This is filed pursuant to Rule 497(c).
File Nos. 333-8818 and 811-9176.
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Alliance Select Prospectus and Application
Investor Series,
Premier Portfolio March 1, 2000
The Premier Portfolio is a portfolio of Alliance Select Investor Series, Inc.,
an open-end management investment company structured as a series fund that
offers a selection of investment alternatives to the sophisticated investor.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
AllianceCapital [LOGO](R)
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Investment Products Offered
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o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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TABLE OF CONTENTS
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Page
RISK/RETURN SUMMARY................................................... 3
FEES AND EXPENSES OF THE FUND......................................... 5
GLOSSARY.............................................................. 6
DESCRIPTION OF THE FUND............................................... 6
Investment Objective and Principal Policies
and Risks........................................................... 6
Description of Additional Investment Practices........................ 8
Additional Risk Considerations........................................ 13
MANAGEMENT OF THE FUND................................................ 14
PURCHASE AND SALE OF SHARES........................................... 16
How The Fund Values Its Shares........................................ 16
How To Buy Shares..................................................... 16
How To Exchange Shares................................................ 17
How To Sell Shares.................................................... 17
DIVIDENDS, DISTRIBUTIONS AND TAXES.................................... 17
DISTRIBUTION ARRANGEMENTS............................................. 18
GENERAL INFORMATION................................................... 19
FINANCIAL HIGHLIGHTS.................................................. 21
The Fund's investment adviser is Alliance Capital Management L.P., a global
investment manager providing diversified services to institutions and
individuals through a broad line of investments including more than 100 mutual
funds.
RISK/RETURN SUMMARY
The following is a summary of certain key information about the Alliance Select
Investor Series, Premier Portfolio. You will find additional information about
the Fund, including a detailed description of the risks of an investment in the
Fund, after this Summary.
The Risk/Return Summary describes the Fund's objectives, principal investment
strategies, principal risks and fees. A more detailed description of the Fund,
including the risks associated with investing in the Fund, can be found further
back in this Prospectus. Please be sure to read this additional information
BEFORE you invest. The Fund uses certain types of investment derivatives such as
options, futures, and forwards. The use of these techniques involve special
risks that are discussed in this Prospectus.
The Risk/Return Summary includes a table for the Fund showing its average annual
returns and a bar chart showing its annual returns. The table and bar chart
provide an indication of the historical risk of an investment in the Fund by
showing:
o how the Fund's average annual returns for one year and over the life of
the Fund compare to those of a broad-based securities market index; and
o changes in the Fund's performance from year to year over the life of the
Fund.
The Fund's past performance, of course, does not necessarily indicate how it
will perform in the future. As with all investments, you may lose money by
investing in the Fund.
3
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Premier Portfolio
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OBJECTIVE:
The Fund seeks long-term growth of capital through all market conditions.
PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests primarily in a non-diversified portfolio of equity securities
of large, intensively researched, high-quality companies that are judged likely
to achieve superior earnings growth. To take advantage of investment
opportunities in both rising and falling markets and in an effort to enhance
returns, the Fund may make substantial use of short-selling and other investment
practices, such as options, futures, forwards, and leverage. In contrast to most
equity funds, the Fund focuses on a relatively small number of intensively
researched companies. Alliance selects the Fund's investments from a research
universe of more than 500 companies that have strong management, superior
industry positions, excellent balance sheets, and superior earnings growth
prospects.
Normally, the Fund invests in about 40-50 companies, with the 25 most highly
regarded of these companies usually constituting substantially all of the Fund's
net assets. The Fund will seek to take advantage of what Alliance believes are
opportunities presented by unwarranted fluctuations in the prices of securities,
both to purchase or increase positions on weakness and to sell or reduce
overpriced holdings. The Fund also may invest up to 35% of its total assets in
foreign securities and up to 20% of its total assets in convertible securities.
PRINCIPAL RISKS:
Among the principal risks of investing in the Fund is market risk. Because the
Fund uses derivatives strategies and other leveraging techniques speculatively
to enhance returns, it is subject to greater risk and its returns may be more
volatile than other funds, particularly in periods of market declines. The Fund
is "non-diversified", which means that it invests more of its assets in a
smaller number of securities than many other equity funds. As a result, changes
in the value of a single security may have a more significant effect, either
negative or positive, on the Fund's net asset value. The Fund's investments in
foreign securities have foreign risk and currency risk. The Fund's investments
in fixed-income securities have interest rate risk.
The Fund is appropriate for the sophisticated investor who understands and is
willing to assume the risks of the Fund's aggressive investment strategies. The
Fund is not a complete investment program and investors should invest only a
portion of their assets in the Fund.
The table and bar chart provide an indication of the historical risk of an
investment in the Fund.
PERFORMANCE TABLE
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Since
1 Year Inception
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Class A 31.30% 35.52%
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Class B 32.08% 36.68%
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Class C 35.17% 38.58%
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Russell 1000
Growth Index 33.16% 35.82%
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Index returns and average annual total returns are for the periods ended
December 31, 1999. Average annual total returns reflect imposition of the
maximum front-end or contingent deferred sales charges as well as conversion of
Class B shares to Class A shares after the applicable period. Inception dates
are 7/29/98 for Class A, Class B and Class C shares. Since inception index
return is from 7/31/98.
BAR CHART
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The annual return in the bar chart is for the Fund's Class A shares and does not
reflect sales loads. If sales loads were reflected, the annual return would be
less than that shown.
[The following table was depicted in a bar chart]
Calendar Year End
-----------------
90 n/a
91 n/a
92 n/a
93 n/a
94 n/a
95 n/a
96 n/a
97 n/a
98 n/a
99 37.12
You should consider an investment in the Fund as a long-term investment. The
Fund's returns will fluctuate over long and short periods. For example, during
the period shown in the bar chart, the Fund's:
Best Quarter was up 23.17%, 4th quarter, 1999; and Worst Quarter was down
- -4.95%, 3rd quarter, 1999.
4
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FEES AND EXPENSES OF THE FUND
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This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
Maximum Sales Charge
(Load) Imposed on
Purchases (as a
percentage of
offering price) 4.25% None None
Maximum Deferred Sales
Charge (Load) (as a
percentage of original
purchase price or
redemption proceeds,
whichever is lower) None 4.0%* 1.0% **
Exchange Fee None None None
* Class B Shares automatically convert to Class A Shares after 8 years. The
CDSC decreases over time. For Class B shares the CDSC decreases 1.00%
annually to 0% after the 4th year.
** For Class C shares the CDSC is 0% after the 1st year.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
Operating Expenses
-----------------------------------
Class A Class B Class C
------- ------- -------
Management fees (a) 1.40% 1.40% 1.40%
Distribution (12b-1) fees .30% 1.00% 1.00%
Other expenses .50% .49% .49%
---- ---- ----
Total Fund operating expenses (b) 2.20% 2.89% 2.89%
==== ==== ====
EXAMPLES
The Examples are to help you compare the cost of investing in the Fund with the
cost of investing in other funds. They assume that you invest $10,000 in the
Fund for the time periods indicated and then redeem all of your shares at the
end of those periods. They also assume that your investment has a 5% return each
year, that the Fund's operating expenses stay the same and that all dividends
and distributions are reinvested. Your actual costs may be higher or lower.
Examples
-----------------------------------------------------
Class A Class B+ Class B++ Class C+ Class C++
-------- -------- --------- -------- ---------
After 1 Yr. $ 639 $ 692 $ 292 $ 392 $ 292
After 3 Yrs. $1,084 $1,095 $ 895 $ 895 $ 895
After 5 Yrs. $1,555 $1,523 $1,523 $1,523 $1,523
After 10 Yrs. $2,851 $3,051(c) $3,051(c) $3,214 $3,214
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+ Assumes redemption at the end of period.
++ Assumes no redemption at end of period.
(a) The basic management fee is 1.10%, but it may range from .80% to 1.40%
depending on the Fund's performance compared to the Russell 1000(R) Growth
Index.
(b) During the Fund's fiscal year ended 10/31/99, Alliance voluntarily
reimbursed the Fund for certain expenses. Taking into account such expense
reimbursement, total fund operating expenses were 2.18% for Class A shares
and 2.87% for Class B & C shares. In addition, Alliance has contractually
agreed to waive a portion of its management fee and/or reimburse the Fund
for a portion of its operating expenses to the extent necessary to prevent
total Fund operating expenses, on an annualized basis, from exceeding
2.50% for Class A shares and 3.20% for Class B and C shares. This
agreement extends through the Fund's current fiscal year (Oct. 31) and may
be extended by Alliance for additional one-year terms.
(c) Assumes Class B shares convert to Class A after 8 years.
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GLOSSARY
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This Prospectus uses the following terms.
TYPES OF SECURITIES
Convertible securities are fixed-income securities that are convertible into
common stock.
Debt securities are bonds, debentures, notes, bills, loans, other direct debt
instruments, and other fixed, floating and variable rate debt obligations, but
do not include convertible securities.
Equity securities are (i) common stocks, partnership interests, business trust
shares, and other equity ownership interests in business enterprises, and (ii)
securities convertible into, and rights and warrants to subscribe for the
purchase of, such stocks, shares, and interests.
Fixed-income securities are debt securities and dividend-paying preferred
stocks, including floating rate and variable rate instruments.
Non-U.S. company is an entity that (i) is organized under the laws of a country
other than the United States and has its principal office in a country other
than the United States, or (ii) the equity securities of which are traded
principally in securities markets outside the United States.
Rule 144A securities are securities that may be resold pursuant to Rule 144A of
the Securities Act.
U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
RATING AGENCIES
Moody's is Moody's Investors Service, Inc.
S&P is Standard & Poor's Rating Services.
OTHER
1940 Act is the Investment Company Act of 1940, as amended.
Code is the Internal Revenue Code of 1986, as amended.
Commission is the Securities and Exchange Commission.
Exchange is the New York Stock Exchange.
Securities Act is the Securities Act of 1933, as amended.
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DESCRIPTION OF THE FUND
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This section of the Prospectus provides a more complete description of the
Fund's investment objective, principal strategies and principal risks. Of
course, there can be no assurance that the Fund will achieve its investment
objective.
Please note:
o Additional discussion of the Fund's investments, including the risks of
the investments that appear in bold type can be found in the discussion
under Description of Additional Investment Practices following this
section.
o Additional information about risks of investing in the Fund can be found
in the discussions under Additional Risk Considerations.
o Additional descriptions of the Fund's strategies and investments, as well
as other strategies and investments not described below, may be found in
the Fund's Statement of Additional Information or SAI.
o The Fund's investment objective is "fundamental" and cannot be changed
without a shareholder vote and, except as noted, the Fund's investment
policies are not fundamental and thus can be changed without a shareholder
vote.
INVESTMENT OBJECTIVE AND PRINCIPAL POLICIES AND RISKS
INVESTMENT OBJECTIVE
The Fund's investment objective is to seek long-term growth of capital through
all market conditions.
PRINCIPAL POLICIES
Consistent with the investment style of Alliance's Large Cap Growth Group, the
Fund will invest in a "Core Portfolio" of equity securities of large,
intensively researched, high-quality companies that are judged likely to achieve
superior earnings growth. As a matter of fundamental policy, the Fund invests at
least 65% of its total assets in these type of companies. In Alliance's view,
high-quality companies are larger capitalization companies (companies with
market capitalizations generally expected to exceed $5 billion) that possess,
among other things, relatively long operating histories, strong management,
superior industry positions and excellent balance sheets. The Fund will seek to
take advantage of what Alliance believes are opportunities presented by
unwarranted fluctuations in the prices of securities, both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. To
take advantage of investment opportunities in both rising and declining markets,
the Fund may engage in short selling and may use certain other investment
practices, including options, futures and forward contracts, and leverage.
The Fund's Core Portfolio, which will constitute at least the majority of, and
at times may constitute substantially all of, its total assets, will consist of
the equity securities of the 25 companies that are most highly regarded by
Alliance's Large Cap
6
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Growth Group at any point in time. These Core Portfolio companies will be
predominantly U.S. companies. The balance of the Fund's portfolio will be
invested in equity securities of other U.S. and non-U.S. companies that
Alliance considers to have exceptional growth potential.
Normally, about 40 companies will be represented in the Fund's portfolio. The
Fund thus differs from more typical equity mutual funds because it invests most
of its assets in a relatively small number of intensively researched companies.
The Fund may invest up to 35% of its total assets in equity securities of
non-U.S. companies. Equity securities of non-U.S. companies will be selected by
Alliance for investment by the Fund on the basis of the same growth potential
and other characteristics as equity securities of U.S. companies.
Within the Fund's investment framework, Alliance's Large Cap Growth Group, led
by Alfred Harrison, Vice Chairman of Alliance Capital Management Corporation,
the general partner of Alliance, will make day-to-day investment decisions for
the Fund. Alliance depends heavily upon the fundamental analysis and research of
its large internal research staff in making investment decisions for the Fund.
The research staff generally follows a primary research universe of
approximately 500 companies that are considered by Alliance to have strong
management, superior industry positions, excellent balance sheets, and the
ability to demonstrate superior earnings growth. As one of the largest
multi-national investment firms, Alliance has access to considerable information
concerning all of the companies it follows, an in-depth understanding of the
products, services, markets, and competition of these companies, and a good
knowledge of these companies' managements.
Alliance's analysts prepare their own earnings estimates and financial models
for each company followed. While each analyst has responsibility for following
companies in one or more identified sectors and/or industries, the lateral
structure of Alliance's research organization and constant communication among
the analysts result in decision-making based on the relative attractiveness of
stocks among industry sectors. The focus during this process is on the early
recognition of change on the premise that value is created through the dynamics
of changing company, industry, and economic fundamentals. Alliance's research
emphasizes identifying companies whose substantially above average prospective
earnings growth is not fully reflected in current market valuations.
Alliance continually reviews its primary research universe of approximately 500
companies to maintain a list of favored securities, the "Alliance 100,"
considered by Alliance to have the most clearly superior earnings potential and
valuation attraction. Alliance's concentration on a limited universe of
companies allows it to devote its extensive resources to constant intensive
research of these companies. Companies are continually added to and deleted from
the Alliance 100 as fundamentals and valuations change. Alliance's Large Cap
Growth Group, in turn, further refines, on a weekly basis, the selection process
for the Fund, with each portfolio manager in the Group selecting the 25 such
companies which appear to the manager most attractive at current prices. These
individual ratings are then aggregated and ranked to produce a composite list of
the 25 most highly regarded stocks, the "Favored 25".
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. The Fund will strive to
capitalize on unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. Under normal
circumstances, the Fund will remain substantially fully invested in equity
securities and will not take significant cash positions for market timing
purposes. Rather, during a market decline, while adding to positions in favored
stocks, the Fund will tend to become somewhat more aggressive, gradually
reducing the number of companies represented in the Fund's portfolio.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund will tend to become somewhat more conservative, gradually
increasing the number of companies represented in the Fund's portfolio. Through
this "buying into declines" and "selling into strength," Alliance seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets.
The Fund also may:
o engage in short sales of securities for up to 30% of its total assets;
o invest up to 20% of its total assets in convertible securities;
o invest up to 5% of its total assets in rights or warrants;
o write covered put and call options and purchase put and call options on
U.S. and foreign securities exchanges and over the counter, including
options on market indices, and write uncovered options for cross hedging
purposes;
o enter into contracts for the purchase and sale of stock Index futures and
purchase and write put and call options on such futures contracts;
o enter into contracts for the purchase and sale for the future delivery of
foreign currencies or contracts based on financial indices, including any
index of U.S. Government securities or securities issued by foreign
government entities;
o purchase and write put and call options on foreign currencies;
o purchase or sell forward foreign currency exchange contracts;
o enter into forward commitments for the purchase or sale of securities;
o enter into reverse repurchase agreements and dollar rolls;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make secured loans of its securities of up to 30% of its total assets; and
o enter into repurchase agreements.
7
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PRINCIPAL RISKS
Among the principal risks of investing in the Fund are:
o Market Risk This is the risk that the value of the Fund's investments will
fluctuate as the stock or bond markets fluctuate and that prices overall
will decline over short or longer-term periods.
o Credit Risk This is the risk that the issuer of a security will be unable
or unwilling to make timely payments of interest or principal, or to
otherwise honor its obligations. The degree of risk for a particular
security may be reflected in its credit rating.
o Interest Rate Risk This is the risk that changes in interest rates will
affect the value of a Fund's investments in income-producing, fixed-income
(i.e., debt) securities. Increases in interest rates may cause the value
of a Fund's investments to decline.
o Derivative and Leverage Risk The Fund may make substantial use of
derivatives and employ specialized trading techniques such as short sales,
options, futures, forwards, and leverage to increase its exposure to
certain selected securities. Alliance employs these techniques
speculatively to enhance returns and not merely as hedging tools. These
techniques are riskier than many investment strategies and will result in
greater volatility for the Fund, particularly in periods of market
declines.
o Foreign Risk This is the risk of investments in issuers located in foreign
countries. Investments in foreign securities may experience more rapid and
extreme changes in value than investments in securities of U.S. companies.
This is because the securities markets of many foreign countries are
relatively small, with a limited number of companies representing a small
number of industries. Additionally, foreign securities issuers are usually
not subject to the same degree of regulation as U.S. issuers. Reporting,
accounting, and auditing standards of foreign countries differ, in some
cases significantly, from U.S. standards. Also, nationalization,
expropriation or confiscatory taxation, currency blockage, or political
changes or diplomatic developments could adversely affect the Fund's
investments in a foreign country. In the event of nationalization,
expropriation, or other confiscation, the Fund could lose its entire
investment.
o Currency Risk This is the risk that fluctuations in the exchange rates
between the U.S. Dollar and foreign currencies may negatively affect the
value of the Fund's investments.
o Management Risk The Fund is subject to management risk because it is an
actively managed investment Fund. Alliance will apply its investment
techniques and risk analyses in making investment decisions for the Fund,
but there is no guarantee that its techniques will produce the intended
result.
o Focused Portfolio Risk This is the risk associated with investments in a
limited number of companies. The Fund is "non-diversified" meaning that it
invests more of its assets in a smaller number of companies than many
other Funds. These investments may have more risk because changes in the
value of a single security may have a more significant effect, either
negative or positive, on the Fund's net asset value.
DESCRIPTION OF ADDITIONAL INVESTMENT PRACTICES
This section describes the investment practices of the Fund and risks associated
with these practices.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which generally
provide a stable stream of income with generally higher yields than those of
equity securities of the same or similar issuers. The price of a convertible
security will normally vary with changes in the price of the underlying equity
security, although the higher yield tends to make the price of the convertible
security less volatile than that of the underlying equity security. As with debt
securities, the market values of convertible securities tend to decrease as
interest rates rise and increase as interest rates fall. While convertible
securities generally offer lower interest yields than non-convertible debt
securities of similar quality, they offer investors the potential to benefit
from increases in the market prices of the underlying common stocks.
The Fund will not invest in convertible debt securities rated below Baa by
Moody's and BBB by S&P, or, if not rated, determined by Alliance to be of
equivalent quality. Securities rated Baa by Moody's or BBB by S&P, and
comparable unrated securities as determined by Alliance are considered to have
speculative characteristics. Sustained periods of deteriorating economic
conditions or rising interest rates are more likely to lead to a weakening in
the issuer's capacity to pay interest and repay principal than in the case of
higher-rated securities. The Fund will not retain a convertible debt security
that is downgraded below Baa or BBB, or, if unrated, determined by Alliance to
have undergone similar credit quality deterioration subsequent to purchase by
the Fund.
Currency Swaps. Currency swaps involve the individually negotiated exchange by
the Fund with another party of a series of payments in specified currencies. A
currency swap may involve the delivery at the end of the exchange period of a
substantial amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a currency swap is
subject to the risk that the swap counterparty will default on its contractual
delivery obligations. The Fund will not enter into any currency swap unless the
credit quality of the unsecured senior debt or the claims-paying ability of the
counterparty is rated in the highest rating category of at least one nationally
recognized rating organization at the time of entering into the transaction. If
there is a default by the other party to such a transaction, the Fund will have
contractual remedies pursuant to the agreements related to the transactions.
8
<PAGE>
Forward Commitments. Forward commitments for the purchase or sale of securities
may include purchases on a "when-issued" basis or purchases or sales on a
"delayed delivery" basis. In some cases, a forward commitment may be conditioned
upon the occurrence of a subsequent event, such as approval and consummation of
a merger, corporate reorganization or debt restructuring (i.e., a "when, as and
if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but the Fund may negotiate settlements beyond two months.
Securities purchased or sold under a forward commitment are subject to market
fluctuation, and no interest or dividends accrue to the purchaser prior to the
settlement date.
When-issued securities and forward commitments may be sold prior to the
settlement date, but the Fund enters into when-issued and forward commitments
only with the intention of actually receiving securities or delivering them, as
the case may be. If the Fund chose to dispose of the right to acquire a
when-issued security prior to its acquisition or dispose of its right to deliver
or receive against a forward commitment, it may realize a gain or incur a loss.
Any significant commitment of Fund assets to the purchase of securities on a
"when, as and if issued" basis may increase the volatility of the Fund's net
asset value. No forward commitments will be entered into if, as a result, the
Fund's aggregate commitments under the transactions would be more than 30% of
its total assets. In the event the other party to a forward commitment
transaction were to default, the Fund might lose the opportunity to invest money
at favorable rates or to dispose of securities at favorable prices.
Forward Foreign Currency Exchange Contracts. The Fund may purchase or sell
forward foreign currency exchange contracts to minimize the risk of adverse
changes in the relationship between the U.S. Dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific currency for an
agreed price at a future date, and is individually negotiated and privately
traded.
The Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. Dollar price of the security
("transaction hedge"). The Fund may not engage in transaction hedges with
respect to the currency of a particular country to an extent greater than the
aggregate amount of the Fund's transactions in that currency. When the Fund
believes that a foreign currency may suffer a substantial decline against the
U.S. Dollar, it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency; or when the Fund believes that
the U.S. Dollar may suffer a substantial decline against a foreign currency, it
may enter into a forward purchase contract to buy that foreign currency for a
fixed dollar amount ("position hedge"). The Fund will not position hedge with
respect to a particular currency to an extent greater than the aggregate market
value (at the time of making such sale) of the securities held in its portfolio
denominated or quoted in that currency. Instead of entering into a position
hedge, the Fund may, in the alternative, enter into a forward contract to sell a
different foreign currency for a fixed U.S. Dollar amount where the Fund
believes that the U.S. Dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the U.S. Dollar value
of the currency in which portfolio securities of the Fund are denominated
("cross-hedge"). Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it does not enter into forward
contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of securities decline. These transactions also preclude the opportunity
for gain if the value of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so generally
anticipated that the Fund is not able to contract to sell the currency at a
price above the anticipated devaluation level.
Illiquid Securities. The Fund will limit its investment in illiquid securities
to no more than 5% of its net assets. Illiquid securities generally include (i)
direct placements or other securities that are subject to legal or contractual
restrictions on resale or for which there is no readily available market (e.g.,
when trading in the security is suspended or, in the case of unlisted
securities, when market makers do not exist or will not entertain bids or
offers), including many individually negotiated currency swaps and any assets
used to cover currency swaps, (ii) over-the-counter options and assets used to
cover over-the-counter options, and (iii) repurchase agreements not terminable
within seven days.
Because of the absence of a trading market for illiquid securities, the Fund may
not be able to realize the price at which they are carried on the Fund's books
upon sale. Alliance will monitor the illiquidity of the Fund's investments in
such securities. Rule 144A securities will not be treated as "illiquid" for
purposes of this limit on investments if they meet certain liquidity guideline
established by the Fund or the Adviser.
The Fund may not be able to readily sell securities for which there is no ready
market. To the extent that these securities are foreign securities, there is no
law in many of the countries in which the Fund may invest similar to the
Securities Act requiring an issuer to register the sale of securities with a
governmental agency or imposing legal restrictions on resales of securities,
either as to length of time the securities may be held or manner of resale.
There may, however, be contractual restrictions on resale of securities.
Loans of Portfolio Securities. The Fund may make secured loans of its portfolio
securities to entities with which it can enter into repurchase agreements,
provided that cash and/or liquid high grade debt securities equal to at least
100% of the market value of the securities loaned are deposited and maintained
by the borrower with the Fund. The risk in lending portfolio securities, as with
other extensions of credit, consists of the possible
9
<PAGE>
loss of rights in the collateral should the borrower fail financially.
In determining whether to lend securities to a particular borrower, Alliance
will consider all relevant facts and circumstances, including the
creditworthiness of the borrower. While securities are on loan, the borrower
will pay the Fund any income from the securities. The Fund may invest any cash
collateral in portfolio securities and earn additional income, or receive an
agreed-upon amount of income from a borrower who has delivered equivalent
collateral. The Fund will have the right to regain record ownership of loaned
securities to exercise beneficial rights such as voting rights, subscription
rights, and rights to dividends, interest or distributions. The Fund may pay
reasonable finders', administrative, and custodial fees in connection with a
loan.
Options on Securities. An option gives the purchaser of the option, upon payment
of a premium, the right to deliver to (in the case of a put) or receive from (in
the case of a call) the writer of the option a specified amount of a security on
or before a fixed date at a predetermined price. A call option written by the
Fund is "covered" if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security 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 the Fund is "covered" if the Fund holds a put on the
underlying securities with an exercise price equal to or greater than that of
the put option it has written.
A call option is for cross-hedging purposes if the Fund does not own the
underlying security and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire. The
Fund may write call options for cross-hedging purposes. The Fund would write a
call option for cross-hedging purposes, instead of writing a covered call
option, when the premium to be received from the cross-hedge transaction would
exceed that which would be received from writing a covered call option, while at
the same time achieving the desired hedge.
In purchasing an option, the Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess of
the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by the Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option is exercised, the underlying security would then be purchased or
sold by the Fund at a disadvantageous price. Entering into a closing transaction
(i.e., by disposing of the option prior to its exercise) could reduce these
risks. The Fund retains the premium received from writing a put or call option
whether or not the option is exercised. The writing of call options could result
in increases in the Fund's portfolio turnover rate, especially during periods
when market prices of the underlying securities appreciate.
The Fund will purchase or write options on securities of the types in which it
is permitted to invest in privately negotiated (i.e., over-the-counter)
transactions only with investment dealers and other financial institutions (such
as commercial banks or savings and loan institutions) deemed creditworthy by
Alliance. Alliance has adopted procedures for monitoring the creditworthiness of
such entities. Options purchased or written by the Fund in negotiated
transactions are illiquid and it may not be possible for the Fund to effect a
closing transaction at an advantageous time.
Options on Securities Indices. An option on a securities index is similar to an
option on a security except that, rather than the right to take or make delivery
of a security at a specified price, an option on a securities index gives the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing level of the chosen index is greater than (in the case of a call) or
less than (in the case of a put) the exercise price of the option.
Options on Foreign Currencies. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and the Fund could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on a foreign currency may constitute
an effective hedge against fluctuations in exchange rates, although, in the
event of rate movements adverse to the Fund's position, the Fund may forfeit the
entire amount of the premium plus related transaction costs.
Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currency or other commodity called for by the contract at
a specified price on a specified date. A "purchase" of a futures contract means
the incurring of an obligation to acquire the securities or foreign currency or
other commodity called for by the contract at a specified price on a specified
date. The purchaser of a futures contract on an index agrees to take or make
delivery of an amount of cash equal to the difference between a specified dollar
multiple of the value of the index on the expiration date of the contract
("current contract value") and the price at which the contract was originally
struck. No physical delivery of the securities underlying the index is made.
The Fund will purchase options on futures contracts written or purchased that
are traded on U.S. or foreign exchanges or over-the-counter. These investment
techniques will be used only to hedge against anticipated future changes in
market conditions and interest or exchange rates which otherwise might either
adversely affect the value of the Fund's portfolio securities or adversely
affect the prices of securities which the Fund intends to purchase at a later
date.
The Fund will not enter into any futures contracts or options on futures
contracts if immediately thereafter the market values of the outstanding futures
contracts of the Fund and the currencies and futures contracts subject to
outstanding options written by the Fund would exceed 100% of its total assets.
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<PAGE>
Repurchase Agreements. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit the Fund
to keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. If a vendor defaults on its
repurchase obligation, the Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
a vendor goes bankrupt, the Fund might be delayed in, or be prevented from,
selling the collateral for its benefit.
Reverse Repurchase Agreements and Dollar Rolls. Reverse repurchase agreements
involve sales by the Fund of portfolio assets concurrently with an agreement by
the Fund to repurchase the same assets at a later date at a fixed price. During
the reverse repurchase agreement period, the Fund continues to receive principal
and interest payments on these securities. Generally, the effect of such a
transaction is that the Fund can recover all or most of the cash invested in the
portfolio securities involved during the term of the reverse repurchase
agreement, while it will be able to keep the interest income associated with
those portfolio securities. Such transactions are only advantageous if the
interest cost to the Fund of the reverse repurchase transaction is less than the
cost of otherwise obtaining the cash.
Dollar rolls involve sales by the Fund of securities for delivery in the current
month and the Fund's simultaneously contracting to repurchase substantially
similar (same type and coupon) securities on a specified future date. During the
roll period, the Fund forgoes principal and interest paid on the securities. The
Fund is compensated by the difference between the current sales price and the
lower forward price for the future purchase (often referred to as the "drop") as
well as by the interest earned on the cash proceeds of the initial sale.
Reverse repurchase agreements and dollar rolls involve the risk that the market
value of the securities the Fund is obligated to repurchase under the agreement
may decline below the repurchase price. In the event the buyer of securities
under a reverse repurchase agreement or dollar roll files for bankruptcy or
becomes insolvent, the Fund's use of the proceeds of the agreement may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.
Reverse repurchase agreements and dollar rolls are speculative techniques and
are considered borrowings by the Funds.
Rights and Warrants. The Fund will invest in rights or warrants only if the
underlying equity securities themselves are deemed appropriate by Alliance for
inclusion in the Fund's portfolio. Rights and warrants entitle the holder to buy
equity securities at a specific price for a specific period of time. Rights are
similar to warrants except that they have a substantially shorter duration.
Rights and warrants may be considered more speculative than certain other types
of investments in that they do not entitle a holder to dividends or voting
rights with respect to the underlying securities nor do they represent any
rights in the assets of the issuing company. The value of a right or warrant
does not necessarily change with the value of the underlying securities,
although the value of a right or warrant may decline because of a decrease in
the value of the underlying stock, the passage of time, or a change in
perception as to the potential of the underlying stock, or any combination of
these factors.
If the market price of the underlying security is below the exercise price of
the warrant on the expiration date, the warrant will expire worthless. Moreover,
a right or warrant ceases to have value if it is not exercised prior to the
expiration date.
Short Sales. The Fund may utilize short selling in order to attempt both to
protect its portfolio against the effects of potential downtrends in the
securities markets and as a means of enhancing its overall performance. In
identifying short selling opportunities, the Large Cap Growth Group will use the
fundamental analysis and investment research strategy described above to
identify a small group of companies that it believes may decline in price as a
result of fundamental or market developments.
A short sale is a transaction in which the Fund sells a security it does not own
but has borrowed in anticipation that the market price of that security will
decline. The Fund may be required to pay a fee to borrow the security and to pay
over to the lender any payments received on the security.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
Although the Fund's gain is limited by the price at which it sold the security
short, its potential loss is unlimited.
In order to defer realization of gain or loss for U.S. federal income tax
purposes, the Fund may also make short sales "against the box". In this type of
short sale, at the time of the sale, the Fund owns or has the immediate and
unconditional right to acquire at no additional cost the identical security.
Standby Commitment Agreements. Standby commitment agreements commit the Fund,
for a stated period of time, to purchase a stated amount of a security that may
be issued and sold to the Fund at the option of the issuer. The price and coupon
of the security are fixed at the time of the commitment. At the time of entering
into the agreement, the Fund is paid a commitment fee, regardless of whether the
security ultimately is issued, typically equal to approximately 0.5% of the
aggregate purchase price of the security the Fund has committed to purchase. The
Fund will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
to the Fund and unavailable on a firm commitment basis. The Fund will limit its
investment in such commitments so that the aggregate purchase price of the
securities subject to the commitments will not exceed 50% of its assets taken at
the time of making the commitment.
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<PAGE>
There is no guarantee that the securities subject to a standby commitment will
be issued, and the value of the security, if issued, on the delivery date may be
more or less than its purchase price. Since the issuance of the security
underlying the commitment is at the option of the issuer, the Fund will bear the
risk of capital loss in the event the value of the security declines and may not
benefit from an appreciation in the value of the security during the commitment
period if the issuer decides not to issue and sell the security to the Fund.
Stock Index Futures. The Fund may purchase and sell stock index futures as a
hedge against movements in the equity markets. There are several risks in
connection with the use of stock index futures by the Fund as a hedging device.
One risk arises because of the imperfect correlation between movements in the
price of a stock index future and movements in the price of the securities which
are the subject of the hedge. The price of a stock index future may move more
than or less than the price of the securities being hedged. If the price of a
stock index future moves less than the price of the securities which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the securities being hedged has moved in an unfavorable direction, the Fund
would be in a better position than if it had not hedged at all. If the price of
the securities being hedged has moved in a favorable direction, this advantage
will be partially offset by the loss on the index futures contract. If the price
of the index future moves more than the price of the stock, the Fund will
experience either a loss or gain on the futures contract which will not be
completely offset by movements in the price of the securities which are subject
to the hedge.
To compensate for the imperfect correlation of movements in the price of
securities being hedged and movements in the price of a stock index future, the
Fund may buy or sell stock index futures contracts in a greater dollar amount
than the dollar amount of securities being hedged if the volatility over a
particular time period of the prices of such securities has been greater than
the volatility over such time period of the stock index, or if otherwise deemed
to be appropriate by Alliance. Conversely, the Fund may buy or sell fewer stock
index futures contracts if the volatility over a particular time period of the
prices of the securities being hedged is less than the volatility over such time
period of the stock index, or it is otherwise deemed to be appropriate by
Alliance. It is also possible that, where the Fund has sold futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of securities held in the Fund may decline. If this occurred, the Fund would
lose money on the futures and also experience a decline in value in its
portfolio securities. However, over time the value of a diversified portfolio
should tend to move in the same direction as the market indices upon which the
index futures are based, although there may be deviations arising from
differences between the composition of the Fund and the stocks comprising the
index.
Where a stock index futures contract is purchased to hedge against a possible
increase in the price of stock before the Fund is able to invest its cash (or
cash equivalents) in stocks (or options) in an orderly fashion, it is possible
that the market may decline instead. If the Fund then concludes not to invest in
stock or options at that time because of concern as to possible further market
decline or for other reasons, the Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation, or no
correlation at all, between movements in stock index futures and the portion of
the portfolio being hedged, the price of stock index futures may not correlate
perfectly with movement in the stock index due to certain market distortions.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the normal
relationship between the index and futures markets. From the point of view of
speculators, the deposit requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in a
stock index and movements in the price of stock index futures, a correct
forecast of general market trends by the investment adviser may still not result
in a successful hedging transaction over a short time frame.
Positions in stock index futures may be closed out only on an exchange or board
of trade which provides a secondary market for such futures. Although the Fund
intends to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
futures contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event that futures contracts have
been used to hedge portfolio securities, such securities will not be sold until
the futures contract can be terminated. In such circumstances, an increase in
the price of the securities, if any, may partially or completely offset losses
on the futures contract. As described above, however, there is no guarantee that
the price of the securities will in fact correlate with the price movements in
the futures contract and thus provide an offset on a futures contract.
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.
General. The successful use of the investment practices described above draws
upon Alliance's special skills and experience and usually depends on Alliance's
ability to forecast price movements or currency exchange rate movements
correctly.
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<PAGE>
Should prices or exchange rates move unexpectedly, the Fund may not achieve the
anticipated benefits of the transactions or may realize losses and thus be in a
worse position than if such strategies had not been used. Unlike many
exchange-traded futures contracts and options on futures contracts, there are no
daily price fluctuation limits for certain options on currencies and forward
contracts, and adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation between movements in
the prices of such instruments and movements in the prices of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.
The Fund's ability to dispose of its positions in futures contracts, options and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types of
securities and currencies are relatively new and still developing, and there is
no public market for forward contracts. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options, and forward contracts. If a secondary market does not exist for an
option purchased or written by the Fund, it might not be possible to effect a
closing transaction in the option (i.e., dispose of the option) with the result
that (i) an option purchased by the Fund would have to be exercised in order for
the Fund to realize any profit and (ii) the Fund may not be able to sell
portfolio securities or currencies covering an option written by the Fund until
the option expires or it delivers the underlying securities, currency or futures
contract upon exercise. Therefore, no assurance can be given that the Fund will
be able to utilize these instruments effectively.
Portfolio Turnover. The Fund's portfolio turnover rate is included in the
Financial Highlights section. The Fund is actively managed and, in some cases in
response to market conditions, a Fund's portfolio turnover may exceed 100%. A
higher rate of portfolio turnover increases brokerage and other expenses, which
must be borne by the Fund and its shareholders. High portfolio turnover also may
result in the realization of substantial net short-term capital gains, which,
when distributed, are taxable to shareholders.
Temporary Defensive Position. For temporary defensive purposes, 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 U.S.
Government securities, bank deposits, money market instruments, short-term debt
securities, including notes and bonds, or hold its assets in cash. While the
Fund is investing for temporary defensive purposes, it may not meet its
investment objective.
ADDITIONAL RISK CONSIDERATIONS
Effects of Borrowing. The Fund may, when Alliance believes that market
conditions are appropriate, borrow in order to take full advantage of available
investment opportunities. The Fund may, although it has no present intention of
doing so, borrow money from a bank in a privately arranged transaction to
increase the money available to the Fund to invest in securities when the Fund
believes that the return from the securities financed will be greater than the
interest expense paid on the borrowing. Borrowings may involve additional risk
to the Fund because the interest expense may be greater than the income from or
appreciation of the securities carried by the borrowings and the value of the
securities carried may decline below the amount borrowed.
Any investment gains made with the proceeds obtained from borrowings in excess
of interest paid on the borrowings will cause the net income per share and the
net asset value per share of the Fund's common stock to be greater than would
otherwise be the case. On the other hand, if the investment performance of the
additional securities purchased fails to cover their cost (including any
interest paid on the money borrowed) to the Fund, then the net income per share
and net asset value per share of the Fund's common stock will be less than would
otherwise be the case. This is the speculative factor known as "leverage".
Borrowings by the Fund result in leveraging of the Fund's shares of common
stock. Utilization of leverage, which is usually considered speculative,
involves certain risks to the Fund's shareholders. These include a higher
volatility of the net asset value of the Fund's shares of common stock and the
relatively greater effect on the net asset value of the shares. So long as the
Fund is able to realize a net return on its investment portfolio that is higher
than the interest expense paid on borrowings, the effect of leverage will be to
cause the Fund's shareholders to realize a higher current net investment income
than if the Fund were not leveraged. On the other hand, interest rates on U.S.
Dollar-denominated and foreign currency-denominated obligations change from time
to time as does their relationship to each other, depending upon such factors as
supply and demand forces, monetary and tax policies within each country and
investor expectations. Changes in such factors could cause the relationship
between such rates to change so that rates on U.S. Dollar-denominated
obligations may substantially increase relative to the foreign
currency-denominated obligations in which the Fund may be invested. To the
extent that the interest expense on borrowings approaches the net return on the
Fund's investment portfolio, the benefit of leverage to the Fund's shareholders
will be reduced, and if the interest expense on borrowings were to exceed the
net return to shareholders, the Fund's use of leverage would result in a lower
rate of return than if the Fund were not leveraged. Similarly, the effect of
leverage in a declining market could be a greater decrease in net asset value
per share than if the Fund were not leveraged. In an extreme case, if the Fund's
current investment income were not sufficient to meet the interest expense on
borrowings, it could be necessary for the Fund to liquidate certain of its
investments, thereby reducing the net asset value of the Fund's shares.
Foreign Securities. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, the Fund, whose investment portfolio includes foreign
securities, may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of U.S.
companies. These markets may be subject to
13
<PAGE>
greater influence by adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual in the United
States. Securities registration, custody and settlements may in some instances
be subject to delays and legal and administrative uncertainties.
Certain foreign countries require governmental approval prior to investments by
foreign persons or limit investment by foreign persons to only a specified
percentage of an issuer's outstanding securities or a specific class of
securities which may have less advantageous terms (including price) than
securities of the company available for purchase by nationals. These
restrictions or controls may at times limit or preclude investment in certain
securities and may increase the costs and expenses of the Fund. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from certain countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority,
and if a deterioration occurs in a country's balance of payments, the country
could impose temporary restrictions on foreign capital remittances.
The Fund also could be adversely affected by delays in, or a refusal to grant,
any required governmental approval for repatriation, as well as by the
application of other restrictions on investment. Investing in local markets may
require the Fund to adopt special procedures, that may involve additional costs
to the Fund. These factors may affect the liquidity of the Fund's investments in
any country and Alliance will monitor the effect of any such factor or factors
on the Fund's investments. Furthermore, transaction costs including brokerage
commissions for transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements, and timely disclosure of information. The reporting, accounting,
and auditing standards of foreign countries may differ, in some cases
significantly, from U.S. standards in important respects and less information
may be available to investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available about certain
non-U.S. issuers than is available about U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency, and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability, or diplomatic
developments could affect adversely the economy of a foreign country and the
Fund's investments. In the event of expropriation, nationalization or other
confiscation, the Fund could lose its entire investment in the country involved.
In addition, laws in foreign countries governing business organizations,
bankruptcy and insolvency may provide less protection to security holders, such
as the Fund, than that provided by U.S. laws.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISER AND FUND MANAGER
The Fund's Adviser is Alliance Capital Management, L.P., ("Alliance"), 1345
Avenue of the Americas, New York, New York 10105. Alliance is a leading
international adviser supervising client accounts with assets as of December 31,
1999 totaling more than $368 billion (of which more than $169 billion
represented assets of investment companies). As of December 31, 1999, Alliance
managed retirement assets for many of the largest public and private employee
benefit plans (including 31 of the nation's FORTUNE 100 companies), for public
employee retirement funds in 31 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide. The 53
registered investment companies managed by Alliance, comprising 119 separate
investment portfolios, currently have more than 5 million shareholder accounts.
Alliance provides investment advisory services and order placement facilities
for the Fund. For these advisory services, the Fund paid Alliance as a
percentage of average daily net assets a fee of 1.40% for its fiscal year ended
October 31, 1999.
The persons primarily responsible for the day-to-day management of the Fund will
be Alfred Harrison, Vice Chairman of ACMC, and Michael J. Reilly, Senior Vice
President of ACMC. Both Messrs. Harrison and Reilly are members of Alliance's
Large Cap Growth Group and have been associated with Alliance since prior to
1993.
Under the Advisory Agreement, Alliance will receive a basic fee at an annualized
rate of 1.10% of the Fund's average daily net assets (the "Basic Fee") and an
adjustment to the Basic Fee based on the investment performance of the Class A
shares of the Fund in relation to the investment record of the Russell 1000(R)
Growth Index (the "Index") for certain prescribed periods as described below.
The fee will be accrued daily and paid monthly, except as described below.
The Russell 1000(R) universe of securities is compiled by Frank Russell Company
and is segmented into two style indices, the Russell 1000(R) Growth Index and
the Russell 1000(R) Value Index, both based on the capitalization-weighted
median book-to-price ratio of each of the securities. At each reconstitution,
the Russell 1000(R) constituents are ranked by their book-to-price ratio. Once
so ranked, the breakpoint for the two styles is determined by the median market
capitalization of the Russell 1000(R). Thus, those securities falling within the
top fifty percent of the cumulative market capitalization (as ranked by
descending book-to-price ratio) become members of the Russell 1000(R) Value
Index and the remaining fifty percent become members of the Russell 1000(R)
Growth Index. The Russell 1000(R) Growth Index is, accordingly, designed to
include those Russell 1000(R) securities with a greater-than-average growth
orientation. In contrast with the securities in the Russell 1000(R) Value Index,
companies in the Growth Index tend to exhibit higher price-to-book and
price-earnings ratios, lower dividend yields and higher forecasted growth
values. The Russell 1000(R) Growth Index reflects
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<PAGE>
changes in market prices, and assumes reinvestment of investment income.
Beginning with the month of August 1999 and for each succeeding month, the Basic
Fee will be a monthly fee equal to 1/12th of 1.10% (1.10% on an annualized
basis) of the average of the net assets of the Fund. The performance period for
each such month will be from August 1998 through the current calendar month,
until the Advisory Agreement has been in effect for 36 full calendar months,
when it will become a rolling 36-month period ending with the current calendar
month. The Basic Fee for each such month may be increased or decreased at the
rate of 1/12th of .05% per percentage point, depending on the extent, if any, by
which the investment performance of the Class A shares of the Fund exceeds by
more than two percentage points, or is exceeded by more than two percentage
points by, the percentage change in the investment record of the Index for the
applicable performance period. The maximum increase or decrease in the Basic Fee
for any month may not exceed 1/12th of .30%. Accordingly, for each month,
commencing with the month of August 1999, the maximum monthly fee as adjusted
for performance is 1/12th of 1.40% and would be payable if the investment
performance of the Class A shares of the Fund exceeded the percentage change in
the investment record of the Index by eight or more percentage points for the
performance period, and the minimum monthly fee rate as adjusted for performance
is 1/12th of .80% and would be payable if the percentage change in the
investment record of the Index exceeded the investment performance of the Class
A shares of the Fund by eight or more percentage points for the performance
period.
The following table illustrates the full range of permitted increases or
decreases to the Basic Fee.
Percentage Point
Difference* Between
Performance of
Class A Shares and Adjustment Annual Fee
Russell 1000(R) to 1.10% Rate as
Growth Index ** Basic Fee Adjusted
--------------------- ----------- -----------
+8 +.30% 1.40%
+7 +.25% 1.35%
+6 +.20% 1.30%
+5 +.15% 1.25%
+4 +.10% 1.20%
+3 +.05% 1.15%
+/-2 0 1.10%
-3 -.05% 1.05%
-4 -.10% 1.00%
-5 -.15% .95%
-6 -.20% .90%
-7 -.25% .85%
-8 -.30% .80%
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* Fractions of a percentage point will be rounded to the nearer whole point
(to the higher whole point if exactly one-half).
** Measured over the performance period, which is the period from August 1,
1998 to the most recent month-end until July 31, 2001, at which time the
performance period will become a rolling 36-month period ending with the
most recent calendar month.
The investment performance of the Class A shares during any performance period
will be measured by the percentage difference between (i) the opening net asset
value ("NAV") of a Class A share of the Fund and (ii) the sum of (a) the closing
NAV of a Class A share of the Fund, (b) the value of any dividends and
distributions on such share during the period treated as if reinvested in Class
A shares of the Fund and (c) the value of any capital gains taxes per Class A
share paid or payable by the Fund on undistributed realized long-term capital
gains. The measurement of the performance of the Class A shares will not include
any effects resulting from the issuance, sale, repurchase or redemption of
shares of the Fund. The performance of the Index is measured by the percentage
change in the Index between the beginning and the end of the performance period
with cash distributions on the securities that constitute the Index being
treated as reinvested in the Index.
Because the adjustment to the Basic Fee is based on the comparative performance
of the Class A shares with the record of the Index, the controlling factor is
not whether the performance of the Class A shares is up or down, but whether
that performance is up or down more than or less than that of the Index.
Moreover, the comparative investment performance of the Class A shares is based
solely on the relevant performance period without regard to the cumulative
performance over a longer or shorter period of time. The Class A shares of the
Fund have lower expenses and pay correspondingly higher dividends than Class B
and Class C shares and thus will have better performance than the Class B and
Class C shares.
</R
Performance of a Similarly Managed Fund. Alliance is the investment adviser of a
non-diversified closed-end management investment company, Alliance All-Market
Advantage Fund, Inc. ("All-Market Advantage"), that has substantially the same
investment objective and policies as those of the Fund. Although All-Market
Advantage is a closed-end fund, it has been managed in accordance with
substantially the same investment strategies and techniques as are intended to
be employed with respect to the Fund. As reflected below, All-Market Advantage
has performed favorably when compared with the performance of recognized
performance indices. Alfred Harrison and Michael Reilly are the two persons
primarily responsible for the day-to-day management of the Fund and are also the
persons who have been primarily responsible for the day-to-day management of
All-Market Advantage since its inception in October 1994.
The performance results for All-Market Advantage since its inception, together
with those of the Russell 1000(R) Growth Index (the "Index") and the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500"), as comparative
benchmarks, are set forth below. For a description of the Index, see page 14.
The S&P 500 is a widely recognized, unmanaged index of market activity based
upon the aggregate performance of a selected Fund 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
constituting the index, including changes in market prices and accrued
investment income, which is presumed to be reinvested.
The performance data for All-Market Advantage have not been adjusted to reflect
the Fund's higher expenses, which, if
15
<PAGE>
reflected, would have the effect of lowering the performance results shown
below. The performance data have not been adjusted for corporate or individual
taxes, if any, payable with respect to All-Market Advantage. As a closed-end
investment company, All-Market Advantage, unlike an open-end investment company
such as the Fund, is not required to manage its Fund while also being subject
to daily increases or decreases in net assets caused by net sales and net
redemptions of shares. The rates of return shown for All-Market Advantage are
not an estimate or guarantee of future investment performance of the Fund.
To the extent the Fund does not invest in U.S. common stocks or utilizes
investment techniques such as futures or options, the Index and the S&P 500 may
not be substantially comparable to the Fund. The Index and the S&P 500 are
included to illustrate material economic and market factors that existed during
the time periods shown. The Index and the S&P 500 do not reflect the deduction
of any fees. If the Fund were to purchase a Fund of securities substantially
identical to those constituting the Index or the S&P 500, the Fund's performance
relative thereto would be reduced by its expenses, including brokerage
commissions, advisory fees, distribution fees, custodial fees, transfer agency
costs and other administrative expenses, as well as by the effect on Fund
shareholders of sales charges and income taxes.
The performance results presented below are based on percentage changes in net
asset values of All-Market Advantage with dividends and capital gains
reinvested. Cumulative rates of return reflect performance over a stated period
of time. Annualized rates of return represent the rate of growth that would have
produced the corresponding cumulative return had performance been constant over
the entire period. As of December 31, 1999, the assets in All-Market Advantage
totaled approximately $172 million.
Annualized Rates of Return
Periods Ended December 31, 1999
-----------------------------------
All-Market
Advantage/Benchmarks 1 Year 3 Years Inception*
- -------------------------------------- -------- --------- ------------
Alliance All-Market
Advantage Fund, Inc................. 38.30% 44.72% 34.94%
Russell 1000(R)Growth Index........... 33.16% 34.07% 30.80%
Standard & Poor's 500
Composite Stock Price Index......... 21.03% 27.56% 26.94%
Cumulative Rates of Return
Periods Ended December 31, 1999
------------------------------------
All-Market
Advantage/Benchmarks 1 Year 3 Years Inception*
- -------------------------------------- -------- --------- ------------
Alliance All-Market
Advantage Fund, Inc................. 38.30% 203.13% 370.77%
Russell 1000(R)Growth Index........... 33.16% 141.01% 300.67%
Standard & Poor's 500
Composite Stock Price Index......... 21.03% 107.56% 243.20%
- --------------------------------------------------------------------------------
* October 28, 1994, in the case of All-Market Advantage; for the period
beginning October 31, 1994, in the case of the Index and the S&P 500.
Source: Lipper Inc.
- --------------------------------------------------------------------------------
PURCHASE AND SALE OF SHARES
- --------------------------------------------------------------------------------
How The Fund Values Its Shares
The Fund's net asset value or NAV is calculated at 4:00 p.m., Eastern time, each
day the Exchange is open for business. To calculate NAV, the Fund's assets are
valued and totaled, liabilities are subtracted, and the balance, called net
assets, is divided by the number of shares outstanding. The Fund values its
securities at their current market value determined on the basis of market
quotations, or, if such quotations are not readily available, such other methods
as the Fund's directors believe accurately reflect fair market value.
Your order for purchase, sale, or exchange of shares is priced at the next NAV
calculated after your order is accepted by the Fund. Your purchase of Fund
shares may be subject to an initial sales charge. Sales of Fund shares may be
subject to a contingent deferred sales charge or CDSC. See the Distribution
Arrangements section of this Prospectus for details.
How To Buy Shares
You may purchase the Fund's shares through broker-dealers, banks, or other
financial intermediaries. You also may purchase shares directly from the Fund's
principal underwriter, Alliance Fund Distributors, Inc., or AFD. The minimum
investment in the Fund is $10,000.
If you are an existing Fund shareholder, you may purchase shares by electronic
funds transfer in amounts not exceeding $500,000 if you have completed the
appropriate section of the Shareholder Application. Call 800-221-5672 to arrange
a transfer from your bank account.
The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number. To avoid this, you
must provide your correct Tax Identification Number (Social Security Number for
most investors) on your account application.
The Fund may refuse any order to purchase shares. In particular, the Fund
reserves the right to restrict purchases of shares (including through exchanges)
when they appear to evidence a pattern of frequent purchases and sales made in
response to short-term considerations.
How To Exchange Shares
You may exchange your Fund shares for shares of the same Class of other Alliance
Mutual Funds (including AFD Exchange Reserves, a money market fund managed by
Alliance). Exchanges of shares are made at the next-determined NAV, without
sales or service charges. You may request an exchange by mail or telephone. You
must call by 4:00 p.m., Eastern time, to receive that day's NAV. The Fund may
change, suspend, or terminate the exchange service on 60 days' written notice.
How To Sell Shares
You may "redeem" your shares (i.e., sell your shares to a Fund) on any day the
Exchange is open, either directly or through your financial intermediary. Your
sales price will be the next-
16
<PAGE>
determined NAV, less any applicable CDSC, after the Fund receives your sales
request in proper form. Normally, proceeds will be sent to you within 7 days.
If you recently purchased your shares by check or electronic funds transfer,
your redemption payment may be delayed until the Fund is reasonably satisfied
that the check or electronic funds transfer has been collected (which may take
up to 15 days).
o Selling Shares Through Your Broker
Your broker must receive your sales request by 4:00 p.m., Eastern time, and
submit it to the Fund by 5:00 p.m., Eastern time, for you to receive that day's
NAV, less any applicable CDSC. Your broker is responsible for submitting all
necessary documentation to the Fund and may charge you for this service.
o Selling Shares Directly to the Fund
By Mail:
-- Send a signed letter of instruction or stock power, along with
certificates, to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, N.J. 07906-1520
800-221-5672
-- For your protection, a bank, a member firm of a national stock exchange,
or other eligible guarantor institution, must guarantee signatures. Stock
power forms are available from your financial intermediary, AFS, and many
commercial banks. Additional documentation is required for the sale of
shares by corporations, intermediaries, fiduciaries, and surviving joint
owners. If you have any questions about these procedures, contact AFS.
By Telephone:
-- You may redeem your shares for which no stock certificates have been
issued by telephone request. Call AFS at 800-221-5672 with instructions on
how you wish to receive your sale proceeds.
-- A telephone redemption request must be received by 4:00 p.m., Eastern
time, for you to receive that day's NAV, less any applicable CDSC.
-- If you have selected electronic funds transfer in your Shareholder
Application, the redemption proceeds will be sent directly to your bank.
Otherwise, the proceeds will be mailed to you.
-- Redemption requests by electronic funds transfer may not exceed $100,000
per day and redemption requests by check cannot exceed $50,000 per day.
-- Telephone redemption is not available for shares held in nominee or
"street name" accounts, retirement plan accounts, or shares held by a
shareholder who has changed his or her address of record within the
previous 30 calendar days.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
AND TAXES
- --------------------------------------------------------------------------------
Dividends and Distributions
The Fund's 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 same Class of shares of the Fund. If
paid in additional shares, the shares will have an aggregate NAV as of the close
of business on the day following the declaration date of the dividend or
distribution equal to the cash amount of the dividend or distribution. You may
make an election to receive dividends and distributions in cash or in shares at
the time you purchase shares. Your election can be changed at any time prior to
a record date for a dividend. There is no sales or other charge in connection
with the reinvestment of dividends or capital gains distributions. Cash
dividends may be paid in check, or at your election, electronically via the ACH
network. There is no sales or other charge on the reinvestment of Fund
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 the dividend or
distribution. Thereafter, unless you otherwise specify, you will be deemed to
have elected to reinvest all subsequent dividends and distributions in shares of
the Fund.
The Fund expects that distributions will consist either of net income or
long-term capital gains. For federal income tax purposes, the Fund's dividend
distributions of net income (or short-term taxable gains) will be taxable to you
as ordinary income. Any long-term capital gains distributions may be taxable to
you as long-term capital gains. The Fund's distributions also may be subject to
certain state and local taxes.
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 dividend or distribution will depend
on the realization by the Fund of income and capital gains from investments.
There is no fixed dividend rate and there can be no assurance that the Fund
will pay any dividends or realize any capital gains. The final determination of
the amount of the Fund's return of capital distributions for the period will be
made after the end of each calendar year.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
the Fund is liable for foreign income taxes withheld at the source, the Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such for-
17
<PAGE>
eign taxes), but there can be no assurance that the Fund will be able to do so.
Furthermore, a shareholder's ability to claim a foreign tax credit or deduction
in respect of foreign taxes paid by the Fund may be subject to certain
limitations imposed by the Code, as a result of which a shareholder may not be
permitted to claim a full credit or deduction for the amount of such taxes.
Under certain circumstances, if the Fund realizes losses (e.g., from
fluctuations in currency exchange rates) after paying a dividend, all or a
portion of the dividend may subsequently be characterized as a return of
capital. Returns of capital are generally nontaxable, but will reduce a
shareholder's basis in shares of the Fund. If that basis is reduced to zero
(which could happen if the shareholder does not reinvest distributions and
returns of capital are significant), any further returns of capital will be
taxable as capital gain. See the Fund's SAI for a further explanation of these
tax issues.
If you buy shares just before the Fund deducts a distribution from its NAV, you
will pay the full price for the shares and then receive a portion of the price
back as a taxable distribution.
The sale or exchange of Fund shares is a taxable transaction for federal income
tax purposes.
Each year shortly after December 31, the Fund will send you tax information
stating the amount and type of all its distributions for the year. Consult your
tax adviser about the federal, state, and local tax consequences in your
particular circumstances.
- --------------------------------------------------------------------------------
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Share Classes. The Fund offers three classes of shares.
Class A Shares---Initial Sales Charge Alternative
You can purchase Class A shares at NAV plus an initial sales charge, as follows:
Initial Sales Charge
Commission
to Dealer/
Agent as
As % of As % of % of
Net Amount Offering Offering
Amount Purchased Invested Price Price
- --------------------------------------------------------------------------------
Up to $100,000 4.44% 4.25% 4.00%
$100,000 up to $250,000 3.36 3.25 3.00
$250,000 up to $500,000 2.30 2.25 2.00
$500,000 up to $1,000,000 1.78 1.75 1.50
You pay no initial sales charge on purchases of Class A Shares in the amount of
$1,000,000 or more, but may pay a 1% CDSC if you redeem your shares within 1
year. Alliance may pay the dealer or agent a fee of up to 1% of the dollar
amount purchased. Certain purchases of Class A shares may qualify for reduced or
eliminated sales charges under 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 the Fund's SAI for additional
information about these options.
Class B Shares--Deferred Sales Charge Alternative
You can purchase Class B Shares at NAV without an initial sales charge. The Fund
will thus receive the full amount of your purchase. Your investment, however,
will be subject to a CDSC if you redeem shares within 4 years of purchase. The
CDSC varies depending of the number of years you hold the shares. The CDSC
amounts are:
Years Since Purchase CDSC
--------------------- ---------
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None
If you exchange your shares for the Class B shares of another Alliance Mutual
Fund, the CDSC also will apply to those Class B shares. The CDSC period begins
with the date of your original purchase, not the date of exchange for the other
Class B shares.
The Fund's Class B shares purchased for cash automatically convert to Class A
shares eight years after the end of the month of your purchase. If you purchase
shares by exchange for the Class B shares of another Alliance Mutual Fund, the
conversion period runs from the date of your original purchase.
Class C Shares--Asset-Based Sales Charge Alternative
You can purchase shares at NAV without an initial sales charge. The Fund will
thus receive the full amount of your purchase. Your
18
<PAGE>
investment, however, will be subject to a 1% CDSC if you redeem your shares
within 1 year. If you exchange your shares for the Class C shares of another
Alliance Mutual Fund, the 1% CDSC also will apply to those Class C shares. The
1-year period for the CDSC begins with the date of your original purchase, not
the date of the exchange for the other Class C shares.
Class C shares do not convert to any other Class of shares of the Fund.
Asset-based Sales Charge or Rule 12b-1 Fees. The Fund has adopted a plan under
Commission Rule 12b-1 that allows the Fund to pay asset-based sales charges or
distribution and service fees for the distribution and sale of its shares. The
amount of these fees for each Class of the Fund's shares is:
Rule 12b-1 Fee (As A Percentage Of
Aggregate Average Daily Net Assets)
-----------------------------------------
Class A .30%
Class B 1.00%
Class C 1.00%
Because these fees are paid out of the Fund's assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales fees. Class B and Class C shares are subject to
higher distribution fees than Class A shares (Class B shares are subject to
these higher fees for a period of eight years, after which they convert to Class
A shares). The higher fees mean a higher expense ratio, so Class B and Class C
shares pay correspondingly lower dividends and may have a lower net asset value
than Class A shares.
Choosing a Class of Shares. The decision as to which Class of shares is more
beneficial to you depends on the amount and intended length of your investment.
If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider purchasing Class A shares. If you are making a
smaller investment, you might consider purchasing Class B shares because 100% of
your purchase is invested immediately. If you are unsure of the length of your
investment, you might consider Class C shares because there is no initial sales
charge and no CDSC as long as the shares are held for one year or more. Dealers
and agents may receive differing compensation for selling Class A, Class B, or
Class C shares. There is no size limit on purchases of Class A shares. The
maximum purchase of Class B shares is $250,000. The maximum purchase of Class C
shares is $1,000,000.
You should consult your financial agent to assist in choosing a Class of Fund
shares.
Application of the CDSC. The CDSC is applied to the lesser of the original cost
of shares being redeemed or NAV at the time of redemption (or, as to Fund shares
acquired through an exchange, the cost of the Alliance Mutual Fund shares
originally purchased for cash). Shares obtained from dividend or distribution
reinvestment are not subject to the CDSC. The Fund may waive the CDSC on
redemptions of shares following the death or disability of a shareholder, to
meet the requirements of certain qualified retirement plans, or under a monthly,
bimonthly, or quarterly systematic withdrawal plan. See the Fund's SAI for
further information about CDSC waivers.
Other. A transaction, service, administrative or other similar fee may be
charged by your broker-dealer, agent, financial intermediary, or other financial
representative with respect to the purchase, sale, or exchange of Class A, Class
B, or Class C shares made through your financial representative. The financial
intermediaries also may impose requirements on the purchase, sale, or exchange
of shares that are different from, or in addition to, those imposed by a Fund,
including requirements as to the minimum initial and subsequent investment
amounts.
Shares obtained from dividend or distribution reinvestment are not subject to
the 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, bimonthly or quarterly systematic
withdrawal plan.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
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 telephone requests to
purchase, sell, or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephone requests. The telephone
service may be suspended or terminated at any time without notice.
Shareholder Services. AFS offers a variety of shareholder services. For more
information about these services or your account, call AFS's toll-free number,
800-221-5672. Some services are described in the attached Subscription
Application. You also may request a shareholder's manual explaining all
available services by calling 800-227-4618.
Employee Benefit Plans. Certain employee benefit plans, including
employer-sponsored tax-qualified 401(k) plans and other
19
<PAGE>
defined contribution retirement plans ("Employee Benefit Plans"), may establish
requirements as to the purchase, sale or exchange of shares, including maximum
and minimum initial investment requirements, that are different from those
described in this Prospectus. Employee Benefit Plans also may not offer all
classes of shares of the Fund. In order to enable participants investing through
Employee Benefit Plans to purchase shares of the Fund, the maximum and minimum
investment amounts may be different for shares purchased through Employee
Benefit Plans from those described in this Prospectus. In addition, the Class A,
Class B, and Class C CDSC may be waived for investments made through Employee
Benefit Plans.
20
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand a Fund's
financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total return
in the table represents the rate that an investor would have earned (or lost) on
an investment in the Fund (assuming investment of all dividends and
distributions). The information has been audited by PricewaterhouseCoopers LLP,
the Fund's independent auditors, whose report, along with the Fund's financial
statements, is included in the SAI, which is available upon request.
21
<PAGE>
<TABLE>
<CAPTION>
Income from Investment Operations Less Dividends and Distributions
-------------------------------------------------------- -------------------------------------------
Net Gains
Net Asset or Losses on Dividends Distributions
Value, Securities Total from from Net in Excess of Distributions
Beginning Net Investment (both realized Investment Investment Net Investment from
Fiscal Year or Period of Period Income (Loss) and unrealized) Operations Income Income Capital Gains
- ---------------------- --------- ------------- --------------- ---------- ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A
Year ended 10/31/99... $ 9.53 $(.22)(a)(b) $4.87 $4.65 $0 $0 $0
7/29/98+ to 10/31/98.. $10.00 $(.03)(a)(b) $(.44) $(.47) $0 $0 $0
Class B
Year ended 10/31/99... $ 9.49 $(.30)(a)(b) $4.84 $4.54 $0 $0 $0
7/29/98+ to 10/31/98.. $10.00 $(.04)(a)(b) $(.47) $(.51) $0 $0 $0
Class C
Year ended 10/31/99... $ 9.50 $(.30)(a)(b) $4.83 $4.53 $0 $0 $0
7/29/98+ to 10/31/98.. $10.00 $(.04)(a)(b) $(.46) $(.50) $0 $0 $0
<CAPTION>
Less Distributions Ratios/Supplemental Data
------------------ ---------------------------------------------------------------
Total Net Asset Ratio of Ratio of Net
Dividends Value, Net Assets, Expenses Income (Loss)
and End of Total End of Period to Average to Average Portfolio
Fiscal Year or Period Distributions Period Return(c) (000's omitted) Net Assets(d) Net Assets(c) Turnover Rate
- --------------------- ------------- ------ --------- --------------- ------------- ------------- -------------
Class A
Year ended 10/31/99... $0 $14.18 48.79% $ 84,657 2.18% (1.70)% 87%
7/29/98+ to 10/31/98.. $0 $ 9.53 (4.70)% $ 25,835 2.50%(e) (1.19)%(e) 29%
Class B
Year ended 10/31/99... $0 $14.03 47.84% $115,624 2.87% (2.40)% 87%
7/29/98+ to 10/31/98.. $0 $ 9.49 (5.10)% $ 38,887 3.20%(e) (1.87)%(e) 29%
Class C
Year ended 10/31/99... $0 $14.03 47.68% $ 61,517 2.87% (2.40)% 87%
7/29/98+ to 10/31/98.. $0 $ 9.50 (5.00)% $ 20,904 3.20%(e) (1.85)%(e) 29%
</TABLE>
- --------------------------------------------------------------------------------
+ Commencement of operations
(a) Based on average shares outstanding
(b) Net of fee waiver and expense reimbursement.
(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 period, and
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the caluclation of
total investment. Total investment return calculated for a period of less
than one year is not annualized.
(d) Net of expenses waived/reimbursed. If the Fund had borne all expenses in
the most recent fiscal period, the expense ratio would have been as
follows:
1998 1999
---- ----
Alliance Select Investor Series
Premier Portfolio
Class A 2.70% 2.20%
Class B 3.39% 2.89%
Class C 3.39% 2.89%
(d) Annualized.
22
<PAGE>
Please refer to footnotes on page 22.
23
<PAGE>
For more information about the Fund, the following documents are available upon
request:
o Annual/Semi-Annual Reports to Shareholders
The Fund's annual and semi-annual reports to shareholders contain additional
information on the Fund's investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during its last fiscal year.
o Statement of Additional Information (SAI)
The Fund has an SAI, which contains more detailed information about the Fund,
including its operations and investment policies. The Fund's SAI is incorporated
by reference into (and is legally part of) this Prospectus.
You may request a free copy of the current annual/semi-annual report or the SAI,
by contacting your broker or other financial intermediary, or by contacting
Alliance:
By Mail: c/o Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
By Phone: For Information: (800) 221-5672
For Literature: (800) 227-4618
Or you may view or obtain these documents from the Commission:
o Call the Commission at 1-202-942-8090 for information on the operation of
the Public Reference Room.
o Reports and other information about the Fund are available on the
EDGARDatabase on the Commission's Internet site at http://www.sec.gov
o Copies of the information may be obtained, after paying a duplicating fee,
by electronic request at [email protected], or by writing the
Commission's Public Reference Section, Washington, DC 20549-0102
You also may find more information about Alliance and the Funds on the internet
at www.Alliancecapital.com
Fund SECFile No.
--------------
Alliance Select Investors Series, Inc. 811-9176
Premier Portfolio
24
================================================================================
Alliance Select Investor
Series - Premier
Portfolio Subscription
Application
================================================================================
To Open Your New Alliance Account...
Please complete the application and mail it to:
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, New Jersey 07096-1520
For certified or overnight deliveries, send to:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
Section 1 Your Account Registration (Required)
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
o Individuals, Joint Tenants, Transfer on Death and Gift/Transfer to a
Minor:
o Indicate your name(s) exactly as it appears on your social security
card.
o Transfer on Death:
o Ensure that your state participates
o Trust/Other:
o 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.
o Non-Resident Alien:
o Indicate your permanent country of residence.
Section 3 Your Initial Investment (Required)
For each fund in which you are investing: (1) Write the three digit fund number
in the column titled 'Indicate three digit fund number located below'.
(2) Write the dollar amount of your initial purchase in the column titled
'Indicate Dollar Amount'.
(If you are eligible for a reduced sales charge, you must also complete Section
4F). (3) Check off a distribution option for your dividends. (4) Check off 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 preprinted, 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 the
Fund in one of three ways. First, by a periodic withdrawal directly from your
bank account and invested into the Fund. Second, you can direct your
distributions (dividends and capital gains) from one Alliance Fund into the
Fund. Or third, you can automatically exchange monthly shares of one Alliance
Fund for shares of the Fund. In each case, there is a $10,000 minimum for your
initial investment into the Fund. To elect one of these options, complete the
appropriate portion of Section 4A & 4D.
If more than one dividend direction or monthly exchange is desired, please call
our Literature Center to obtain a Shareholder Account Services Options Form for
completion.
B. 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.
C. Systematic Withdrawal Plans (SWP) - Complete this option if you wish to
periodically redeem dollars from your fund account. Payments can be made via
Electronic Funds Transfer (EFT) to your bank account or by check.
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 preprinted, 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.
Medallion Signature Guarantee is required if your account is not maintained by a
broker dealer.
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
Or Visit Our Website: www.alliancecapital.com
- --------------------------------------------------------------------------------
For Literature Call: (800) 227-4618
- --------------------------------------------------------------------------------
<PAGE>
Alliance Select Investor Series Subscription Application
================================================================================
1. Your Account Registration (Please Print in Capital Letters and Mark Check
Boxes Where Applicable)
================================================================================
|_| Individual Account {|_| Male |_| Female } - or - |_| Joint Account - or -
|_| Transfer on Death {|_| Male |_| Female } - or - |_| Gift/Transfer to a Minor
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Owner or Custodian (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_|
(First Name) Joint Owner*, Transfer On Death Beneficiary or Minor
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
(MI) (Last Name)
|_| |_| |_| - |_| |_| - |_| |_| |_| |_|
Social Security Number of Owner or Minor (required to open account)
If Joint Tenants Account: * The Account will be registered
"Joint Tenants with right of Survivorship" unless you indicate otherwise below:
|_| In Common |_| By Entirety |_| Community Property
If Uniform Gift/Transfer to Minor Account:
|_| |_| Minor's State of Residence
|_| Trust - or - |_| Corporation - or - |_| Other_______________________________
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trustee if applicable (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trust or Corporation or Other Entity
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name of Trust or Corporation or Other Entity continued
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Trust Dated (MM,DD,YYYY) Tax ID Number (required to open account)
|_| Employer ID Number - OR - |_| Social Security Number
================================================================================
2. Your Address
================================================================================
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Street Number Street Name
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
City State Zip code
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_| |_| |_| - |_| |_| |_| |_|
If Non-U.S., Specify Country Daytime Phone Number
|_| U.S. Citizen |_| Resident Alien |_| Non-Resident Alien
AllianceCapital [LOGO](R)
<PAGE>
================================================================================
3. Your Initial Investment
The minimum investment is $10,000.
The maximum investment in Class B is $250,000; Class C is $1,000,000.
================================================================================
I hereby subscribe for shares of the Alliance Select Investor Series - Premier
Portfolio and elect distribution options as indicated.
- --------------------------------------
Broker/Dealer Use Only: Wire Confirm #
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
- --------------------------------------
Dividend and Capital Gain Distribution Options:
R Reinvest distributions into my fund account.
C Send my distributions in cash to the address I have provided
in Section 2. (Complete Section 4D for direct deposit 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).
--------------------------------------
Make all checks* payable to:
Alliance Funds
--------------------------------------
- -------------------------------------- --------------------------------------
Indicate three digit Fund Indicate Dollar Amount
number located below --------------------------------------
- --------------------------------------
--------------------------------------
|_| |_| |_| $
--------------------------------------
|_| |_| |_| $
--------------------------------------
|_| |_| |_| $
--------------------------------------
|_| |_| |_| $
--------------------------------------
- --------------------------------------
Total Investment $
- -------------------------------------- --------------------------------------
- --------------------------------------
Distributions Options
*Check One*
- --------------------------------------
- ------------- -----------------
Dividends Capital Gains
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|
* Cash and money orders are not accepted
-------------------------------------------------------
Contingent Deferred Asset-Based
Initial Sales Charge Sales Charge Sales Charge
- --------------------------------------------------------------------------------
Select Investor Series A B C
- --------------------------------------------------------------------------------
Premier Portfolio 171 271 371
<PAGE>
================================================================================
4. Your Shareholder Options
================================================================================
A. Automatic Investment Plans (AIP)
Withdraw From My Bank Account Via EFT*
|_| 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).
1- |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
2- |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
3- |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
} Frequency:
M = monthly
Q = quarterly
A = annually
* Electronic Funds Transfer. 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 the same class of shares of another Alliance Fund.
FROM:
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
TO:
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
|_| Exchange My Shares Monthly I authorize Alliance to transact monthly
exchanges, within the same class of shares, between my fund accounts as
listed below.
FROM:
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
|_| |_| , |_| |_| |_| .00 |_| |_|
Amount Day of Exchange**
TO:
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| - |_|
Fund Number Account Number (If existing)
** 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. 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.
================================================================================
For shares recently purchased by check or electronic funds transfer redemption
proceeds will not be made available until the Fund is reasonably assured the
check or electronic funds transfer has been collected, normally 15 calendar days
after the purchase date.
================================================================================
<PAGE>
================================================================================
4. Your Shareholder Options (CONTINUED)
================================================================================
C. Systematic Withdrawal Plans (SWP)
In order to establish a SWP, you must reinvest all dividends and capital gains.
|_| I authorize Alliance to transact periodic redemptions from my fund account
and send the proceeds to me as indicated below.
1- |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
2- |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
3- |_| |_| |_| |_| |_| |_| |_| |_| |_| , |_| |_| |_|.00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
} Frequency:
M = monthly
Q = quarterly
A = annually
Please send my SWP proceeds to:
|_| My Address of Record (via check)
|_| My checking account-via EFT (complete section 4D) 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 bank account. Otherwise
payment will be made by check
|_| The Payee and address specified in section 4E (via check) (Medallion
Signature Guarantee required)
D. Bank Information This bank account information will be used for:
|_| Distributions (Section 3)
|_| Telephone Transactions (Section 4B)
|_| Automatic Investments (Section 4A)
|_| Withdrawals (Section 4C)
- --------------------------------------------------------------------------------
Please Tape a Pre-printed Voided Check Here*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
* The above services cannot be established without a pre-printed voided check.
For EFT transactions, the fund requires signatures of bank account owners
exactly as they appear on bank records. If the registration at the bank differs
from that on the Alliance mutual fund, all parties must sign in Section 5.
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Your Bank's ABA Routing Number Your Bank Account Number
|_| Checking Account
|_| Savings Account
<PAGE>
================================================================================
4. Your Shareholder Options (CONTINUED)
================================================================================
E. Third Party Payment Details Your signature(s) in Section 5 must be Medallion
Signature Guaranteed if your account is not maintained by a broker/dealer.
This third party payee information will be used for:
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Distributions (Section 3) Systematic Withdrawals (Section 4C)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Name (First Name) (MI) (Last Name)
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
Street Number Street Name
|_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_| |_|
City State Zip code
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 privileges, so that this and future purchases
will receive any discount for which they are eligible.
------------------------ ------------------------ ------------------------
Tax ID or Account Number Tax ID or Account Number Tax ID or Account Number
|_| 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 indicated is not purchased within 13 months, I
understand that an additional sales charge must be paid from my account.
- --------------------------------------------------------------------------------
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
|________________________________| |______________________________________|
Dealer/Agent Firm Number Representative Number
|________________________________| |______________________________________|
Branch Number Branch Telephone Number
|______________________________________________________________________________|
Branch Office Address
|_______________________________________________| |_| |_| |_________________|
City State Zip code
<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 not have changed
within the last 30 days. The maximum telephone redemption amount is $50,000 for
redemptions by check.
|_| I do not elect the telephone exchange service
|_| I do not elect the telephone redemption by check service
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.
I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or I am waiting for a number to be
issued to me and that I have not been notified that this account is subject to
backup withholding.
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
- -------------------------------------------------------
Medallion Signature Guarantee required if completing Section 4E and your mutual
fund is not maintained by a broker dealer
SISPPPRO300 AllianceCapital [LOGO](R)
00250242.AL5
