounts for one or more classes.
Income, Gains and Losses
Income, and realized and unrealized capital gains and
losses shall be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of
the Fund.
Conversion and Exchange Features
Conversion Features
Class B shares of the Fund automatically convert to
Class A shares of the Fund after a certain number of months or
years after the end of the calendar month in which the
shareholder's purchase order was accepted as described in the
Prospectus. Class B shares purchased through reinvestment of
dividends and distributions will be treated as Class B shares for
all purposes except that such Class B shares will be considered
held in a separate sub-account. Each time any Class B shares in
the shareholder's account convert to Class A shares, an equal
pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares.
Advisor Class shares of the Fund automatically convert
to Class A shares of the Fund during the calendar month following
the month in which the Fund is informed that the beneficial owner
of the Advisor Class shares has ceased to participate in a fee-
3
based program or employee benefit plan that satisfies the
requirements to purchase Advisor Class shares as described in the
Prospectus or the shareholder is otherwise no longer eligible to
purchase Advisor Class shares as provided in the Prospectus.
The conversion of Class B and Advisor Class shares to
Class A shares may be suspended if the opinion of counsel
obtained by the Fund that the conversion does not constitute a
taxable event under current federal income tax law is no longer
available. Class B and Advisor Class shares will convert into
Class A shares on the basis of the relative net asset value of
the two classes, without the imposition of any sales load, fee or
other charge.
In the event of any material increase in payments
authorized under the Rule 12b-1 Plan (or, if presented to
shareholders, any material increase in payments authorized by a
non-Rule 12b-1 shareholder services plan) applicable to Class A
shares, existing Class B and Advisor Class shares will stop
converting into Class A shares unless the Class B and Advisor
Class shareholders, voting separately as a class, approve the
increase in such payments. Pending approval of such increase, or
if such increase is not approved, the Directors shall take such
action as is necessary to ensure that existing Class B and
Advisor Class shares are exchanged or converted into a new class
of shares ("New Class A") identical in all material respects to
Class A shares as existed prior to the implementation of the
increase in payments, no later than such shares were previously
scheduled to convert to Class A shares. If deemed advisable by
the Directors to implement the foregoing, such action may include
the exchange of all existing Class B and Advisor Class shares for
new classes of shares ("New Class B" and "New Advisor Class,"
respectively) identical to existing Class B and Advisor Class
shares, except that New Class B and New Advisor Class shares
shall convert to New Class A shares. Exchanges or conversions
described in this paragraph shall be effected in a manner that
the Directors reasonably believe will not be subject to federal
income taxation. Any additional cost associated with the
creation, exchange or conversion of New Class A, New Class B and
New Advisor Class shares shall be borne by the Adviser and the
Distributor. Class B and Advisor Class shares sold after the
implementation of the fee increase may convert into Class A
shares subject to the higher maximum payment, provided that the
material features of the Class A plan and the relationship of
such plan to the Class B and Advisor Class shares are disclosed
in an effective registration statement.
4
Exchange Features
Shares of each class generally will be permitted to be
exchanged only for shares of a class with similar characteristics
in another Alliance Mutual Fund and shares of certain Alliance
money market funds, except that certain holders of Class A shares
of the Fund eligible to purchase and hold Advisor Class shares of
the Fund may also exchange their Class A shares for Advisor Class
shares. If the aggregate net asset value of shares of all
Alliance Mutual Funds held by an investor in the Fund reaches the
minimum amount at which an investor may purchase Class A shares
at net asset value without a front-end sales load on or before
December 15 in any year, then all Class B and Class C shares of
the Fund held by that investor may thereafter be exchanged, at
the investor's request, at net asset value and without any front-
end sales load or CDSC for Class A shares of the Fund. All
exchange features applicable to each class will be described in
the Prospectus.
Dividends
Dividends paid by the Fund with respect to its Class A,
Class B, Class C and Advisor Class shares, to the extent any
dividends are paid, will be calculated in the same manner, at the
same time and will be in the same amount, except that any Rule
12b-1 fee payments relating to a class of shares will be borne
exclusively by that class and any incremental transfer agency
costs or, if applicable, Class Expenses relating to a class shall
be borne exclusively by that class.
Voting Rights
Each share of a Fund entitles the shareholder of record
to one vote. Each class of shares of the Fund will vote
separately as a class with respect to the Rule 12b-1 plan
applicable to that class and on other matters for which class
voting is required under applicable law. Class A, Class B and
Advisor Class shareholders will vote as three separate classes to
approve any material increase in payments authorized under the
Rule 12b-1 plan applicable to Class A shares.
Responsibilities of the Directors
On an ongoing basis, the Directors will monitor the Fund
for the existence of any material conflicts among the interests
of the four classes of shares. The Directors shall further
monitor on an ongoing basis the use of waivers or reimbursement
by the Adviser and the Distributor of expenses to guard against
cross-subsidization between classes. The Directors, including a
majority of the independent Directors, shall take such action as
is reasonably necessary to eliminate any such conflict that may
5
develop. If a conflict arises, the Adviser and Distributor, at
their own cost, will remedy such conflict up to and including
establishing one or more new registered management investment
companies.
Reports to the Directors
The Adviser and Distributor will be responsible for
reporting any potential or existing conflicts among the four
classes of shares to the Directors. In addition, the Directors
will receive quarterly and annual statements concerning
distributions and shareholder servicing expenditures complying
with paragraph (b)(3)(ii) of Rule 12b-1. In the statements, only
expenditures properly attributable to the sale or servicing of a
particular class of shares shall be used to justify any
distribution or service fee charged to that class. The
statements, including the allocations upon which they are based,
will be subject to the review of the independent Directors in the
exercise of their fiduciary duties. At least annually, the
Directors shall receive a report from an expert, acceptable to
the Directors, (the "Expert"), with respect to the methodology
and procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The report of the Expert
shall also address whether the Fund has adequate facilities in
place to ensure the implementation of the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The Fund and the Adviser
will take immediate corrective measures in the event of any
irregularities reported by the Expert.
Amendments
The Plan may be amended from time to time in accordance
with the provisions and requirements of Rule 18f-3 under the Act.
Adopted by action of the Board of Directors this ___th day of October,
1996.
By: _____________________
Edmund P. Bergan, Jr.
Secretary
6
00250232.AF2
