<PAGE>
As filed with the Securities and Exchange
Commission on June 19, 1997
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.
Post-Effective Amendment No. 1 X
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 3 X
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.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
Location in Prospectus
N-1A Item No. (Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis The Funds at a Glance; Expense
Information
Item 3. Condensed Financial
Information Financial Highlights
Item 4. General Description Description of the Fund;
of Registrant General Information
Item 5. Management of the Management of the Fund; General
Fund Information
Item 6. Capital Stock and Dividends, Distributions and
Other Securities Taxes; General Information
Item 7. Purchase of Securities Purchase and Sale of Shares;
Being Offered General Information
Item 8. Redemption or Purchase and Sale of Shares;
Repurchase General Information
Item 9. Pending Legal Not Applicable
Proceedings
<PAGE>
Location in Statement of
Additional Information
PART B (Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information Description of the Fund;
and History General Information
Item 13. Investment Objectives Description of the Fund
and Policies
Item 14. Management of the Management of the Fund
Registrant
Item 15. Control Persons and Management of the Fund; General
Principal Holders of Information
Securities
Item 16. Investment Advisory and Management of the Fund,
Other Services Expenses of the Fund, General
Information
Item 17. Brokerage Allocation Brokerage and Portfolio
and Other Practices Transactions
Item 18. Capital Stock and Other General Information
Securities
Item 19. Purchase, Redemption Purchase of Shares; Redemption
and Pricing of and Repurchase of Shares;
Securities Being Offered 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>
<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
June 17, 1997
Table of Contents....................................Page
The Fund at a Glance................................. 2
Expense Information.................................. 3
Financial Highlights................................. 4
Glossary............................................. 5
Description of the Fund.............................. 6
Investment Objective............................ 6
Investment Policies............................. 6
Additional Investment Policies and Practices.... 6
Certain Fundamental Investment Policies......... 8
Purchase and Sale of Shares.......................... 8
Management of the Fund............................... 11
Dividends, Distributions and Taxes................... 13
General Information.................................. 14
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 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 June 17, 1997, 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(R)
Investing without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>
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 $182
billion in assets under management as of March 31, 1997. Alliance provides
investment management services to employee benefit plans for 31 of the FORTUNE
100 companies. In rendering its services, Alliance will act through its Regent
Investor Services Division ("Regent"). Regent manages in excess of $2.6 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. In pursuing its investment objectives,
the Fund will from time to time focus its investments in one or more economic
sectors or industries. To the extent the Fund focuses its investments in one or
more sectors or industries, the Fund would be subject to the general risks
associated with investments in that sector or industry to a greater extent than
a fund that has not focused its investments in any one sector or industry. These
risks may include economic as well as regulatory risks which may impact a
particular economic sector or industry and thereby would impact the Fund if it
emphasized its investments in that same sector or industry.
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 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(R)
Investing without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
2
<PAGE>
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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 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.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
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, decreasing first year,
1.0% annually to 0% thereafter
0% after the
fourth year(b)
Exchange fee...................................................... None None None
</TABLE>
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(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 8.
(b) Class B shares automatically convert to Class A shares after eight years.
See "Purchase and Sale of Shares--How to Buy Shares"--page 8.
<TABLE>
<CAPTION>
OPERATING EXPENSES CLASS A CLASS B CLASS C
-------------- -------------- --------------
<S> <C> <C> <C>
Management fees (after waiver) (a)............................ 0.00% 0.00% 0.00%
12b-1 fees.................................................... .30% 1.00% 1.00%
Other expenses (after reimbursement)(b)(c).................... 2.70% 2.70% 2.70%
---- ---- ----
Total fund operating expenses (after waiver/reimbursement)(c). 3.00% 3.70% 3.70%
==== ==== ====
EXAMPLE....................................................... CLASS A CLASS B+ CLASS B++ CLASS C+ CLASS C++
--------- ---------- ----------- ---------- -----------
After 1 year.................................................. $72 $77 $37 $47 $37
After 3 years................................................. $131 $133 $113 $113 $113
</TABLE>
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+ Assumes redemption at end of period.
++ Assumes no redemption at end of period.
(a) Net of voluntary fee waiver. Absent such waiver management fee would have
been .75%.
(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 account.
(c) Net of voluntary fee waivers and reimbursements. Absent such fee waivers and
reimbursements, total fund operating expenses would be 23.22%, 19.26 and
29.21% for Class A, B and C, respectively.
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.
3
<PAGE>
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FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table presents per share income and capital changes for a share
outstanding throughout the period indicated for the Fund. The information in the
table is unaudited. The following information should be read in conjunction with
the financial statements and related notes which are included in the Fund's
Statement of Additional Information.
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
December 16, December 16, December 16,
1996(a) 1996(a) 1996(a)
to to to
February 28, 1997 February 28, 1997 February 28,
(unaudited) (unaudited) (unaudited)
----------------- ----------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period................... $10.00 $10.00 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment loss (b)................................ (.14) (.02) (.02)
Net realized and unrealized gain on investments........ .50 .38 .38
------ ------ ------
Net increase in net asset value from operations........ .36 .36 .36
------ ------ ------
Net asset value, end of period......................... $10.36 $10.36 $10.36
====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net asset value (c)... 3.60% 3.60% 3.60%
RATIO/SUPPLEMENTAL DATA
- -----------------------
Net assets, end of period (000's omitted).............. $544 $786 $5
Ratio to average net assets of:
Expenses, under current cap (d)(e)................ 3.00% 3.70% 3.70%
Expenses, net of waivers/reimbursement (d)(f).......... 9.30% 3.70% 13.90%
Net investment loss (d)........................... (7.42)% (1.59)% (10.61)%
Portfolio turnover rate................................ 3% 3% 3%
Average commission rate................................ $.0500 $.0500 $.0500
</TABLE>
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(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment return calculated for a period of
less than one year is not annualized.
(d) Annualized.
(e) Expense cap in effect as of January 13, 1997.
(f) Net of expenses waived/reimbursed by the Adviser. Absent such
waivers/reimbursements the expense ratios would have been 23.22%. 19.26%,
and 29.21%, for Class A, Class B, and Class C Shares, respectively, for the
period ending February 28, 1997.
4
<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.
5
<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;
- - 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.
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
6
<PAGE>
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 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 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.
7
<PAGE>
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.
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 at a price based on the next calculation of
their net asset value after receipt of a proper purchase order either 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, Inc., the Funds registrar, transfer agent and dividend disbursing
agent ("AFS"). Telephone purchase orders can be made by calling (800) 221-5672
and may not exceed $500,000.
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 there appears to be 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.
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
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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 than 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 their original cost 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 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, as long as the shares are held for one
year or more, no CDSC. 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
$1,000,000.
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 by
(i) accounts established under a fee-based program sponsored and maintained by a
registered broker-dealer or other financial intermediary and approved by AFD,
(ii) 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) certain other categories of investors described in the prospectus for the
Advisor Class, including 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 obtain more
information about Advisor Class shares by contacting AFS at (800) 221-5672 or by
contacting your financial representative.
A transaction, service, administrative or other similar fee may be charged by
your broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of Class A, Class
B or Class C shares made through such financial representative. Such financial
intermediaries may also impose requirements with respect to the purchase, sale
or exchange of shares that are different from, or in addition to, those imposed
by the Fund, including requirements as to the minimum initial and subsequent
investment amounts.
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 EQ Financial Consultants, 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.
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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 FINANCIAL REPRESENTATIVE
Your broker 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 (less any applicable
CDSC). 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 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 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 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 his or her 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 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
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 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 March 31, 1997 of more than $182 billion (of which
more than $66 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 52 registered investment companies managed by Alliance comprising 115
separate investment portfolios currently have over two million shareholders. As
of March 31, 1997, Alliance was retained as an investment manager of employee
benefit plan assets for 31 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.
As of March 31, 1997 Regent had approximately $2.6 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 research and 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 33 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. As of March 31, 1997, the assets in the Historical
Portfolio totalled approximately $320 million. The average size of an
institutional account in the Historical Portfolio is $9.7 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 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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SCHEDULE OF INVESTMENT PERFORMANCE - HISTORICAL
PORTFOLIO
Historical S&P 500
Portfolio Total
Average Annual Total Return Total Return Return
- --------------------------- ------------ -------
4/1/94 - 12/31/94* 6.54% 7.14%
1/1/95 - 12/31/95 40.36% 37.55%
1/1/96 - 12/31/96 28.91% 22.92%
Cumulative Total Return
- -----------------------
4/1/94 - 3/31/97 90.76% 82.85%
- ----------
* Annualized
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
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, 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 for
distribution expenses 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. 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 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.
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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 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 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
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.
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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 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.
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.
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
14
<PAGE>
SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
(see instructions at the front of the application)
- --------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION (PLEASE PRINT)
- --------------------------------------------------------------------------------
[_] INDIVIDUAL OR JOINT ACCOUNT
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Owner's Name (First Name) (MI) (Last Name)
[_][_][_]-[_][_]-[_][_][_][_]
Social Security Number (Required to open account)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Joint Owner's Name* (First Name) (MI) (Last Name)
*Joint Tenants with right of survivorship unless Alliance Fund Services is
informed otherwise.
[_] GIFT/TRANSFER TO A MINOR
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Custodian - One Name Only (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Minor (First Name) (MI) (Last Name)
[_][_][_]-[_][_]-[_][_][_][_]
Minor's Social Security Number (Required to open account)
Under the State of (Minor's Residence) Uniform Gifts/Transfer to
------
Minor's Act
[_] Trust Account
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trustee
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trust
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trust (cont'd)
[_][_][_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_][_][_][_][_][_][_]
Trust Dated Tax ID or Social Security Number
(Required to open account)
[_] Other
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Corporation, Partnership, Investment Only Retirement Plan or other
Entity
[_][_][_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_][_][_][_][_][_][_]
Tax ID Number Trustee Name (Retirement Plans Only)
- --------------------------------------------------------------------------------
2. YOUR ADDRESS
- --------------------------------------------------------------------------------
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Street
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
City State Zip Code
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
If Non-U.S., Specify Country
[_][_][_] - [_][_][_] - [_][_][_][_] [_][_][_] - [_][_][_] - [_][_][_][_]
Daytime Phone Evening Phone
I am a: [_] U.S. Citizen [_] Non-Resident Alien
[_] Resident Alien [_] Other
For Alliance Use Only
<PAGE>
- --------------------------------------------------------------------------------
3. YOUR INITIAL INVESTMENT
- --------------------------------------------------------------------------------
THE MINIMUM INVESTMENT IS $250 PER FUND.THE MAXIMUM INVESTMENT IN CLASS B IS
$250,000; CLASS C IS $1,000,000.
I hereby subscribe for shares of Alliance/Regent Sector Opportunity Fund and
elect distribution options as indicated.
Dividend and Capital Gain R Reinvest distributions into
- ----------------------
Distribution Options: my fund account.
C Send my distributions in cash to the
- -----------------------------
---------------------- address I have provided in Section 2.
Broker/Dealer Use Only (Complete Section 4D for direct deposit
Wire Confirm # to your bank account. Complete Section 4E
---------------------- for payment to a third party)
---------------------- D Direct my distributions to another
- ----------------------------------
Alliance fund. Complete the appropriate
-------------
portion of Section 4A to direct your
distributions (dividends and capital
gains) to another Alliance Fund (the $250
minimum investment requirement applies to
Funds into which distributions are
directed).
<TABLE>
<S> <C> <C>
- ---------------------------------------------- ---------------------------------------------- -----------------------------
MAKE ALL CHECKS PAYABLE TO: CLASS OF SHARES DISTRIBUTIONS OPTIONS *CIRCLE*
ALLIANCE FUND SERVICES ----------------------------------------------
- ---------------------------------------------- CONTINGENT -----------------------------
INITIAL SALES DEFERED ASSET-BASED
ALLIANCE FUND NAME CHARGE SALES CHARGE SALES CHARGE DIVIDENDS CAPITAL GAINS
A B C
- ---------------------------------------------- --------------- ------------ --------------- -----------------------------
Alliance/Regent Sector Opportunity Fund $ R C D R C D
- ---------------------------------------------- --------------- ------------ --------------- -----------------------------
R C D R C D
- ---------------------------------------------- --------------- ------------ --------------- -----------------------------
R C D R C D
- ---------------------------------------------- --------------- ------------ --------------- -----------------------------
R C D R C D
- ---------------------------------------------- --------------- ------------ --------------- -----------------------------
R C D R C D
- ---------------------------------------------- --------------- ------------ --------------- -----------------------------
TOTAL INVESTMENT $ $ $
- ---------------------------------------------- ----------------------------------------------
</TABLE>
<PAGE>
MY SOCIAL SECURITY (TAX IDENTIFICATION) NUMBER IS: [_][_][_][_][_][_][_][_][_]
- --------------------------------------------------------------------------------
4. YOUR SHAREHOLDER OPTIONS
- --------------------------------------------------------------------------------
A. AUTOMATIC INVESTMENT PLANS (AIP)
- ------------------------------------
[_] WITHDRAW FROM MY BANK ACCOUNT
I authorize Alliance to draw on my bank account for investment in my fund
account(s) as indicated below (Complete Section 4D also for the bank account you
wish to use).
<TABLE>
<CAPTION>
Monthly Dollar Amount Day of Withdrawal
Fund Name ($25 minimum) (1st thru 31st) Circle "all" or applicable months
<S> <C> <C> <C>
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
</TABLE>
Your bank must be a member of the National Automated Clearing House
Association (NACHA).
[_] DIRECT MY DISTRIBUTIONS
As indicated in Section 3, I would like my dividends and/or capital gains
directed to another Alliance fund within the same class of shares.
<TABLE>
<CAPTION>
"From" Fund Account #
"From" Fund Name (if existing) "To" Fund Name "To" Fund Account # (if existing)
<S> <C> <C> <C>
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
</TABLE>
[_] EXCHANGE SHARES MONTHLY
I authorize Alliance to transact monthly exchanges between my fund accounts as
listed below within the same class of shares.
<TABLE>
<CAPTION>
"From" Fund Account # Dollar Amount Day of Exchange** "To" Fund Account #
"From" Fund Name (if existing) ($25 minimum) (1st thru 31st) "To" Fund Name (if existing)
<S> <C> <C> <C> <C> <C>
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
</TABLE>
**Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" (If the "Day of Exchange" is not a fund business day, the exchange
transaction will be processed on the next fund business day). The exchange
privilege is not available if stock certificates have been issued.
- -------------------------------------
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)
- -------------------------------------
In order to establish a SWP, you must reinvest all dividends and capital gains
and own or purchase shares of the Fund having a current net asset value of at
least:
. $10,000 for monthly payments, . $5,000 for bi-monthly payments,
. $4,000 for quarterly or less frequent payments
Your bank must be a member of the National Automated Clearing House Association
(NACHA) in order for you to receive SWP proceeds directly into your checking
account.
[_] I authorize Alliance to transact periodic redemptions from my fund account
and send the proceeds to me as indicated below.
<TABLE>
<CAPTION>
Dollar Amount ($50
Fund Name and Class of Shares minimum) Circle "all" or applicable months
<S> <C> <C>
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
</TABLE>
(1st-31st)
I would like to have these payments occur on or about the [ ]
of the months circled above.
PLEASE SEND MY PROCEEDS TO:
[_] MY CHECKING ACCOUNT (via EFT) - (Complete Section 4D)
[_] MY ADDRESS OF RECORD (via CHECK)
[_] THE PAYEE AND ADDRESS SPECIFIED IN SECTION 4E (via CHECK)
<PAGE>
- -------------------------------------
C. PURCHASES AND REDEMPTIONS VIA EFT
- -------------------------------------
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.
Instructions: . Review the information in the Prospectus about
telephone transaction services.
. If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face of a
check from the bank account you wish to use and attach
it to Section 4D of this application.
PURCHASES AND REDEMPTIONS VIA EFT
[_] I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my
telephone instructions or telephone instructions from my Broker/Agent,
and to withdraw money or credit money for such shares via EFT from the
bank account I have selected. In the case of shares purchased by check,
redemption proceeds may not be made available until the Fund is
reasonably assured that the check has cleared, normally 15 calendar days
after the purchase date.
- --------------------
D. BANK INFORMATION
- --------------------
This bank account information will be used for:
[_] Distributions (Section 3) [_] Automatic Investments (Section 4A)
[_] Systematic Withdrawals [_] Telephone Transactions
(Section 4B) (Section 4C)
Please attach a voided check:
TAPE PRE-PRINTED VOIDED CHECK HERE.
We Cannot Establish These Services Without It.
Your bank must be a member of the National Automated Clearing House
Association (NACHA) in order to have EFT transactions processed to your fund
account. For EFT transactions, the fund requires signatures of bank account
owners exactly as they appear on bank records.
- -------------------------------
E. THIRD PARTY PAYMENT DETAILS
- -------------------------------
This third party payee information will be used for:
[_] Distributions (Section 3) [_] Systematic Withdrawals (Section 4B)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 1
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 2
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 3
- ---------------------------------
F. REDUCED CHARGES (CLASS A ONLY)
- ---------------------------------
If you, your spouse or minor children own shares in other Alliance funds,
you may be eligible for a reduced sales charge. Please complete the Right of
Accumulation section or the Statement of Intent section.
A. RIGHT OF ACCUMULATION
[_] Please link the tax identification numbers or account numbers listed
below for Right of Accumulation priveleges, so that this and future
purchases will receive any discount for which they are eligible.
B. STATEMENT OF INTENT
[_] I want to reduce my sales charge by agreeing to invest the following
amount over a 13-month period:
[_] $100,000 [_] $250,000 [_] $500,000 [_] $1,000,000
If the full amount is not purchased within 13 months, I understand that
an additional sales charge must be paid from my account.
-------------------------- ------------------------- -----------------------
Tax ID or Account # Tax ID or Account # Tax ID or Account #
<PAGE>
- --------------------------------------------------------------------------------
5. SHAREHOLDER AUTHORIZATION THIS SECTION MUST BE COMPLETED
- --------------------------------------------------------------------------------
TELEPHONE EXCHANGES AND REDEMPTIONS BY CHECK
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an authorized
employee of an investment dealer or agent requesting a redemption or exchange on
my behalf. (NOTE: Telephone exchanges may only be processed between accounts
that have identical registrations.) Telephone redemption checks will only be
mailed to the name and address of record; and the address must have no change
within the last 30 days. The maximum telephone redemption amount is $50,000.
This service can be enacted once every 30 days.
[_] I do not elect the telephone exchange service.
---
[_] I do not elect the telephone redemption by check service.
---
I CERTIFY UNDER PENALTY OF PERJURY THAT THE NUMBER SHOWN IN SECTION 1 OF THIS
FORM IS MY CORRECT TAX IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER AND THAT
I HAVE NOT BEEN NOTIFIED THAT THIS ACCOUNT IS SUBJECT TO BACKUP WITHHOLDING.
By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my behalf,
that the Fund reasonably believes to be genuine, and that neither the Fund nor
any such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Fund at any time. I understand and agree that the
Fund reserves the right to refuse any telephone instructions and that my
investment dealer or agent reserves the right to refuse to issue any telephone
instructions I may request.
For non-residents only: Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.
I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING.
- ------------------------------------- -----------------------
Signature Date
- ------------------------------------- ----------------------- -----------------
Signature Date Acceptance Date
- --------------------------------------------------------------------------------
DEALER/AGENT AUTHORIZATION For selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
- ------------------------------------- -----------------------------------------
Dealer/Agent Firm Authorized Signature
- ------------------------------------- ------------ ----------------------------
Representative First Name MI Last Name
- --------------------------------------------------------------------------------
Representative Number
- --------------------------------------------------------------------------------
Branch Office Address
- --------------------------------------------------------------------------------
City State Zip Code
( )
- --------------------------------------------------------------------------------
Branch Number Branch Phone
<PAGE>
ALLIANCE SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
- --------------------------------------------------------------------------------
INFORMATION AND INSTRUCTIONS
- --------------------------------------------------------------------------------
TO OPEN YOUR NEW ALLIANCE ACCOUNT...
Please complete the application For certified or overnight
and mail it to: deliveries, send to:
ALLIANCE FUND SERVICES, INC. ALLIANCE FUND SERVICES, INC.
P.O. BOX 1520 500 PLAZA DRIVE
SECAUCUS, NEW JERSEY 07096-1520 SECAUCUS, NEW JERSEY 07094
- ---------
SECTION 1 YOUR ACCOUNT REGISTRATION (REQUIRED)
- ---------
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
. Individuals, Joint Tenants and Gift/Transfer to a Minor:
. Indicate your name(s) exactly as it appears on your social security
card.
. Trust/Other:
. Indicate the name of the entity exactly as it appeared on the
notice you received from the IRS when your Employer Identification
number was assigned.
- ---------
SECTION 2 YOUR ADDRESS (REQUIRED)
- ---------
Complete in full.
- ---------
SECTION 3 YOUR INITIAL INVESTMENT (REQUIRED)
- ---------
1) Write the dollar amount of your initial purchase in the column corresponding
to the class of shares you have chosen (If you are eligible for a reduced sales
charge, you must also complete Section 4F) 2) Circle a distribution option for
your dividends 3) Circle a distribution option for your capital gains. All
distributions (dividends and capital gains) will be reinvested into your fund
account unless you direct otherwise. If you want distributions sent directly to
your bank account, then you must complete Section 4D and attach a voided check
for that account. If you want your distributions sent to a third party you must
complete Section 4E.
- ---------
SECTION 4 YOUR SHAREHOLDER OPTIONS (COMPLETE ONLY THOSE OPTIONS YOU WANT)
- ---------
A. AUTOMATIC INVESTMENT PLANS (AIP) - You can make periodic investments into
any of your Alliance Funds in one of three ways. First, by a periodic
withdrawal ($25 minimum) directly from your bank account and invested into
an Alliance Fund. Second, you can direct your distributions (dividends and
capital gains) from one Alliance Fund into another Fund. Or third, you can
automatically exchange monthly ($25 minimum) shares of one Alliance Fund for
shares of another Fund. To elect one of these options, complete the
appropriate portion of Section 4A.
B. SYSTEMATIC WITHDRAWAL PLANS (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be
made via Electronic Funds Transfer (EFT) to your bank account or by check.
C. TELEPHONE TRANSACTIONS VIA EFT - Complete this option if you would like to
be able to transact via telephone between your fund account and your bank
account.
D. BANK INFORMATION - If you have elected any options that involve transactions
between your bank account and your fund account or have elected cash
distribution options and would like the payments sent to your bank account,
please tape a voided check of the account you wish to use to this section of
the application.
E. THIRD PARTY PAYMENT DETAILS - If you have chosen cash distributions and/or a
Systematic Withdrawal Plan and would like the payments sent to a person
and/or address other than those provided in section 1 or 2, complete this
option.
F. REDUCED CHARGES (CLASS A ONLY) - Complete if you would like to link fund
accounts that have combined balances that might exceed $100,000 so that
future purchases will receive discounts. Complete if you intend to purchase
over $100,000 within 13 months.
- ---------
SECTION 5 SHAREHOLDER AUTHORIZATION (REQUIRED)
- ---------
All owners must sign. If it is a custodial, corporate, or trust account, the
custodian, an authorized officer, or the trustee respectively must sign.
IF WE CAN ASSIST YOU IN ANY WAY, PLEASE DO NOT HESITATE TO CALL US AT: (800)
221-5672.
<PAGE>
<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)
June 17, 1997
Table of Contents Page
The Fund at a Glance................................. 2
Expense Information.................................. 3
Financial Highlights................................. 4
Glossary............................................. 5
Description of the Fund.............................. 6
Investment Objective............................ 6
Investment Policies............................. 6
Additional Investment Policies and Practices.... 6
Certain Fundamental Investment Policies......... 8
Purchase and Sale of Shares.......................... 8
Management of the Fund............................... 10
Dividends, Distributions and Taxes................... 11
Conversion Feature................................... 12
General Information.................................. 13
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 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 June 17, 1997, 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) certain other categories of investors described in the Prospectus,
including 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(R)
Investing without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>
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 $182
billion in assets under management as of March 31, 1997. Alliance provides
investment management services to employee benefit plans for 31 of the FORTUNE
100 companies. In rendering its services, Alliance will act through its Regent
Investor Services Division ("Regent"). Regent manages in excess of $2.6 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. In pursuing its investment objectives,
the Fund will from time to time focus its investments in one or more economic
sectors or industries. To the extent the Fund focuses its investments in one or
more sectors or industries, the Fund would be subject to the general risks
associated with investments in that sector or industry to a greater extent than
a fund that has not focused its investments in any one sector or industry. These
risks may include economic as well as regulatory risks which may impact a
particular economic sector or industry and thereby would impact the Fund if it
emphasized its investments in that same sector or industry.
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. ("AFD"), the Fund's principal
underwriter, (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, (iii) by investment advisory clients of, and certain other persons
associated with, Alliance and its affiliates or the Fund, and (iv) through
registered investment advisers or other financial intermediaries who charge a
management, consulting or other fee for their service and who purchase shares
through a broker or agent approved by AFD and clients of such registered
investment advisers or financial intermediaries whose accounts are linked to the
master account of such investment adviser or financial intermediary on the books
of such approved broker or agent. 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." Generally, a fee-based
program must charge an asset-based or other similar fee and must invest in the
aggregate at least $250,000 in Advisor Class shares of the Fund in order to be
approved by AFD for investment in Advisor Class shares. For more detailed
information about who may purchase and hold Advisor Class shares see the
Statement of Additional Information. Fee-based and other programs through which
Advisor Class shares may be purchased may impose different requirements with
respect to investment in Advisor Class shares than described above. For detailed
information about purchasing and selling shares, see "Purchase and Sale of
Shares."
ALLIANCE(R)
Investing without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
2
<PAGE>
- --------------------------------------------------------------------------------
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 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 (as a percentage of offering price)....... None
Sales charge imposed on dividend reinvestments........... None
Deferred sales charge............................... None
Exchange fee........................................ None
- --------------------------------------------------------------------------------
OPERATING EXPENSES ADVISOR CLASS
-------------
Management fees (after waiver)(a)........................ 0.00%
12b-1 fees............................................... None
Other expenses (after reimbursement)(b)(c)............... 2.70%
-----
Total fund operating
expenses (after waiver/reimbursement)(c)................ 2.70%
=====
EXAMPLE ADVISOR CLASS
-------------
After 1 year............................................. $27
After 3 years............................................ $84
- --------------------------------------------------------------------------------
(a) Net of voluntary fee waiver. Absent such fee waiver, management fees would
have been .75%.
(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.
(c) Net of voluntary fee waivers and reimbursements. Absent such fee waivers
and reimbursements, total fund operating expenses would be 22.57%. 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 the Fund will bear directly
or indirectly. The Example set forth above assumes reinvestment of all dividends
and distributions and utilizes 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.
3
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table presents per share income and capital changes for a share
outstanding throughout the period indicated for the Fund. The information in the
table is unaudited. The following information should be read in conjunction with
the financial statements and related notes which are included in the Fund's
Statement of Additional Information.
Advisor
Class
December 16,
1996(a)
to
February 28, 1997
(unaudited)
-----------------
Net asset value, beginning of period..................... $10.00
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment loss (b).................................. (.14)
Net realized and unrealized gain on investments.......... .50
------
Net increase in net asset value from operations.......... .36
------
Net asset value, end of period........................... $10.36
======
TOTAL RETURN
- ------------
Total investment return based on net asset value (c)..... 3.60%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted)................ $2,197
Ratio to average net assets of:
Expenses, under current cap (d)(e).................. 2.70%
Expenses, net of waivers/reimbursements (d)(f)...... 9.10%
Net investment loss (d)............................. (7.04)%
Portfolio turnover rate.................................. 3%
Average commission rate.................................. $.0500
- --------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment return calculated for a period of
less than one year is not annualized.
(d) Annualized.
(e) Expense cap in effect as of January 13, 1997.
(f) Net of expenses waived/reimbursed by the Advisor. Absent such
waivers/reimbursements the expense ratios would have been 22.57% for
Advisor Class Shares for the period ending February 28, 1997.
4
<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 Policies and 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.
5
<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;
. 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.
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
6
<PAGE>
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 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 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.
7
<PAGE>
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.
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,
(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,
(iii) by investment advisory clients of, and certain other persons associated
with, Alliance and its affiliates or the Fund, and (iv) through registered
investment advisers or other financial intermediaries who charge a management,
consulting or other fee for their service and who purchase shares through a
broker or agent approved by AFD and clients of such registered investment
advisers or financial intermediaries whose accounts are linked to the master
account of such investment adviser or financial intermediary on the books of
such approved broker or agent. 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."
Generally, a fee-based program must charge an asset-based or other similar fee
and must invest at least $250,000 in Advisor Class shares of the Fund in order
to be approved by AFD for investment in Advisor Class shares. 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 through 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
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.
8
<PAGE>
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 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 his or her 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.
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 Advisor Class shares
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 from those described in this Prospectus. A transaction, service,
administrative or other similar fee may be charged by your broker-dealer, agent,
financial intermediary or other financial representative with respect to the
purchase, sale or exchange of Advisor Class shares made through such financial
representative. Such financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are different from, or
in addition to, those imposed by the Fund, including requirements as to the
minimum initial and subsequent investment amounts.
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
9
<PAGE>
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 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 March 31, 1997 of more than $182 billion (of which
more than $66 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 52 registered investment companies managed by Alliance comprising 115
separate investment portfolios currently have over two million shareholders. As
of March 31, 1997 Alliance was retained as an investment manager of employee
benefit plan assets for 31 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 $2.6 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 research and 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 33 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. As of March 31, 1997, the assets in the Historical
Portfolio totalled approximately $320 million. The average size of an
institutional account in the Historical Portfolio is $9.7 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 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
10
<PAGE>
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.
SCHEDULE OF INVESTMENT PERFORMANCE --
HISTORICAL PORTFOLIO
Historical
Average Annual Total Return Portfolio S&P 500
- --------------------------- ---------- -------
4/1/94--12/31/94*................. 6.54% 7.14%
1/1/95--12/31/95.................. 40.36% 37.55%
1/1/96--12/31/96.................. 28.91% 22.92%
Cumulative Total Return
- -----------------------
4/1/94--3/31/97................... 90.76% 82.85%
- ----------
* Annualized
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
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, 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.
- --------------------------------------------------------------------------------
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 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.
Long-term capital gains distributions are not eligible for the dividends-
received deduction referred to above.
11
<PAGE>
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.
- --------------------------------------------------------------------------------
CONVERSION FEATURE
- --------------------------------------------------------------------------------
CONVERSION TO CLASS A SHARES
Advisor Class shares may be held solely through the fee-based program accounts,
employee benefit plans and registered investment advisory or other financial
intermediary relationships 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 the fee-based program or plan or to be associated with
the investment adviser or financial intermediary 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 annual expenses for Class
A shares of the Fund. The "Examples" to the table below show the cumulative
expenses attributable to a hypothetical $1,000 investment for the periods
specified.
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........................................ CLASS A
---------
Management fees (after waiver)(a)......................... 0.00%
12b-1 fees................................................ .30%
Other expenses (after reimbursement)(b)(c)................ 2.70%
----
Total fund operating expenses (after
waiver/reimbursement)(c)................................ 3.00%
====
EXAMPLE (d)............................................... CLASS A
---------
After 1 year.............................................. $ 30
After 3 years............................................. $ 93
- --------------------------------------------------------------------------------
(a) Net of voluntary fee waiver. Absent such fee waiver, management fees would
have been .75%.
(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.
(c) Net of voluntary fee waivers and reimbursements. Absent such fee waivers
and reimbursements, total fund operating expenses would be 23.22.
(d) 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.
12
<PAGE>
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 Class A shares of the Fund may pay
aggregate sales charges totaling more than the economic equivalent of the
maximum initial sales charges totaling permitted by the Conduct Rules of the
National Association of Securities Dealers, Inc. The Rule 12b-1 fee for Class A
comprises a service fee not exceeding .25% of the aggregate average daily net
assets of the Fund attributable to Class A and an asset-based sales charge equal
to the remaining portion of the Rule 12b-1 fee. "Other Expenses" for Class A
shares 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 Commission regulations.
The Example should not be considered representative of past or future expenses:
actual expenses may be greater or less than those shown.
FINANCIAL HIGHLIGHTS. The following table presents per share income and capital
changes for a Class A share outstanding throughout the period indicated for the
Fund. The information in the table is unaudited. The following information
should be read in conjunction with the financial statements and related notes
which are included in the Fund's Statement of Additional Information.
December 18,
1996(a)
to
February 28, 1997
(unaudited)
-----------------
Net asset value, beginning of period........................... $10.00
------
Income from Investment Operations
- ---------------------------------
Net Investment loss (b)........................................ (.14)
Net realized and unrealized gain on investments................ .50
------
Net increase in net asset value from operations................ .36
------
Net Asset value, end of period................................. $10.36
======
Total Return
- ------------
Total investment return based on net asset value (c)........... 3.60%
Ratio/Supplemental Data
- -----------------------
Net assets, end of period (000's omitted)...................... $ 544
Ratio to average net assets of:
Expenses, under current cap (d)(e)........................ 3.00%
Expenses, net of waivers/reinbursement (d)(f)............. 9.30%
Net Investment loss (d)................................... (7.42)%
Portfolio turnover rates....................................... 3%
Average commission rate........................................ $.0500
- --------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment return calculated for a period of
less than one year is not annualized.
(d) Annualized.
(e) Expense cap in effect as of January 13, 1997.
(f) Net of expenses waived/reimbursed by the Adviser. Absent such
waivers/reimbursements the expense ratio would have been 23.22% for Class A
Shares for the period ending February 28, 1997.
- --------------------------------------------------------------------------------
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. 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.
13
<PAGE>
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 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.
14
<PAGE>
SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
Advisor Class
(see instructions at the front of the application)
- --------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION (PLEASE PRINT)
- --------------------------------------------------------------------------------
[_] INDIVIDUAL OR JOINT ACCOUNT
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Owner's Name (First Name) (MI) (Last Name)
[_][_][_]-[_][_]-[_][_][_][_]
Social Security Number (Required to open account)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Joint Owner's Name* (First Name) (MI) (Last Name)
*Joint Tenants with right of survivorship unless Alliance Fund Services is
informed otherwise.
[_] GIFT/TRANSFER TO A MINOR
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Custodian - One Name Only (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Minor (First Name) (MI) (Last Name)
[_][_][_]-[_][_]-[_][_][_][_]
Minor's Social Security Number (Required to open account)
Under the State of (Minor's Residence) Uniform Gifts/Transfer to
------
Minor's Act
[_] Trust Account
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trustee
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trust
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trust (cont'd)
[_][_][_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_][_][_][_][_][_][_]
Trust Dated Tax ID or Social Security Number
(Required to open account)
[_] Other
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Corporation, Partnership, Investment Only Retirement Plan or other
Entity
[_][_][_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_][_][_][_][_][_][_]
Tax ID Number Trustee Name (Retirement Plans Only)
- --------------------------------------------------------------------------------
2. YOUR ADDRESS
- --------------------------------------------------------------------------------
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Street
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
City State Zip Code
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
If Non-U.S., Specify Country
[_][_][_] - [_][_][_] - [_][_][_][_] [_][_][_] - [_][_][_] - [_][_][_][_]
Daytime Phone Evening Phone
I am a: [_] U.S. Citizen [_] Non-Resident Alien
[_] Resident Alien [_] Other
For Alliance Use Only
<PAGE>
- --------------------------------------------------------------------------------
3. YOUR INITIAL INVESTMENT
- --------------------------------------------------------------------------------
I hereby subscribe for shares of Alliance/Regent Sector Opportunity Fund and
elect distribution options as indicated.
Dividend and Capital Gain R Reinvest distributions into
- ----------------------
Distribution Options: my fund account.
C Send my distributions in cash to the
- -----------------------------
---------------------- address I have provided in Section 2.
Broker/Dealer Use Only (Complete Section 4D for direct deposit
Wire Confirm # to your bank account. Complete Section 4E
---------------------- for payment to a third party)
---------------------- D Direct my distributions to another
- ----------------------------------
Alliance fund. Complete the appropriate
-------------
portion of Section 4A to direct your
distributions (dividends and capital
gains) to the Advisor Class Shares of
another Alliance Fund.
<TABLE>
<S> <C> <C>
- ---------------------------------------------- ----------------------- -----------------------------
MAKE ALL CHECKS PAYABLE TO: DISTRIBUTIONS OPTIONS *CIRCLE*
ALLIANCE FUND SERVICES ADVISOR CLASS
- ---------------------------------------------- -----------------------------
ALLIANCE FUND NAME DIVIDENDS CAPITAL GAINS
- ---------------------------------------------- ----------------------- -----------------------------
Alliance/Regent Sector Opportunity Fund $ R C D R C D
- ---------------------------------------------- ----------------------- -----------------------------
R C D R C D
- ---------------------------------------------- ----------------------- -----------------------------
R C D R C D
- ---------------------------------------------- ----------------------- -----------------------------
R C D R C D
- ---------------------------------------------- ----------------------- -----------------------------
R C D R C D
- ---------------------------------------------- ----------------------- -----------------------------
TOTAL INVESTMENT $
- ---------------------------------------------- -----------------------
</TABLE>
<PAGE>
MY SOCIAL SECURITY (TAX IDENTIFICATION) NUMBER IS: [_][_][_][_][_][_][_][_][_]
- --------------------------------------------------------------------------------
4. YOUR SHAREHOLDER OPTIONS
- --------------------------------------------------------------------------------
A. AUTOMATIC INVESTMENT PLANS (AIP)
- ------------------------------------
[_] WITHDRAW FROM MY BANK ACCOUNT
I authorize Alliance to draw on my bank account for investment in my fund
account(s) as indicated below (Complete Section 4D also for the bank account you
wish to use).
<TABLE>
<CAPTION>
Monthly Dollar Amount Day of Withdrawal
Fund Name ($25 minimum) (1st thru 31st) Circle "all" or applicable months
<S> <C> <C> <C>
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
</TABLE>
Your bank must be a member of the National Automated Clearing House
Association (NACHA).
[_] DIRECT MY DISTRIBUTIONS
As indicated in Section 3, I would like my dividends and/or capital gains
directed to another Alliance fund within the same class of shares.
<TABLE>
<CAPTION>
"From" Fund Account #
"From" Fund Name (if existing) "To" Fund Name "To" Fund Account # (if existing)
<S> <C> <C> <C>
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
[_] New
[_] Existing
- ------------------------------- -------------------------------- ----------------------- ---------------------------------
</TABLE>
[_] EXCHANGE SHARES MONTHLY
I authorize Alliance to transact monthly exchanges between my fund accounts as
listed below within the same class of shares.
<TABLE>
<CAPTION>
"From" Fund Account # Dollar Amount Day of Exchange** "To" Fund Account #
"From" Fund Name (if existing) ($25 minimum) (1st thru 31st) "To" Fund Name (if existing)
<S> <C> <C> <C> <C> <C>
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
[_] New
[_] Existing
- ------------------ ------------------------ ----------------- -------------------- -------------------- ------------------
</TABLE>
**Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" (If the "Day of Exchange" is not a fund business day, the exchange
transaction will be processed on the next fund business day). The exchange
privilege is not available if stock certificates have been issued.
- -------------------------------------
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)
- -------------------------------------
In order to establish a SWP, you must reinvest all dividends and capital gains
and own or purchase shares of the Fund having a current net asset value of at
least:
. $10,000 for monthly payments, . $5,000 for bi-monthly payments,
. $4,000 for quarterly or less frequent payments
Your bank must be a member of the National Automated Clearing House Association
(NACHA) in order for you to receive SWP proceeds directly into your checking
account.
[_] I authorize Alliance to transact periodic redemptions from my fund account
and send the proceeds to me as indicated below.
<TABLE>
<CAPTION>
Dollar Amount ($50
Fund Name and Class of Shares minimum) Circle "all" or applicable months
<S> <C> <C>
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
All J F M A M J J A S O N D
- ---------------------------------------------------------------- ----------------------- ---------------------------------
</TABLE>
(1st-31st)
I would like to have these payments occur on or about the [ ]
of the months circled above.
PLEASE SEND MY PROCEEDS TO:
[_] MY CHECKING ACCOUNT (via EFT) - (Complete Section 4D)
[_] MY ADDRESS OF RECORD (via CHECK)
[_] THE PAYEE AND ADDRESS SPECIFIED IN SECTION 4E (via CHECK)
<PAGE>
- -------------------------------------
C. PURCHASES AND REDEMPTIONS VIA EFT
- -------------------------------------
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.
Instructions: . Review the information in the Prospectus about
telephone transaction services.
. If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face of a
check from the bank account you wish to use and attach
it to Section 4D of this application.
PURCHASES AND REDEMPTIONS VIA EFT
[_] I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my
telephone instructions or telephone instructions from my Broker/Agent,
and to withdraw money or credit money for such shares via EFT from the
bank account I have selected. In the case of shares purchased by check,
redemption proceeds may not be made available until the Fund is
reasonably assured that the check has cleared, normally 15 calendar days
after the purchase date.
- --------------------
D. BANK INFORMATION
- --------------------
This bank account information will be used for:
[_] Distributions (Section 3) [_] Automatic Investments (Section 4A)
[_] Systematic Withdrawals [_] Telephone Transactions
(Section 4B) (Section 4C)
Please attach a voided check:
TAPE PRE-PRINTED VOIDED CHECK HERE.
We Cannot Establish These Services Without It.
Your bank must be a member of the National Automated Clearing House
Association (NACHA) in order to have EFT transactions processed to your fund
account. For EFT transactions, the fund requires signatures of bank account
owners exactly as they appear on bank records.
- -------------------------------
E. THIRD PARTY PAYMENT DETAILS
- -------------------------------
This third party payee information will be used for:
[_] Distributions (Section 3) [_] Systematic Withdrawals (Section 4B)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 1
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 2
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 3
<PAGE>
- --------------------------------------------------------------------------------
5. SHAREHOLDER AUTHORIZATION THIS SECTION MUST BE COMPLETED
- --------------------------------------------------------------------------------
TELEPHONE EXCHANGES AND REDEMPTIONS BY CHECK
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an authorized
employee of an investment dealer or agent requesting a redemption or exchange on
my behalf. (NOTE: Telephone exchanges may only be processed between accounts
that have identical registrations.) Telephone redemption checks will only be
mailed to the name and address of record; and the address must have no change
within the last 30 days. The maximum telephone redemption amount is $50,000.
This service can be enacted once every 30 days.
[_] I do not elect the telephone exchange service.
---
[_] I do not elect the telephone redemption by check service.
---
I CERTIFY UNDER PENALTY OF PERJURY THAT THE NUMBER SHOWN IN SECTION 1 OF THIS
FORM IS MY CORRECT TAX IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER AND THAT
I HAVE NOT BEEN NOTIFIED THAT THIS ACCOUNT IS SUBJECT TO BACKUP WITHHOLDING.
By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my behalf,
that the Fund reasonably believes to be genuine, and that neither the Fund nor
any such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Fund at any time. I understand and agree that the
Fund reserves the right to refuse any telephone instructions and that my
investment dealer or agent reserves the right to refuse to issue any telephone
instructions I may request.
For non-residents only: Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.
I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATION REQUIRED TO AVOID BACKUP WITHHOLDING.
- ------------------------------------- -----------------------
Signature Date
- ------------------------------------- ----------------------- -----------------
Signature Date Acceptance Date
- --------------------------------------------------------------------------------
DEALER/AGENT AUTHORIZATION For selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
- ------------------------------------- -----------------------------------------
Dealer/Agent Firm Authorized Signature
- ------------------------------------- ------------ ----------------------------
Representative First Name MI Last Name
- --------------------------------------------------------------------------------
Representative Number
- --------------------------------------------------------------------------------
Branch Office Address
- --------------------------------------------------------------------------------
City State Zip Code
( )
- --------------------------------------------------------------------------------
Branch Number Branch Phone
<PAGE>
ALLIANCE SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
ADVISOR CLASS
- --------------------------------------------------------------------------------
INFORMATION AND INSTRUCTIONS
- --------------------------------------------------------------------------------
TO OPEN YOUR NEW ALLIANCE ACCOUNT...
Please complete the application For certified or overnight
and mail it to: deliveries, send to:
ALLIANCE FUND SERVICES, INC. ALLIANCE FUND SERVICES, INC.
P.O. BOX 1520 500 PLAZA DRIVE
SECAUCUS, NEW JERSEY 07096-1520 SECAUCUS, NEW JERSEY 07094
- ---------
SECTION 1 YOUR ACCOUNT REGISTRATION (REQUIRED)
- ---------
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
. Individuals, Joint Tenants and Gift/Transfer to a Minor:
. Indicate your name(s) exactly as it appears on your social security
card.
. Trust/Other:
. Indicate the name of the entity exactly as it appeared on the
notice you received from the IRS when your Employer Identification
number was assigned.
- ---------
SECTION 2 YOUR ADDRESS (REQUIRED)
- ---------
Complete in full.
- ---------
SECTION 3 YOUR INITIAL INVESTMENT (REQUIRED)
- ---------
1) Write the dollar amount of your initial purchase 2) Circle a distribution
option for your dividends 3) Circle a distribution option for your capital
gains. All distributions (dividends and capital gains) will be reinvested into
your fund account unless you direct otherwise. If you want distributions sent
directly to your bank account, then you must complete Section 4D and attach a
voided check for that account. If you want your distributions sent to a third
party you must complete Section 4E.
- ---------
SECTION 4 YOUR SHAREHOLDER OPTIONS (COMPLETE ONLY THOSE OPTIONS YOU WANT)
- ---------
A. AUTOMATIC INVESTMENT PLANS (AIP) - You can make periodic investments into
any of your Alliance Funds in one of three ways. First, by a periodic
withdrawal ($25 minimum) directly from your bank account and invested into
an Alliance Fund. Second, you can direct your distributions (dividends and
capital gains) from one Alliance Fund into another Fund. Or third, you can
automatically exchange monthly ($25 minimum) shares of one Alliance Fund for
shares of another Fund. To elect one of these options, complete the
appropriate portion of Section 4A.
B. SYSTEMATIC WITHDRAWAL PLANS (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be
made via Electronic Funds Transfer (EFT) to your bank account or by check.
C. TELEPHONE TRANSACTIONS VIA EFT - Complete this option if you would like to
be able to transact via telephone between your fund account and your bank
account.
D. BANK INFORMATION - If you have elected any options that involve transactions
between your bank account and your fund account or have elected cash
distribution options and would like the payments sent to your bank account,
please tape a voided check of the account you wish to use to this section of
the application.
E. THIRD PARTY PAYMENT DETAILS - If you have chosen cash distributions and/or a
Systematic Withdrawal Plan and would like the payments sent to a person
and/or address other than those provided in section 1 or 2, complete this
option.
- ---------
SECTION 5 SHAREHOLDER AUTHORIZATION (REQUIRED)
- ---------
All owners must sign. If it is a custodial, corporate, or trust account, the
custodian, an authorized officer, or the trustee respectively must sign.
IF WE CAN ASSIST YOU IN ANY WAY, PLEASE DO NOT HESITATE TO CALL US AT: (800)
221-5672.
<PAGE>
ALLIANCE/REGENT SECTOR
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
June 17, 1997
_________________________________________________________________
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 dated June 17, 1997 and the current
Prospectus for the Fund that offers the Advisor Class shares of
the Fund dated June 17, 1997 (the "Advisor Class Prospectus" and,
together with the Prospectus that offers the Class A, Class B and
Class C shares of the fund, the "Prospectuses"). Copies of the
Prospectuses may be obtained by contacting Alliance Fund
Services, Inc. at the address or the "For Literature" telephone
number shown above.
TABLE OF CONTENTS
Page
Description of the Fund...............................
Management of the Fund................................
Expenses of the Fund..................................
Purchase of Shares....................................
Redemption and Repurchase of Shares...................
Shareholder Services..................................
Net Asset Value.......................................
Dividends, Distributions and Taxes....................
Brokerage and Portfolio Transactions..................
General Information...................................
Report of Independent Auditors
and Financial Statement...............................
<PAGE>
Appendix: Certain Investment Practices .............. A-1
(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.
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
3
<PAGE>
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
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
4
<PAGE>
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
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
5
<PAGE>
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
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.
6
<PAGE>
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) 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 (iv) 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.
7
<PAGE>
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.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
Directors and Officers
The Directors and principal officers of the Fund, their
ages and their principal occupations during the past five years
are set forth below. 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, 52,* Chairman and President of the Fund,
is the President and Chief Operating Officer, the Chief Financial
Officer and a Director of ACMC,** with which he has been
associated since prior to 1992.
RUTH BLOCK, 66, was formerly an Executive Vice President
and the Chief Insurance Officer of 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, 67, was formerly a Senior Vice
President of ACMC with which he had been associated since prior
____________________
* An "interested person" of the Fund as defined in the
Investment Company Act of 1940, as amended (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 same name.
8
<PAGE>
to 1992 through 1994. He is currently an Independent Consultant.
His address is P.O. Box 167, Spring Lake, New Jersey 07762.
JOHN H. DOBKIN, 55, has been the President of Historic
Hudson Valley (historic preservation) since 1992. From 1987 to
1992 he was a Director of ACMC. His address is Historic Hudson
Valley, 150 White Plains Road, Tarrytown, New York 10591.
WILLIAM H. FOULK, JR., 64, is an Investment Adviser and
an Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1992. His address is
2 Hekma Road, Greenwich, Connecticut 06831.
DR. JAMES M. HESTER, 73, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide
Corporation, with which he has been associated since prior to
1992. 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, 57, is a partner of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1992. He is President, Chief Executive Officer and
Director of Wenonah Development Company (investment holding
company) and a Director of Placer Dome, Inc. (mining). His
address is 80 Pine Street, New York, NY 10005.
DONALD J. ROBINSON, 62, was formerly a senior partner at
the law firm of Orrick, Herrington & Sutcliffe and is currently
of counsel to that firm. His address is 666 Fifth Avenue, 19th
Floor, New York, New York 10103.
Officers
JOHN D. CARIFA, Chairman, see biography above.
EUGENE J. LANCARIC, 41, 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 1992.
LANA GHENG-MINAFRA, 33, Vice President, is a Vice
President and Senior Analyst of Regent and has been employed at
Regent since 1992. Prior thereto Ms. Cheng-Minafra was a
financier in the Public Finance Department at BancBoston
Securities, Inc., an investment banking division at Bank of
Boston.
9
<PAGE>
THOMAS BARDONG, 52, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1992.
DANIEL V. PANKER, 58, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1992.
EDMUND P. BERGAN, JR., 47, Secretary, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS") with which
he has been associated since prior to 1992.
DOMENICK PUGLIESE, 36, Assistant Secretary, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since May 1995. Previously, he was Vice
President and Counsel of Concord Holding Corporation since 1994
and Vice President and Associate General Counsel of Prudential
Securities since 1992.
MARK D. GERSTEN, 46, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services
Inc., with which he has been associated since prior to 1992.
VINCENT S. NOTO, 32, Controller, is an Assistant Vice
President of Alliance Fund Services, with which he has been
associated since 1992.
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), the aggregate compensation paid to each of the
Directors during calendar year 1996 by all of the funds 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
pension 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.
10
<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- 50
Ruth Block 3,407 153,864 37
David H. Dievler 3,411 173,870 42
John H. Dobkin 3,440 114,050 29
William H. Foulk, Jr. 3,454 140,574 31
Dr. James M. Hester 3,394 144,857 37
Clifford L. Michel 3,394 122,357 37
Donald J. Robinson 3,381 50,479 36
____________________
* 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 1996.
As of June 2, 1997 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., a New York Stock
Exchange ("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 March 31,
1997 of more than $182 billion (of which more than $66 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. As of March 31, 1997, the
Adviser managed employee benefit assets for 31 of the FORTUNE 100
companies. As of that date, the Adviser and its subsidiaries
employed approximately 1,450 employees who operated out of five
domestic offices and the offices of subsidiaries in Bombay,
Istanbul, London, Paris, Sao Paolo, Sydney, Tokyo, Toronto,
Bahrain, Luxembourg and Singapore. Fifty-two registered
11
<PAGE>
investment companies comprising 110 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-UAP, a French insurance holding company. As of March 1,
1997, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
together with Equitable, owned in the aggregate approximately 58%
of the issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of March 1, 1997, approximately 33% and 9%
of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including an employee
of the Adviser who serves as a Director of the Fund.
As of March 1, 1997, AXA-UAP and its subsidiaries owned
60.7% of the issued and outstanding shares of the capital stock
of ECI. ECI is a public company with shares traded on the
Exchange. AXA-UAP, a French company, is the holding company for
an international group of insurance and related financial
services companies. AXA-UAP's insurance operations include
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities, principally in Western Europe, North America and
the Asia/Pacific area. AXA-UAP is also engaged in asset
management, investment banking, securities trading, brokerage,
real estate and other financial services activities principally
12
<PAGE>
in the United States, as well as in Western Europe and the
Asia/Pacific area.
Based on information provided by AXA-UAP, on March 1,
1997, 22.5% of the issued ordinary shares (representing 33.0% of
the voting power) of AXA-UAP were controlled directly and
indirectly by Finaxa, a French holding company. As of March 1,
1997, 61.4% of the shares (representing 72.0% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 34.9% of the shares, representing 40.0%
of the voting power), and 23.7% of the shares of Finaxa
(representing 14.6% of the voting power) were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary
shares owned by Finaxa, on March 1, 1997, the Mutuelles AXA
directly or indirectly controlled 26.0% of the issued ordinary
shares (representing 38.1% of the voting power) of AXA-UAP.
Acting as a group, the Mutuelles AXA control AXA-UAP and Finaxa.
In November 1996, AXA offered (the "Exchange Offer") to
acquire 100% of the ordinary shares ("UAP Shares") of FF10 each
of Compagnie UAP, a societe anonyme organized under the laws of
France ("UAP"), in exchange for ordinary shares ("Shares") and
Certificates of Guaranteed Value ("Certificates") of AXA. Each
UAP shareholder that tendered UAP Shares in the Exchange Offer
received two Shares and two Certificates for every five UAP
Shares so tendered. On January 24, 1997, AXA acquired 91.37% of
the outstanding UAP Shares. AXA-UAP currently intends to merge
(the "Merger") with UAP at some future date in 1997. It is
anticipated that approximately 11,706,826 additional Shares will
be issued in connection with the Merger to UAP shareholders who
did not tender UAP Shares in the Exchange Offer. If the Merger
had been completed at March 1, 1997, Finaxa would have
beneficially owned (directly and indirectly) approximately 21.7%
of the Shares (representing approximately 32.0% of the voting
power), and the Mutuelles AXA would have controlled (directly or
indirectly through their interest in Finaxa) 25.1% of the issued
ordinary shares (representing 36.8% of the voting power) of AXA-
UAP. On January 17, 1997, AXA announced its intention to redeem
its outstanding 6% Bonds (the "Bonds"). Between February 14,
1997 and May 14, 1997, holders of the Bonds has the option to
convert each Bond into 5.15 Shares. On May 15, 1997, each Bond
still outstanding was redeemed into cash at FF1,285 plus FF9.29
accrued interest. Finaxa converted the Bonds it had owned into
2,153,308 Shares. After giving effect to the conversion of all
outstanding Bonds into Shares and to the Merger as if it had been
completed at March 1, 1997, Finaxa would have beneficially owned
(directly and indirectly) approximately 21.4% of the Shares
(representing 31.3% of the voting power), and the Mutuelles AXA
would have controlled (directly or indirectly through their
13
<PAGE>
interest in Finaxa) 24.7% of the issued ordinary shares
(representing 36.0% of the voting power) of AXA-UAP.
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 became effective on October 11,
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 1940 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
14
<PAGE>
from the same broker-dealer, such transactions may be averaged as
to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following registered investment
companies: 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
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 and to permit the Fund to pay distribution
15
<PAGE>
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 1940 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
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 for their review 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 October 11, 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 October 1), provided, however,
that such continuance is specifically approved at least annually
by the Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities (as defined in the
1940 Act) of that class, and in either case, by a majority of the
Directors of the Fund who are not parties to the Agreement or
interested persons, as defined in the 1940 Act, of any such party
(other than as directors of the Fund) and who have no direct or
indirect financial interest in the operation of the 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.
16
<PAGE>
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
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.
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."
17
<PAGE>
General
Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge and, as long as the shares are held for one
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
Class shares, without any initial, contingent deferred or asset-
based sales charge, in each case as described below. Shares of
the Fund that are offered subject to a sales charge are offered
through (i) investment dealers that are members of the National
Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Principal Underwriter
("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered
into selected agent agreements with the Principal Underwriter
("selected agents") and (iii) the Principal Underwriter.
Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, (ii) through self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that have at least
1,000 participants or $25 million in assets, (iii) by the
categories of investors described in clauses (i) through (iv)
below under "--Sales at Net Asset Value" (other than officers,
directors and present and full-time employees of selected dealers
or agents, or relatives of such person, or any trust, individual
retirement account or retirement plan account for the benefit of
such relative, none of whom is eligible on the basis solely of
such status to purchase and hold Advisor Class shares), or (iv)
by directors and present or retired full-time employees of Koll
Real Estate Services ("Koll").
Generally, a fee-based program must charge an asset-
based or other similar fee and must invest at least $250,000 in
Advisor Class shares of the Fund in order to be approved by the
Principal Underwriter for investment in Advisor Class shares.
Investors may purchase shares of the Fund either through
selected dealers, agents or financial representatives or directly
through the Principal Underwriter. A transaction, service,
administrative or other similar fee may be charged by your
broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of
Class A, Class B, Class C or Advisor Class shares made through
such financial representative. Such financial representative may
also impose requirements with respect to the purchase, sale or
18
<PAGE>
exchange of shares that are different from, or in addition to,
those imposed by the Fund, including requirements as to the
minimum initial and subsequent investment amounts. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B, Class C or Advisor Class shares.
Shares of the Fund 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 under "Class
A Shares". On each Fund business day on which a purchase or
redemption order is received by the Fund and trading in the types
of securities in which the Fund invests might materially affect
the value of Fund shares, the per share net asset value is
computed in accordance with the Fund's Articles of Incorporation
and By-Laws as of the next close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern
time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
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 values
of the Class A and Advisor Class shares, as a result of the
differential daily expense accruals of the distribution and
transfer agency fees applicable with respect to those classes of
shares. Even under those circumstances, the per share net asset
values of the four classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes.
The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
19
<PAGE>
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 representative, receives the order prior to
the close of regular trading on the Exchange and transmits it to
the Principal Underwriter prior to 5:00 p.m. Eastern time. The
selected dealer, agent or financial representative, as
applicable, is responsible for transmitting such orders by
5:00 p.m. If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
telephone purchase orders may not exceed $500,000. Payment for
shares purchased by telephone can be made only by Electronic
Funds Transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.
Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription. As
a convenience to the subscriber, and to avoid unnecessary expense
to the Fund, stock certificates representing shares of the Fund
are not issued except upon written request to the Fund by the
shareholder or his or her authorized selected dealer or agent.
This facilitates later redemption and relieves the shareholder of
the responsibility for and inconvenience of lost or stolen
certificates. No certificates are issued for fractional shares,
although such shares remain in the shareholder's account on the
books of the Fund.
In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
20
<PAGE>
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.
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
that borne by 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 that borne by Class A shares
and Advisor Class shares, (iv) each of Class A, Class B and Class
C shares has exclusive voting rights with respect to provisions
of the Rule 12b-1 Plan pursuant to which its distribution
services fee is paid and other matters for which separate class
voting is appropriate under applicable law, provided that, if the
Fund submits to a vote of the Class A shareholders an amendment
to the Rule 12b-1 Plan that would materially increase the amount
to be paid thereunder with respect to the Class A shares, then
such amendment will also be submitted to the Class B 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
21
<PAGE>
under the 1940 Act and state law, will seek to ensure that no
such conflict arises.
Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C Shares***
The alternative purchase arrangements available with
respect to Class A, Class B and Class C shares permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
investment in the Fund, the accumulated distribution services fee
and contingent deferred sales charge on Class B shares prior to
conversion, or the accumulated distribution services fee and
contingent deferred sales charge on Class C shares, would be less
than the initial sales charge and accumulated distribution
services fee on Class A shares purchased at the same time, and to
what extent such differential would be 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 $1,000,000 for
Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.
____________________
*** Advisor Class shares are sold only to investors described
above in this section under "--General."
22
<PAGE>
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.
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.
23
<PAGE>
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
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
24
<PAGE>
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.
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
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on June 2, 1997.
25
<PAGE>
Net Asset Value per Class A Share at $11.01
June 2, 1997
Class A Per Share Sales Charge
4.25% of offering price (4.44% of
net asset value per share) .49
Class A Per Share Offering Price to
the public $11.50
======
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:
AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
26
<PAGE>
-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 High Yield Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-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 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
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown on the front cover of this Statement of Additional
Information.
27
<PAGE>
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
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.
28
<PAGE>
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
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
29
<PAGE>
succeeding monthly purchase will be that normally applicable,
under such schedule, to an investment equal to the sum of (i) the
total purchase previously made during the 13-month period, and
(ii) the current month's purchase multiplied by the number of
months (including the current month) remaining in the 13-month
period. Sales charges previously paid during such period will
not be retroactively adjusted on the basis of later purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A or Class B shares of the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinvestment of
such shares. Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes
except that no loss will be recognized to the extent that the
proceeds are reinvested in shares of the Fund within 30 calendar
days after the redemption or repurchase transaction. Investors
may exercise the reinstatement privilege by written request sent
to the Fund at the address shown on the cover of this Statement
of Additional Information.
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without a contingent deferred sales charge to certain
categories of investors including:
(i) investment management clients of the Adviser or its
affiliates;
(ii) officers and present or former Directors of the
Fund; present or former directors and trustees of other
investment companies managed by the Adviser; present or retired
full-time employees of the Adviser, the Principal Underwriter,
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 descendant
(collectively "relatives") of any such person; or any trust,
individual retirement account or retirement plan account for the
benefit of any such person or relative; or the estate of any such
person or relative, if such shares are purchased for investment
purposes (such shares may not be resold except to the Fund);
30
<PAGE>
(iii) the Adviser, the Principal Underwriter, Alliance
Fund Services, Inc. and their affiliates; and certain employee
benefit plans for employees of the Adviser, the Principal
Underwriter, Alliance Fund Services, Inc. and their affiliates;
(iv) registered investment advisers or other financial
intermediaries who charge a management, consulting or other fee
for their services and who purchase shares through a broker or
agent approved by the Principal Underwriter and clients of such
registered investment advisers or financial intermediaries whose
accounts are linked to the master account of such investment
adviser or financial intermediary on the books of such approved
broker or agent;
(v) persons participating in a fee-based program,
sponsored and maintained by a registered broker-dealer or other
financial intermediary and approved by the Principal Underwriter,
pursuant to which such persons pay an asset-based fee to such
broker-dealer or financial intermediary, or its affiliates or
agents, for services in the nature of investment advisory or
administrative services;
(vi) 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
(vii) 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.
Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
31
<PAGE>
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.
To illustrate, assume that an investor purchased 100
Class B shares at $10 per share (at a cost of $1,000) and in the
second year after purchase, the net asset value per share is $12
and, during such time, the investor has acquired 10 additional
Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 50 Class B shares
(proceeds of $600), 10 Class B shares will not be subject to the
charge because of dividend reinvestment. With respect to the
remaining 40 Class B shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 2.0% (the
applicable rate in the second year after purchase as set forth
below).
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 %
Year Since Purchase of Dollar Amount Subject to Charge
____________________ _______________________________________
First 4%
Second 3%
Third 2%
Fourth 1%
Fifth None
32
<PAGE>
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 Internal Revenue Code of 1986 as amended (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.
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
33
<PAGE>
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.
Class C Shares
Investors may purchase Class C shares at the public
offering price equal to the net asset value per share of the
Class C shares on the date of purchase without the imposition of
a sales charge either at the time of purchase or, as long as the
shares are held for one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, without
a contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares of the Fund and incur higher distribution
services fees and transfer agency costs than Class A shares and
Advisor Class shares, and will thus have a higher expense ratio
and pay correspondingly lower dividends than Class A and Advisor
Class shares.
Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B Shares."
In determining the contingent deferred sales charge
applicable to a redemption of Class C shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because the
shares have been held beyond the period during which the charge
applies or were acquired upon the reinvestment of dividends or
34
<PAGE>
distributions) and, second, of shares held longest during the
time they are subject to the sales charge.
Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares and Advisor Class shares.
Conversion of Advisor Class Shares to Class A Shares
Advisor Class shares may be held solely through the fee-
based program accounts, employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares-- General," and by
investment advisory clients of, and by 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 the
fee-based program or plan, or to be associated with the
investment advisory or financial intermediary 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
35
<PAGE>
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class shares
to Class A shares may be suspended if such an opinion is no
longer available at the time such conversion is to occur. In
that event, the Advisor Class shareholder would be required to
redeem his Advisor Class shares, which would constitute a taxable
event under federal income tax law.
________________________________________________________________
REDEMPTION AND REPURCHASE OF SHARES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Sell Shares." If you are an Advisor Class
shareholder through an account established under a fee-based
program your fee-based program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares
of the Fund that are different from those described herein. A
transaction fee may be charged by your financial representative
with respect to the purchase, sale or exchange of Advisor Class
shares made through such financial representative.
Redemption
Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge 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
36
<PAGE>
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.
To redeem shares of the Fund for which no share
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
To redeem shares of the Fund represented by 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
Funds 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.
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Eastern time on a Fund business day as defined above. Proceeds
of telephone redemptions will be sent by Electronic Funds
Transfer to a shareholder's designated bank account at a bank
selected by the shareholder that is a member of the NACHA.
Telephone Redemption By Check. Except for certain
omnibus accounts 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.
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Repurchase
The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. 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.
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________________________________________________________________
SHAREHOLDER SERVICES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectuses under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class shareholder through an account established under a
fee-based program your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein. A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing Electronic Funds 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
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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
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 above in this section are
taxable transactions for federal income tax purposes. The
exchange service may be changed, suspended, or terminated on 60
days written notice.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.
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
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<PAGE>
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
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 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.
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Retirement Plans
The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "For Literature" telephone number on the cover of
this Statement of Additional Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.
If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan reaches $5 million
on or before December 15 in any year, all Class B 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.
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<PAGE>
403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirement plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to 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 account, a
Class A, Class B, Class C or Advisor Class account with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on 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 "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Investors wishing to establish a dividend direction
plan in connection with their initial investment should complete
the appropriate section of the Subscription Application found in
the Prospectus. Current shareholders should contact 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.
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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
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 "For Literature" telephone number shown on the cover of this
Statement of Additional Information.
CDSC Waiver for Class B and Class C Shares. Under a
systematic withdrawal plan, up to 1% monthly, 2% bi-monthly or 3%
quarterly of the value at the time of redemption of the Class B
or Class C shares in a shareholder's account may be redeemed free
of any contingent deferred sales charge.
With respect to Class B shares, the waiver applies only
with respect to shares 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. Redemptions of Class B shares
in excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.
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With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.
Statements and Reports
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, Ernst & Young LLP, as
well as a 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
________________________________________________________________
The per share net asset value is determined once daily
as of the next close of regular trading on the Exchange
(currently 4:00 p.m. Eastern time) following receipt of a
purchase or redemption order by the Fund, on each Fund business
day on which such an order is received and trading in the types
of securities in which the Fund invests might materially affect
the value of Fund 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. A Fund business day is any day on which the
Exchange is open for trading. The net asset value is the net
worth of the Fund (assets including securities at market value
minus liabilities) divided by the number of Fund shares
outstanding.
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.
All securities listed on an exchange for which market
quotations are readily available are valued at the closing price
on the exchange on the day of valuation or, if no such closing
price is available, at the mean of bid and ask price quoted on
such day. Other securities for which market quotations are
readily available will be valued in a like manner. Options will
be valued at such market value or fair value if no market exists.
Futures contracts will be valued in a like manner, except that
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<PAGE>
open futures contracts sales will be valued using the closing
settlement price or, in the absence of such a price, the most
recent quoted asked price. If there are no quotations available
for the day of valuations, the last available closing price will
be used. Securities and assets for which market quotations are
not readily available (including investments that are subject to
limitations as to their sale) are valued at fair value as
determined in good faith by the Fund's Board of Directors.
Short-term debt securities that mature in less than 60
days are valued at amortized cost if their term to maturity from
date of purchase was less than 60 days, or by amortizing their
value on the 61st day prior to maturity if their term to maturity
from date of purchase when acquired by the Fund was more than 60
days, unless such amortized cost is determined by the Board of
Directors not to represent fair value.
For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in
foreign currencies will be converted into U.S. Dollars at the
mean of the current bid and asked prices of such currency against
the U.S. Dollar last quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a
pricing service that takes into account the quotes provided by a
number of such major banks.
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 accountants, 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.
________________________________________________________________
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
(including, but not limited to, gains from options, futures and
forward contracts) derived with respect to its business of
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<PAGE>
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
these shareholders for the year declared, and not for the year in
which the shareholders actually receive the dividend.
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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
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
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<PAGE>
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
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
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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 contracts are considered "section 1256
contracts" for federal income tax purposes. Section 1256
contracts held by the Fund at the end of each taxable year will
be "marked to market" and treated for federal income tax purposes
as though sold for fair market value on the last business day of
such taxable year. Gain or loss realized by the Fund on section
1256 contracts 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
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
51
<PAGE>
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
consult their counsel for further information as to the United
States tax consequences of receipt of income from the Fund.
52
<PAGE>
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
price paid or received by the Fund or the size of the position
obtainable for the Fund.
53
<PAGE>
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
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
54
<PAGE>
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.
At June 2, 1997, there were 542,642 shares of common
stock of the Fund outstanding, including 65,894 Class A shares,
168,722 Class B shares, 15,172 Class C shares and 292,804 Advisor
Class shares. To the knowledge of the Fund, the following
persons owned of record 5% or more of a class of the outstanding
shares of the Fund as of June 2, 1997:
% of
Name and No. of Advisor % of % of % of
Address: Shares Class Class A Class B Class C
_______ _______ ______ _______ _______ ______
Joseph Zaro
Jeremy Zaro TTE
138 Bruckner Blvd.
Bronx, NY 10454 4,735 7.19
Richard Zaro IRA
138 Bruckner Blvd.
Bronx, NY 10454 4,735 7.19
Stuart Zaro
Adam Zaro Trust
138 Bruckner Blvd.
Bronx, NY 10454 4,735 7.19
Scott Zaro Trust
138 Bruckner Blvd.
Bronx, NY 10454 4,735 7.19
Alliance Plans
Div/FTC
C/F Dorothy Zaro
IRA
138 Bruckner Blvd.
Bronx, NY 10454 4,743 7.20
55
<PAGE>
Alliance Plans
Div/DTC
C/F Keri Zaro IRA
138 Bruckner Blvd.
Bronx, NY 10454 5,593 8.49
Alliance Plans
Div/DTC
C/F Stuart Zaro IRA
138 Bruckner Blvd.
Bronx, NY 10454 5,476 8.31
Alliance Plans
Div/DTC
C/F Michael Delfino
100 Montrose Station
Rd.
Montrose, NY 10548 44,743 15.28
Alliance Plans
Div/DTC
C/F Gerald Michael
352 Gallopwood Place
Great Falls VA 22066 21,622 7.38
Alliance Plans
Div/DTC
FBO Maurice Mandel
14 Hillside Ave.
Port Washington,
NY 11050-2747 77,982 26.63
Merrill Lynch
4800 Deer Lake Dr.
Jacksonville, FL
32246 5,783 8.78
106,127 62.88
Prudential 6,883 45.37
Securities
2 Hazlewood Ct.
San Antonio, TX
78257 14,618 8.66
Wexford Clearing
Svcs.
C/F Billie F. Glover
IRA Rollover
6312 E. County Rd.
Alvarno, TX 76009 1,893 12.48
56
<PAGE>
Prudential Securities
James F. Lyons
938 emerald Bay
Laguna Bch, CA 92651 4,740 31.24
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.
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,
57
<PAGE>
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 the Fund's
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
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,
58
<PAGE>
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.
59
<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 (Advisor Class) 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
======
60
<PAGE>
Class Y (Advisor Class) 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 Class 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.
61
<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.
62
<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
63
<PAGE>
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-96.5%
TECHNOLOGY-19.7%
COMPUTER HARDWARE-4.6%
COMPAQ Computer Corp. (a) 900 $ 71,325
Dell Computer Corp. (a) 700 49,787
Sun Microsystems, Inc. (a) 1,400 43,225
------------
164,337
COMPUTER SOFTWARE-8.0%
HBO & Co. 600 34,575
Informix Corp. (a) 1,400 24,325
Microsoft Corp. (a) 800 78,000
Netscape Communications Corp. (a) 900 26,213
Oracle Corp. (a) 1,900 74,575
Peoplesoft, Inc. (a) 1,100 43,862
------------
281,550
NETWORK SOFTWARE-1.9%
Cisco Systems, Inc. (a) 1,200 66,750
SEMI-CONDUCTOR CAPITAL EQUIPMENT-2.0%
Applied Materials, Inc. (a) 1,400 70,875
SEMI-CONDUCTOR COMPONENTS-3.2%
Intel Corp. 800 113,500
------------
697,012
FINANCE-17.8%
BANKING - MONEY CENTER-3.2%
BankAmerica Corp. 1,000 113,750
BANKING - REGIONAL-6.9%
Mellon Bank Corp. 1,100 88,412
NationsBank Corp. 2,600 155,675
------------
244,087
INSURANCE-4.9%
General Reinsurance Corp. 200 33,925
Travelers Group, Inc. 2,600 139,425
------------
173,350
MISCELLANEOUS-2.8%
American Express Co. 1,500 98,063
------------
629,250
CONSUMER SERVICES-15.8%
APPAREL-2.5%
Nike, Inc. Cl.B 1,200 86,250
BROADCASTING & CABLE-0.9%
Cox Communications, Inc. Cl.A (a) 1,500 30,187
ENTERTAINMENT & LEISURE-1.5%
Eastman Kodak Co. 600 53,775
PRINTING & PUBLISHING-4.3%
McGraw-Hill Cos., Inc. 1,400 72,625
New York Times Co. Cl.A 1,800 80,100
------------
152,725
RETAIL - GENERAL MERCHANDISE-6.6%
Federated Department Stores, Inc. (a) 2,200 76,450
Home Depot, Inc. 1,600 87,200
Sears, Roebuck & Co. 1,300 70,525
------------
234,175
------------
557,112
HEALTH CARE-9.1%
DRUGS-4.7%
Merck & Co., Inc. 1,100 101,200
Pfizer, Inc. 700 64,138
------------
165,338
MEDICAL PRODUCTS-1.3%
Medtronic, Inc. 700 45,325
MEDICAL SERVICES-3.1%
Columbia/HCA Healthcare Corp. 1,700 71,400
United Healthcare Corp. 800 39,900
------------
111,300
------------
321,963
5
PORTFOLIO OF INVESTMENTS
(CONTINUED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
ENERGY-8.2%
DOMESTIC INTEGRATED-2.9%
Phillips Petroleum Co. 2,500 $ 103,437
INTERNATIONAL-2.0%
Texaco, Inc. 700 69,212
OIL SERVICE-1.6%
Baker Hughes, Inc. 800 28,400
Schlumberger, Ltd. 300 30,188
------------
58,588
PIPELINES-1.7%
Enron Corp. 1,500 59,813
------------
291,050
CONSUMER STAPLES-6.6%
COSMETICS-2.3%
Avon Products, Inc. 1,400 81,550
HOUSEHOLD PRODUCTS-1.2%
Colgate-Palmolive Co. 400 41,400
TOBACCO-3.1%
Philip Morris Cos., Inc. 800 108,100
------------
231,050
CAPITAL GOODS-6.3%
ELECTRICAL EQUIPMENT-5.3%
General Electric Co. 900 92,588
Johnson Controls, Inc. 1,100 92,675
------------
185,263
MACHINERY-1.0%
Allied-Signal, Inc. 500 36,125
------------
221,388
TRANSPORTATION-3.3%
AIR FREIGHT-1.9%
Federal Express Corp. (a) 1,300 66,950
RAILROAD-1.4%
Burlington Northern Santa Fe 600 49,950
------------
116,900
AEROSPACE & DEFENSE-3.3%
AEROSPACE-3.3%
General Dynamics Corp. 500 33,625
United Technologies Corp. 1,100 82,775
------------
116,400
CONSUMER MANUFACTURING-2.0%
AUTO & RELATED-2.0%
Chrysler Corp. 1,100 37,263
General Motors Corp. 600 34,725
------------
71,988
MULTI INDUSTRY COMPANIES-1.8%
Tyco International, Ltd. 1,100 64,900
UTILITIES-1.4%
Texas Utilities Co. 1,200 48,450
BASIC INDUSTRY-1.2%
CHEMICALS-1.2%
Dow Chemical Co. 500 40,500
Total Common Stocks (cost $3,293,730) 3,407,963
TOTAL INVESTMENTS-96.5%
(cost $3,293,730) 3,407,963
Other assets less liabilities-3.5% 124,609
NET ASSETS-100% $3,532,572
(a) Non-income producing securities.
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $3,293,730) $3,407,963
Cash 183,558
Deferred organization expenses 287,645
Receivable for capital stock sold 77,006
Receivable due from Advisor 17,983
Dividend receivable 5,218
Total assets 3,979,373
LIABILITIES
Organization expense payable 299,203
Payable for investment securities purchased 98,590
Distribution fee payable 546
Accrued expenses and other liabilities 48,462
Total liabilities 446,801
NET ASSETS $3,532,572
COMPOSITION OF NET ASSETS
Capital stock, at par $ 341
Additional paid-in capital 3,448,449
Accumulated net investment loss (30,049)
Accumulated net realized loss on investments (402)
Net unrealized appreciation of investments 114,233
$3,532,572
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($544,413/
52,560 shares of capital stock issued and outstanding) $10.36
Sales charge--4.25% of public offering price .46
Maximum offering price $10.82
CLASS B SHARES
Net asset value and offering price per share($786,397/
75,916 shares of capital stock issued and outstanding) $10.36
CLASS C SHARES
Net asset value and offering price per share($5,137/
496 shares of capital stock issued and outstanding) $10.36
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share($2,196,625
/212,070 shares of capital stock issued and outstanding) $10.36
See notes to financial statements.
7
STATEMENT OF OPERATIONS
DECEMBER 16, 1996* TO FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends $ 6,487
Interest 3,051 $ 9,538
EXPENSES
Advisory fee 3,507
Distribution fee - Class A 230
Distribution fee - Class B 579
Administrative 24,900
Custodian 19,341
Audit and legal 17,735
Amortization of organization expenses 11,808
Printing 8,732
Directors' fees 8,656
Transfer agency 6,319
Registration 828
Miscellaneous 1,481
Total expenses 104,116
Less: expenses waived and assumed by adviser
(See Note B) (64,529)
Net expenses 39,587
Net investment loss (30,049)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions (402)
Net unrealized appreciation of investments 114,233
Net gain on investments 113,831
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 83,782
* Commencement of operations.
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
DECEMBER 16, 1996*
TO
FEBRUARY 28, 1997
(UNAUDITED)
------------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (30,049)
Net realized loss on investment transactions (402)
Net unrealized appreciation of investments 114,233
Net increase in net assets from operations 83,782
CAPITAL STOCK TRANSACTIONS
Net increase 3,348,490
Total increase 3,432,272
NET ASSETS
Beginning of period 100,300
End of period $3,532,572
* Commencement of operations.
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997 (UNAUDITED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance/Regent Sector Opportunity Fund (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. Prior to commencement of operations on December 16, 1996, the Fund had
no operations other than the sale to Alliance Capital Management L.P. (the
"Adviser") of 10 shares each of Class A, Class B and Class C and 10,000 shares
of Advisor Class for the aggregate amount of $100 each on Class A, Class B and
Class C shares and $100,000 on the Advisor Class shares on October 7, 1996. The
fund offers Class A, Class B, Class C and Advisor Class shares. Class A shares
are sold with a front-end sales charge of up to 4.25% for purchases not
exceeding $1,000,000. With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a contingent
deferred sales charge of 1%. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
solely to investors participating in fee based programs. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The following is a summary of
significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Securities traded on national securities exchanges are valued at the last
reported sales price, or, if no sale occurred, at the mean of the bid and asked
price at the close of such exchange. Over-the-counter securities not traded on
national securities exchanges are valued at the closing bid price. Debt
securities are valued at the mean of the bid and asked price except that debt
securities maturing within 60 days are valued at amortized cost which
approximates market value. Securities for which current market quotations are
not readily available (including investments which are subject to limitations
as to their sale) are valued at their fair value as determined in good faith by
the Board of Directors.
2. ORGANIZATION EXPENSES
Organization expenses of approximately $299,453 have been deferred and are
being amortized on a straight-line basis through December, 2001.
3. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Investment transactions are accounted for on the trade date and dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis. The Fund accretes discounts on debt securities owned. Investment gains
and losses are determined on the identified cost basis.
4. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to its
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") an advisory fee at an annual rate of
.75% of the Fund's average daily net assets. Such fee is accrued daily and paid
monthly. As of January 13, 1997, the Adviser has agreed to voluntarily waive
its fees and bear certain expenses so that total expenses do not exceed on an
annual basis 3.00%, 3.70%, 3.70% and 2.70% of average net assets, respectively,
for the Class A, Class B, Class C and Advisor Class shares. For the period
ended February 28, 1997, such reimbursement amounted to $36,629.
10
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
Pursuant to the Advisory agreement, the Adviser provides certain legal and
accounting services for the Fund. For the period ended February 28, 1997, the
Adviser voluntarily agreed to waive its fees for such services.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency agreement for providing personnel and
facilities to perform transfer agency services for the Fund. No such
compensation was paid for the period ended February 28, 1997.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $113 from the sales of Class A shares for the period
ended February 28, 1997.
Brokerage commissions paid on securities transactions for the period ended
February 28, 1997, amounted to $2,305, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp., ("DLJ") an affiliate of the Adviser nor to DLJ directly.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for Class A,
Class B and Class C. Under the Agreement, the Fund pays a distribution fee to
the Distributor at an annual rate of up to .30 of 1% of the Fund's average
daily net assets attributable to Class A shares and 1.00% of the average daily
net assets attributable to both Class B and Class C shares. There is no
distribution fee on Advisor Class shares. Such fee is accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $76,551 and $10,125, for Class B and C
shares, respectively. Such costs may be recovered from the Fund in future
periods so long as the Agreement is in effect. In accordance with the Agreement
there is no provision for recovery of unreimbursed distribution costs incurred
by the Distributor beyond the current fiscal year for Class A shares. The
Agreement also provides that the Advisor may use its own resources to finance
the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $3,362,792 and $68,660,
respectively, for the period ended February 28, 1997. There were no purchases
or sales of U.S. government or government agency obligations for the period
ended February 28, 1997. At February 28, 1997 the cost of securities for
federal income tax purposes was the same as the cost for financial reporting
purposes. Accordingly, gross unrealized appreciation of investments was
$198,128 and gross unrealized depreciation of investments was $83,895 resulting
in net unrealized appreciation of $114,233.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
NOTE E: CAPITAL STOCK
There are 12,000,000,000 shares of $.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class. Each class consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
SHARES AMOUNT
------------------ ------------------
DECEMBER 16, 1996* DECEMBER 16, 1996*
TO TO
FEBRUARY 28, 1997 FEBRUARY 28, 1997
(UNAUDITED) (UNAUDITED)
------------------ ------------------
CLASS A
Shares sold 52,550 $ 528,369
CLASS B
Shares sold 75,906 $ 784,415
CLASS C
Shares sold 486 $ 5,043
ADVISOR CLASS
Shares sold 202,070 $2,030,663
* Commencement of operations.
12
FINANCIAL HIGHLIGHTS
ALLIANCE/REGENT SECTOR OPPORTUNITY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
ADVISOR
CLASS A CLASSB CLASS C CLASS
DECEMBER 16, DECEMBER 16, DECEMBER 16, DECEMBER 16,
1996(a) 1996(a) 1996(a) 1996(a)
TO TO TO TO
FEB. 28,1997 FEB. 28,1997 FEB. 28,1997 FEB. 28,1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.14) (.02) (.02) (.14)
Net realized and unrealized gain on
investments .50 .38 .38 .50
Net increase in net asset value from
operations .36 .36 .36 .36
Net asset value, end of period $10.36 $10.36 $10.36 $10.36
TOTAL RETURN
Total investment return based on net
asset value (c) 3.60% 3.60% 3.60% 3.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $544 $786 $5 $2,197
Ratio to average net assets of:
Expenses, under current cap (d)(e) 3.00% 3.70% 3.70% 2.70%
Expenses, net of waivers/
reimbursements (d)(f) 9.30% 3.70% 13.90% 9.10%
Net investment loss (d) (7.42)% (1.59)% (10.61)% (7.04)%
Portfolio turnover rate 3% 3% 3% 3%
Average commission rate $.0500 $.0500 $.0500 $.0500
</TABLE>
(a) Commencement of operations.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(d) Annualized.
(e) Expense cap in effect as of January 13, 1997.
(f) Net of expenses waived/reimbursed by the Adviser. Absent such
waivers/reimbursements the expense ratios would have been 23.22%, 19.26%,
29.21%, and 22.57% for Class A, Class B, Class C and Advisor Class Shares,
respectively, for the period ending February 28, 1997.
13
<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
A-1
<PAGE>
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 high-grade liquid assets 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 a National Exchange, (v) the facilities of a
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
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements
Included in the Prospectus: Financial Highlights
(unaudited)
Included in the Registrant's Statement of
Additional Information:
Statement of Assets and Liabilities: October 7,
1996
Notes to Statement of Assets of Liabilities:
October 7, 1996
Report of Independent Auditors.
Portfolio of Investments - February 28, 1997
(unaudited)
Statement of Assets and Liabilities- February 28,
1997 (unaudited)
Statement of Operations- December 16, 1996
(commencement of operations) to February 28, 1997
(unaudited)
Statement of Changes in Net Assets- December 16,
1996 (commencement of operations) to February 28,
1997 (unaudited)
Notes to Financial Statements- February 28, 1997
(unaudited)
Financial Highlights- December 16, 1996
(commencement of operations) to February 28, 1997.
(unaudited)
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) Articles of Incorporation of the Registrant -
Incorporated by reference as Exhibit 1 to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
C-1
<PAGE>
(b) Articles of Amendment. - Incorporated by
reference as Exhibit 1(b) to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-08193 and
811-07709) filed with the Securities and Exchange
Commission on October 16, 1996.
(2) By-Laws of the Registrant - Incorporated by
reference as Exhibit 2 to Pre-Effective Amendment
No. 2 to Registrant's Registration Statement on
Form N-1A (File Nos. 333-08193 and 811-07709) filed
with the Securities and Exchange Commission on
October 16, 1996.
(3) Not applicable.
(4) (a) Form of Share Certificate for Class A Shares.
- Incorporated by reference as Exhibit 4(a) to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(b) Form of Share Certificate for Class B Shares.
- Incorporated by reference as Exhibit 4(b) to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(c) Form of Share Certificate for Class C Shares.
- Incorporated by reference as Exhibit 4(c) to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(d) Form of Share Certificate for Advisor Class
Shares. - Incorporated by reference as Exhibit 4(d)
to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(5) Copy of Advisory Agreement between the Registrant
and Alliance Capital Management L.P. - Incorporated
by reference as Exhibit 5 to Pre-Effective
Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File Nos. 333-08193 and
811-07709) filed with the Securities and Exchange
Commission on October 16, 1996.
C-2
<PAGE>
(6) (a) Copy of Distribution Services Agreement
between the Registrant and Alliance Fund
Distributors, Inc. - Incorporated by reference as
Exhibit 6(a) to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A
(File Nos. 333-08193 and 811-07709) filed with the
Securities and Exchange Commission on October 16,
1996.
(b) Form of Selected Dealer Agreement between
Alliance Fund Distributors, Inc. and selected
dealers offering shares of Registrant. -
Incorporated by reference as Exhibit 6(b) to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(c) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected
agents making available shares of Registrant. -
Incorporated by reference as Exhibit 6(c) to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(7) Not applicable.
(8) Copy of Custodian Contract between the Registrant
and State Street Bank and Trust Company. -
Incorporated by reference as Exhibit 8 to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(9) Copy of Transfer Agency Agreement between the
Registrant and Alliance Fund Services, Inc. -
Incorporated by reference as Exhibit 9 to Pre-
Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File Nos.
333-08193 and 811-07709) filed with the Securities
and Exchange Commission on October 16, 1996.
(10) Not applicable.
(11) Consent of Independent Auditors - Filed herewith.
(12) Not applicable.
C-3
<PAGE>
(13) Not applicable.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6(a) and (b) above.
(16) Schedule for computation of performance
quotations.*
(17) Financial Data Schedules - filed herewith.
(18) Rule 18f-3 Plan. - Incorporated by reference as
Exhibit 18 to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A
(File Nos. 333-08193 and 811-07709) filed with the
Securities and Exchange Commission on October 16,
1996.
ITEM 25. Persons Controlled by or under Common Control with
Registrant.
ITEM 26. Number of Holders of Securities.
As of June 2, 1997, Registrant had 169 record holders of
shares of Common Stock comprised of 25 Class A shares,
64 Class B shares, 14 Class C shares and 66 Advisor
Class shares.
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-4
<PAGE>
_________________
* To be filed in a post-effective amendment
C-5
<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-6
<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-7
<PAGE>
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 High Yield 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 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/Regent Sector Opportunity 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
C-8
<PAGE>
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
and Secretary
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Richard A. Davies Senior Vice President
Managing Director
Byron M. Davis Senior Vice President
Anne S. Drennan Senior Vice President &
Treasurer
Mark J. Dunbar Senior Vice President
Bradley F. Hanson Senior Vice President
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President
and Treasurer
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Ryne A. Nishimi Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleondakis Senior Vice President
Robert E. Powers Senior Vice President
Richard K. Saccullo 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
C-9
<PAGE>
Richard A. Winge Senior Vice President
Jamie A. Atkinson Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Beth Cahill Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Sohaila S. Farsheed Vice President
Leon M. Fern Vice President
William C. Fisher Vice President
Gerard J. Friscia Vice President &
Controller
Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
Counsel
Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer
Joseph W. Gibson Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
C-10
<PAGE>
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Scott Hutton Vice President
Thomas K. Intoccia Vice President
Larry P. Johns Vice President
Richard D. Keppler Vice President
Gwenn M. Kessler Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Lori E. Master Vice President
Shawn P. McClain Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Thomas F. Monnerat Vice President
Jeanette M. Nardella Vice President
Nicole Nolan-Koester Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
C-11
<PAGE>
James J. Posch Vice President
Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Robert C. Schultz Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
William C. White Vice President
Emilie D. Wrapp Vice President and Assistant
Special Counsel Secretary
Charles M. Barrett Assistant Vice President
Maria L. Carreras Assistant Vice President
John W. Cronin Assistant Vice President
Ralph A. DiMeglio Assistant Vice President
Faith C. Dunn Assistant Vice President
John C. Endahl Assistant Vice President
John E. English Assistant Vice President
Duff C. Ferguson Assistant Vice President
John Grambone Assistant Vice President
C-12
<PAGE>
Brian S. Hanigan Assistant Vice President
James J. Hill Assistant Vice President
Edward W. Kelly Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Catherine N. Peterson Assistant Vice President
Carol H. Rappa Assistant Vice President
Clara Sierra Assistant Vice President
Vincent T. Strangio Assistant Vice President
Wesley S. Williams Assistant Vice President
Christopher J. Zingaro Assistant Vice President
Mark R. Manley Assistant Secretary
(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
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.
C-13
<PAGE>
ITEM 32. Undertakings.
(b) Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon
request and without charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the
removal of any Director of the Fund in accordance
with Section 16 of the Investment Company Act of
1940.
C-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York
and the State of New York, on the 17th day of June, 1997.
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 June 17, 1997
______________________ President
(2) Principal Financial
and Accounting Officer:
/s/Mark D. Gersten Treasurer and June 17, 1997
_____________________ Chief Financial
Officer
C-15
<PAGE>
(3) All of the Directors
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
James M. Hester
Clifford L. Michel
Donald J. Robinson
By:
/s/Edmund P. Bergan, Jr. Senior Vice June 17, 1997
________________________ President,
(Attorney-in-fact) General Counsel
and Secretary
C-16
<PAGE>
INDEX TO EXHIBITS
(11) Consent of Independent Auditors
(17) Financial Data Schedule
C-17
00250232.AK0
<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 Post-Effective
Amendment to the Registration Statement (Form N-1A No. 333-
08193) of Alliance/Regent Sector Opportunity Fund, Inc.
/s/ Ernst & Young LLP
New York, New York
June 17, 1997
00250232.AK2
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<PAGE>
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<NAME> ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.
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<NAME> ALLIANCE/REGENT SECTOR OPPORTUNITY FUND, INC.
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<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> DEC-16-1996
<PERIOD-END> FEB-28-1997
<INVESTMENTS-AT-COST> 3,293,730
<INVESTMENTS-AT-VALUE> 3,407,963
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<APPREC-INCREASE-CURRENT> 114,233
<NET-CHANGE-FROM-OPS> 83,782
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