THE
--------------------
ALLIANCE
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FUND
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Annual Report
November 30, 1998
Alliance Capital[LOGO](R)
<PAGE>
LETTER TO SHAREHOLDERS The Alliance Fund
================================================================================
January 11, 1999
Dear Shareholder:
This annual shareholder report reviews investment results and market activity
for The Alliance Fund (the "Fund") for the six- and 12-month periods ended
November 30, 1998. In the following table, the Fund's performance is
compared with that of the Standard & Poor's 400 Midcap Index (the "S&P 400"),
which is a measure of mid-cap stock performance, and the Russell 1000 Growth
Index, which tracks the performance of large, growth-oriented companies.
INVESTMENT RESULTS
1998 has been a difficult year for the Fund. After outperforming its benchmarks
in 1997, the Fund lagged its benchmarks this year due to the continuing
contraction in the breadth of market leadership and sharp declines in the prices
of several individual holdings, most of which continue to have positive
fundamental outlooks. In particular, declines in selected consumer cyclical
holdings such as Continental Airlines, Inc., Northwest Airlines Corp., and
Republic Industries, Inc. impaired performance. In addition, although we sharply
reduced our oil service holdings earlier in the year, our remaining oil service
stocks were weak.
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INVESTMENT RESULTS*
Periods Ended November 30, 1998
Total Returns
6 Months 12 Months
------------ ------------
The Alliance Fund
Class A -14.71% -8.48%
Class B -15.10% -9.27%
Class C -15.38% -9.58%
S&P 400 Midcap
Index -1.56% 10.40%
Russell 1000
Growth Index 12.17% 28.66%
* The Fund's investment results are total returns for the periods and are
based on the net asset value of each class of shares. All fees and
expenses related to the operation of the Fund have been deducted, but no
adjustment has been made for sales charges that may apply when shares are
purchased or redeemed. Total return for Advisor Class shares will differ
due to different expenses associated with that class. Past performance is
no guarantee of future results.
The S&P 400 Midcap Index is an unmanaged index of 400 U.S. companies which
are chosen for their market size, liquidity and industry group
representation. It is a market-value weighted index representing
approximately 10% of the aggregate market value of U.S. domestic
companies. The Russell 1000 Growth Index measures the performance of those
Russell 1000 companies with relatively higher price-to-book ratios and
higher forecasted growth values. An investor cannot invest directly in an
index.
Additional investment results appear on page 3.
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REVIEW OF INVESTMENT STRATEGY
The Fund continues to focus on the midcap area of the market with an average
market capitalization at approximately $5 billion. Our approach is to seek to
identify the most rapidly growing companies in this segment of the marketplace,
and to buy and hold them at attractive valuation levels.
At the present time, we have very substantial holdings in the financial services
sector with important positions in MBNA Corp., CNA Financial Corp., Legg Mason,
Inc., and A. G. Edwards, Inc. These have been large holdings for well over one
year and have produced a positive impact on the Fund's performance. Their
earnings progress has been excellent and their valuations remain very
attractive.
Airlines and travel related companies such as Carnival Corp. and Royal Caribbean
Cruises, Ltd. comprise another important sector in the portfolio. Carnival and
Royal Caribbean are rapidly growing companies gaining market share in an
industry that is growing much faster than overall gross domestic product ("GDP")
growth, as demographic trends propel the growth of sea cruises as a form of
entertainment and vacationing. While the cruise companies are relatively new to
the portfolio, airline holdings have remained a major focus as Continental
Airlines continues to gain market position in the industry.
Changes in the portfolio during the reporting period included the elimination of
several oil service stocks such as Halliburton Co. and Rowan Companies, Inc.
Major new additions were Healthsouth Corp., a leading health care company
specializing in rehabilitation therapies, and
1
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The Alliance Fund
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Global Telesystems Group, Inc., a telecommunications concern with a rapidly
growing communications presence in Europe.
CURRENT OUTLOOK
Equity valuations are high by historical measures particularly in the larger-cap
segment of the market. Nevertheless, inflation remains contained, interest rates
are low, and the Federal Reserve Board seems intent upon avoiding recession in
the current context of Asian economic weakness. Markets have been volatile as
the push and pull of global economic problems and central bank easings have
magnified normal volatility. Despite current high valuations for
larger-capitalization market indices, such as the S&P 500 or Dow Jones averages,
we continue to find mid-cap companies with both strong growth rates and
reasonable valuations. We remain enthusiastic about the longer-term
attractiveness of the stocks in the Fund.
Thank you for your continued interest in The Alliance Fund. We look forward to
reporting to you on market activity and your Fund's investment results in the
coming periods.
Sincerely,
/s/ John D. Carifa
John D. Carifa
Chairman and President
/s/ Alden Stewart
Alden Stewart
Executive Vice President
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Shares of the Fund are not deposits or obligations of, guaranteed or endorsed
by, any bank; further, such shares are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other agency.
Shares of the Fund involve investment risks, including the possible loss of
principal.
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2
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INVESTMENT OBJECTIVE AND POLICIES
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The Alliance Fund is an open-end, diversified investment company that seeks
long-term growth of capital and income primarily through investments in common
stocks. While the Fund normally invests substantially all of its assets in
equities that Alliance believes will appreciate in value, it may invest in a
variety of securities, including convertible bonds, U.S. Government securities,
and other high-quality instruments. The Fund has the flexibility to invest
without limit in foreign securities.
INVESTMENT RESULTS
================================================================================
NAV and SEC Average Annual Total Returns as of November 30, 1998
----------------------------
CLASS A SHARES
----------------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year -8.48% -12.41%
Five Years 13.86% 12.88%
Ten Years 15.09% 14.59%
----------------------------
CLASS B SHARES
----------------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year -9.27% -11.94%
Five Years 12.86% 12.86%
Since Inception* 13.27% 13.27%
----------------------------
CLASS C SHARES
----------------------------
Without With
Sales Charge Sales Charge
----------------------------
One Year -9.58% -10.25%
Five Years 12.81% 12.81%
Since Inception* 13.63% 13.63%
SEC Average Annual Total Returns as of the most recent quarter-end (September
30, 1998)
Class A Class B Class C
-------- --------- ---------
1 Year -26.92% -26.51% -24.96%
5 Years 9.61% 9.62% 9.61%
10 Years 12.82% n/a n/a
The Fund's investment results represent Average Annual Total Returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A or applicable contingent
deferred sales charge for Class B (4% year 1, 3% year 2, 2% year 3, 1% year 4);
and for Class C shares (1% year 1). Returns for Class A shares do not reflect
the imposition of the 1 year 1% contingent deferred sales charge for accounts
over $1,000,000. Total returns for Advisor Class shares will differ due to
different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
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* Since Inception: 3/4/91 Class B; 5/3/93 Class C.
n/a: not applicable.
3
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The Alliance Fund
================================================================================
THE ALLIANCE FUND
GROWTH OF A $10,000 INVESTMENT
11/30/88 TO 11/30/98
[GRAPHIC OMITTED]
[The following information was depicted as a chart in the printed material.]
Russell 1000 Growth Index:
$61,215
S&P 400 Midcap Index:
$54,176
The Alliance Fund Class A:
$39,050
This chart illustrates the total value of an assumed $10,000 investment in
The Alliance Fund Class A shares (from 11/30/88 to 11/30/98) as compared to the
performance of appropriate broad-based indices. The chart reflects the deduction
of the maximum 4.25% sales charge from the initial $10,000 investment in the
Fund and assumes the reinvestment of dividends and capital gains. Performance
for Class B, Class C and Advisor Class shares will vary from the results shown
above due to differences in expenses charged to those classes. Past performance
is not indicative of future results, and is not representative of future gain or
loss in capital value or dividend income.
The Standard & Poor's 400 Midcap Index is a market-value weighted index
which consists of 400 domestic stocks chosen for market size, liquidity and
industry group representation.
The unmanaged Russell 1000 Growth Index measures the performance of
large-cap stocks with a greater-than-average growth orientation.
When comparing The Alliance Fund to the indices shown above, you should
note that no charges or expenses are reflected in the performance of the
indices.
4
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TEN LARGEST HOLDINGS
November 30, 1998 The Alliance Fund
================================================================================
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COMPANY VALUE PERCENT OF NET ASSETS
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MBNA Corp. $ 56,718,750 5.3%
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CNA Financial Corp. 54,506,250 5.1
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Continental Airlines, Inc. Cl.B 53,675,000 5.0
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Republic Industries, Inc. 48,705,000 4.5
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Telephone and Data Systems, Inc. 47,880,000 4.5
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Carnival Corp. Cl.A 47,437,500 4.4
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Global Telesystems Group, Inc. 43,406,250 4.1
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Royal Caribbean Cruises, Ltd. 37,665,000 3.5
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Tommy Hilfiger Corp. 37,510,000 3.5
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HBO & Co. 35,356,387 3.3
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$462,860,137 43.2%
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MAJOR PORTFOLIO CHANGES
Six Months Ended November 30, 1998
================================================================================
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SHARES*
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PURCHASES BOUGHT HOLDINGS 11/30/98
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Carnival Corp. Cl.A 965,000 1,375,000
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CBS Corp. 400,000 400,000
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Global Telesystems Group, Inc. 1,000,000 1,000,000
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HBO & Co. 1,417,800 1,417,800
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Healthsouth Corp. 1,800,000 1,800,000
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Noble Drilling Corp. 1,050,000 2,150,000
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PairGain Technologies, Inc. 884,400 884,400
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Philips Electronics NV (ADR) 305,000 350,000
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Santa Fe International Corp. 800,000 800,000
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Tommy Hilfiger Corp. 380,200 620,000
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SALES SOLD HOLDINGS 11/30/98
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Ascend Communications, Inc. 300,000 -0-
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ASM Lithography Holding NV 500,000 -0-
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Diamond Offshore Drilling, Inc. 728,000 -0-
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Intuit, Inc. 520,000 -0-
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Life Re Corp. 274,600 -0-
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Loews Corp. 120,000 -0-
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MCI WorldCom, Inc. 1,300,000 -0-
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Merrill Lynch & Co., Inc. 200,000 -0-
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Morgan Stanley, Dean Witter & Co. 360,000 -0-
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Rowan Cos., Inc. 1,200,000 -0-
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* Adjusted for stock splits.
5
<PAGE>
PORTFOLIO OF INVESTMENTS
November 30, 1998 The Alliance Fund
================================================================================
Company Shares Value
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COMMON STOCKS-97.3%
CONSUMER SERVICES-20.3%
AIRLINES-8.8%
Alaska Air Group, Inc. (a) ......... 250,300 $ 9,370,606
America West Holdings
Corp. Cl.B (a) ................. 300,000 4,237,500
Continental Airlines, Inc.
Cl.B (a) ....................... 1,520,000 53,675,000
Northwest Airlines Corp.
Cl.A (a) ....................... 1,058,300 26,523,644
--------------
93,806,750
--------------
APPAREL-0.4%
Nautica Enterprises, Inc. (a) ...... 130,400 2,567,250
Wolverine World Wide, Inc. ......... 104,700 1,426,537
--------------
3,993,787
--------------
BROADCASTING & CABLE-1.3%
CBS Corp. .......................... 400,000 11,925,000
Fox Entertainment Group, Inc. (a) .. 70,700 1,670,287
TCI Group Series A (a) ............. 2,959 125,018
--------------
13,720,305
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ENTERTAINMENT & LEISURE-7.9%
Carnival Corp. Cl.A ................ 1,375,000 47,437,500
Royal Caribbean Cruises, Ltd. ...... 1,240,000 37,665,000
--------------
85,102,500
--------------
RESTAURANTS & LODGING-1.2%
Extended Stay America,
Inc. (a) ....................... 1,200,000 12,000,000
Suburban Lodges of
America, Inc. (a) .............. 98,000 784,000
--------------
12,784,000
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RETAIL-GENERAL MERCHANDISE-0.0%
Dickson Concepts
International, Ltd. (b) ........ 357,500 385,526
--------------
MISCELLANEOUS-0.7%
Newell Co. ......................... 175,000 7,743,750
--------------
217,536,618
--------------
FINANCE-19.5%
BROKERAGE & MONEY MANAGEMENT-4.8%
Edwards (A.G.), Inc. ............... 520,000 19,175,000
Legg Mason, Inc. ................... 1,072,700 31,979,869
--------------
51,154,869
--------------
INSURANCE-7.3%
CNA Financial Corp. (a) ............ 1,275,000 54,506,250
IPC Holdings, Ltd. ................. 112,100 2,732,437
NAC Re Corp. ....................... 100,000 4,775,000
PMI Group, Inc. .................... 250,000 13,671,875
Travelers Property Casualty
Corp. Cl.A ..................... 75,000 2,582,813
--------------
78,268,375
--------------
MORTGAGE BANKING-0.2%
Washington Mutual, Inc. ............ 57,120 2,213,400
--------------
REAL ESTATE-1.6%
Excel Legacy Corp. (a) ............. 158,000 533,250
New Plan Excel Realty
Trust, Inc. (a) ................ 189,600 4,147,500
Prime Retail, Inc. ................. 1,200,000 12,675,000
--------------
17,355,750
--------------
MISCELLANEOUS-5.6%
MBNA Corp. ......................... 2,500,000 56,718,750
Newcourt Credit Group,
Inc. (c) ....................... 80,000 2,830,000
--------------
59,548,750
--------------
208,541,144
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6
<PAGE>
The Alliance Fund
================================================================================
Company Shares Value
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TECHNOLOGY-18.2%
COMMUNICATION EQUIPMENT-5.7%
Embratel Participacoes, SA
(ADR) (a)(d) ................... 80,000 $ 1,280,000
Global Telesystems Group,
Inc. (a) ....................... 1,000,000 43,406,250
NTL, Inc. (a) ...................... 24,900 1,386,619
PairGain Technologies,
Inc. (a) ....................... 884,400 8,954,550
Tele Celular Sul
Participacoes, SA
(ADR) (a)(d) ................... 8,000 182,000
Tele Centro Oeste Celular
Participacoes, SA
(ADR) (a)(d) ................... 26,640 126,540
Tele Centro Sul
Participacoes, SA
(ADR) (a)(d) ................... 16,000 913,000
Tele Leste Celular
Participacoes, SA
(ADR) (a)(d) ................... 1,600 66,900
Tele Nordeste Celular
Participacoes, SA
(ADR) (a)(d) ................... 4,000 104,750
Tele Norte Celular
Participacoes, SA
(ADR) (a)(d) ................... 1,600 65,500
Tele Norte Leste
Participacoes, SA
(ADR) (a)(d) ................... 80,000 1,360,000
Tele Sudeste Celular
Participacoes, SA
(ADR) (a)(d) ................... 16,000 432,000
Telemig Celular
Participacoes, SA
(ADR) (a)(d) ................... 4,000 123,500
Telesp Celular
Participacoes, SA
(ADR) (a)(d) ................... 32,000 840,000
Telesp Participacoes, SA
(ADR) (a)(d) ................... 80,000 2,140,000
--------------
61,381,609
--------------
COMPUTER SERVICES-1.2%
DBT Online, Inc. (a) ............... 114,000 1,945,125
First Data Corp. ................... 420,000 11,208,750
--------------
13,153,875
--------------
COMPUTER SOFTWARE-6.3%
HBO & Co. .......................... 1,417,800 35,356,387
Network Associates,
Inc. (a) ....................... 500,000 25,437,500
Novell, Inc. (a) ................... 400,000 6,625,000
--------------
67,418,887
--------------
NETWORKING SOFTWARE-0.2%
Fore Systems, Inc. (a) ............. 120,000 1,815,000
--------------
SEMI-CONDUCTOR
COMPONENTS-4.0%
Altera Corp. (a) ................... 350,000 17,171,875
Micron Technology,
Inc. (a) ....................... 250,000 10,328,125
Xilinx, Inc. (a) ................... 291,100 14,773,325
--------------
42,273,325
--------------
MISCELLANEOUS-0.8%
Sanmina Holdings
Corp. (a) ...................... 169,000 8,418,313
--------------
194,461,009
--------------
CONSUMER MANUFACTURING-10.0%
AUTO & RELATED-5.7%
Budget Group, Inc.
Cl.A (a) ....................... 250,000 3,125,000
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued) The Alliance Fund
================================================================================
Company Shares Value
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Dollar Thrifty Automotive
Group, Inc. (a) ................ 746,700 $ 9,333,750
Republic Industries,
Inc. (a) ....................... 2,865,000 48,705,000
--------------
61,163,750
--------------
TEXTILE PRODUCTS-3.9%
Tommy Hilfiger Corp. (a) ........... 620,000 37,510,000
Unifi, Inc. ........................ 200,200 3,853,850
--------------
41,363,850
--------------
MISCELLANEOUS-0.4%
Industrie Natuzzi SpA
(ADR) (e) ...................... 209,800 4,641,825
--------------
107,169,425
--------------
UTILITIES-8.9%
TELEPHONE UTILITY-8.9%
Hyperion
Telecommunications,
Inc. Cl.A (a) .................. 105,000 1,141,875
Millicom International
Cellular, SA (a)(f) ............ 500,000 16,687,500
Telecomunicacoes
Brasilieras, SA
(ADR) (d) ...................... 80,000 13,750
Telephone and Data
Systems, Inc. .................. 1,120,000 47,880,000
United States Cellular
Corp. (a) ...................... 780,000 29,396,250
--------------
95,119,375
--------------
HEALTH CARE-8.5%
BIOTECHNOLOGY-6.3%
Centocor, Inc. (a) ................. 546,900 22,149,450
GelTex Pharmaceuticals,
Inc. (a) ....................... 500,000 11,937,500
Genzyme Corp. (a) .................. 150,000 6,309,375
Genzyme Molecular
Oncology (a) ................... 16,207 56,724
MedImmune, Inc. (a) ................ 400,000 26,750,000
--------------
67,203,049
--------------
MEDICAL SERVICES-2.2%
Healthsouth Corp. (a) .............. 1,800,000 24,187,500
--------------
91,390,549
--------------
ENERGY-5.3%
DOMESTIC INTEGRATED-1.3%
Kerr-McGee Corp. ................... 60,000 2,370,000
USX-Marathon Group ................. 407,000 11,548,625
--------------
13,918,625
--------------
OIL SERVICE-3.3%
IRI International Corp. (a) ........ 200,000 875,000
Noble Drilling Corp. (a) ........... 2,150,000 24,859,375
Santa Fe International
Corp. .......................... 800,000 9,950,000
--------------
35,684,375
--------------
MISCELLANEOUS-0.7%
AES Corp. (a) ...................... 50,000 2,287,500
Stolt Comex Seaway, SA ............. 20,700 174,656
(ADR) (a)(h) ................... 620,000 4,417,500
--------------
6,879,656
--------------
56,482,656
--------------
CAPITAL GOODS-4.6%
ELECTRICAL
EQUIPMENT-2.3%
Philips Electronics NV
(ADR) (g) ...................... 350,000 22,159,375
Western Wireless Corp.
Cl.A (a) ....................... 120,000 2,175,000
--------------
24,334,375
--------------
POLLUTION CONTROL-2.3%
United States Filter
Corp. (a) ...................... 1,105,000 24,448,125
--------------
48,782,500
--------------
CONSUMER STAPLES-0.8%
FOOD-0.6%
Tyson Foods, Inc. Cl.A ............. 320,000 6,620,000
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8
<PAGE>
The Alliance Fund
================================================================================
Company Shares Value
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HOUSEHOLD PRODUCTS-0.2%
Viad Corp. ......................... 105,000 $ 2,447,813
--------------
9,067,813
--------------
TRANSPORTATION-0.5%
SHIPPING-0.2%
OMI Corp. (a) ...................... 600,000 1,875,000
--------------
MISCELLANEOUS-0.3%
Knightsbridge Tankers,
Ltd. ........................... 175,000 3,718,750
Marine Transport Corp. ............. 60,000 123,750
--------------
3,842,500
--------------
5,717,500
--------------
AEROSPACE & DEFENSE-0.4%
DEFENSE ELECTRONICS-0.4%
Loral Space &
Communications,
Ltd. (a) ....................... 250,000 4,593,750
--------------
Shares or
Principal
Amount
Company (000) Value
- -----------------------------------------------------------------------
BASIC INDUSTRY-0.3%
CHEMICALS-0.3%
Crompton & Knowles
Corp. .......................... 146,700 2,842,313
--------------
Total Common Stocks
(cost $990,329,984)............. 1,041,704,652
--------------
SHORT-TERM INVESTMENT-2.0%
COMMERCIAL PAPER-2.0%
Prudential Funding Corp.
5.25%, 12/01/98
(amortized cost
$21,450,000).................... $21,450 21,450,000
--------------
TOTAL INVESTMENTS-99.3%
(cost $1,011,779,984)........... 1,063,154,652
Other assets less
liabilities-0.7%................ 8,019,081
--------------
NET ASSETS-100%..................... $1,071,173,733
==============
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(a) Non-income producing security.
(b) Country of origin -- Hong Kong.
(c) Country of origin -- Canada.
(d) Country of origin -- Brazil.
(e) Country of origin -- Italy.
(f) Country of origin -- Luxembourg.
(g) Country of origin -- Netherlands.
(h) Country of origin -- Norway.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
9
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1998 The Alliance Fund
================================================================================
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $1,011,779,984)......................... $1,063,154,652
Cash ............................................................................. 3,788
Receivable for investment securities sold......................................... 36,273,777
Dividends receivable.............................................................. 439,303
Receivable for capital stock sold................................................. 376,521
--------------
Total assets...................................................................... 1,100,248,041
--------------
LIABILITIES
Payable for investment securities purchased....................................... 17,377,026
Payable for capital stock redeemed................................................ 9,385,467
Unclaimed dividends............................................................... 1,005,679
Management fee payable............................................................ 616,968
Distribution fee payable.......................................................... 261,201
Accrued expenses.................................................................. 427,967
--------------
Total liabilities................................................................. 29,074,308
--------------
NET ASSETS........................................................................... $1,071,173,733
==============
COMPOSITION OF NET ASSETS
Capital stock, at par............................................................. $ 1,808,379
Additional paid-in capital........................................................ 952,548,405
Accumulated net realized gain on investments and foreign currency transactions.... 65,442,232
Net unrealized appreciation of investments and foreign currency
denominated assets and liabilities.............................................. 51,374,717
--------------
$1,071,173,733
==============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($953,181,401 / 159,591,089 shares of capital stock issued and outstanding)..... $5.97
Sales charge-4.25% of public offering price....................................... .26
-----
Maximum offering price............................................................ $6.23
=====
Class B Shares
Net asset value and offering price per share
($85,456,190 / 15,499,133 shares of capital stock issued and outstanding)....... $5.51
=====
Class C Shares
Net asset value and offering price per share
($21,230,850 / 3,857,465 shares of capital stock issued and outstanding)........ $5.50
=====
Advisor Class Shares
Net asset value, redemption and offering price per share
($11,305,292 / 1,890,240 shares of capital stock issued and outstanding)........ $5.98
=====
</TABLE>
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See notes to financial statements.
10
<PAGE>
STATEMENT OF OPERATIONS
Year Ended November 30, 1998 The Alliance Fund
================================================================================
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $150,176)........ $ 7,830,475
Interest..................................................... 433,100 $ 8,263,575
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EXPENSES
Management fee............................................... 8,274,404
Distribution fee-Class A..................................... 2,217,958
Distribution fee-Class B..................................... 879,957
Distribution fee-Class C..................................... 248,458
Transfer agency.............................................. 1,130,195
Custodian.................................................... 238,036
Printing..................................................... 162,479
Administrative............................................... 124,000
Registration................................................. 109,571
Taxes........................................................ 100,800
Audit and legal.............................................. 74,105
Directors' fees.............................................. 30,000
Miscellaneous................................................ 19,540
-------------
Total expenses............................................... 13,609,503
-------------
Net investment loss.......................................... (5,345,928)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain on investment transactions................. 83,664,602
Net realized loss on foreign currency transactions........... (29,583)
Net change in unrealized appreciation of:
Investments................................................ (180,389,597)
Foreign currency denominated assets and liabilities........ 49
-------------
Net loss on investments and foreign currency transactions.... (96,754,529)
-------------
NET DECREASE IN NET ASSETS FROM OPERATIONS...................... $(102,100,457)
=============
</TABLE>
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See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS The Alliance Fund
================================================================================
<TABLE>
<CAPTION>
Year Ended Year Ended
November 30, November 30,
1998 1997
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss.................................................. $ (5,345,928) $ (3,938,274)
Net realized gain on investments and foreign currency transactions... 83,635,019 312,544,907
Net change in unrealized appreciation of investments and
foreign currency denominated assets and liabilities................ (180,389,548) 4,067,927
-------------- --------------
Net increase (decrease) in net assets from operations................ (102,100,457) 312,674,560
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A............................................................ -0- (2,584,179)
Advisor Class...................................................... -0- (4,914)
Net realized gain on investments
Class A............................................................ (297,697,708) (136,315,610)
Class B............................................................ (19,042,143) (6,355,169)
Class C............................................................ (5,056,456) (1,970,589)
Advisor Class...................................................... (2,587,444) (148,119)
CAPITAL STOCK TRANSACTIONS
Net increase......................................................... 196,615,939 77,246,571
-------------- --------------
Total increase (decrease)............................................ (229,868,269) 242,542,551
NET ASSETS
Beginning of year.................................................... 1,301,042,002 1,058,499,451
-------------- --------------
End of year.......................................................... $1,071,173,733 $1,301,042,002
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1998 The Alliance Fund
================================================================================
NOTE A: Significant Accounting Policies
The Alliance Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company. The Fund
offers Class A, Class B, Class C and Advisor Class shares. Class A shares are
sold with a front-end sales charge of up to 4.25% for purchases not exceeding
$1,000,000. With respect to purchases of $1,000,000 or more, Class A shares
redeemed within one year of purchase will be subject to a contingent deferred
sales charge of 1%. Class B shares are currently sold with a contingent deferred
sales charge which declines from 4%Eto zero depending on the period of time the
shares are held. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month of purchase. Class C shares are
subject to a contingent deferred sales charge of 1% on redemptions made within
the first year after purchase. Advisor Class shares are sold without an initial
or contingent deferred sales charge and are not subject to ongoing distribution
expenses. Advisor Class shares are offered to investors participating in
fee-based programs and to certain retirement plan accounts. All four classes of
shares have identical voting, dividend, liquidation and other rights, except
that each class bears different distribution expenses and has exclusive voting
rights with respect to its distribution plan. The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the reporting period. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked prices on that day. Readily marketable securities
traded in the over-the-counter market, securities listed on a foreign securities
exchange whose operations are similar to the U.S. over-the-counter market, and
securities listed on a national securities exchange whose primary market is
believed to be over-the-counter, are valued at the mean of the current bid and
asked price. U.S. government and fixed income securities which mature in 60 days
or less are valued at amortized cost, unless this method does not represent fair
value. Securities for which current market quotations are not readily available
are valued at their fair value as determined in good faith by, or in accordance
with procedures adopted by, the Board of Directors. Fixed income securities may
be valued on the basis of prices obtained from a pricing service when such
prices are believed to reflect the fair market value of such securities.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked prices of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued.
Net realized foreign currency gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and foreign exchange
currency contracts, currency gains and losses realized between the trade and
settlement dates on security transactions and the difference between the amounts
of dividends and interest recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. The Fund does not isolate the
effect of fluctuations in foreign currency exchange rates when determining the
gain or loss upon the sale of equity securities. Net currency gains and losses
from valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) The Alliance Fund
================================================================================
company taxable income and net realized gains, if any, to shareholders.
Therefore, no provisions for federal income or excise taxes are required.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. The Fund accretes discounts as adjustments to interest
income. Investment gains and losses are determined on the identified cost basis.
5. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the net assets of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees than
Class A shares and the Advisor Class shares have no distribution fees.
6. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income dividends and capital gains distributions are determined in accordance
with federal tax regulations and may differ from those determined in accordance
with generally accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital accounts based
on their federal tax basis treatment; temporary differences, do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net operating losses resulted in a net increase in
undistributed net investment income and accumulated net realized gain on
investments and foreign currency transactions and a corresponding decrease in
additional paid-in capital. This reclassification had no effect on net assets.
- --------------------------------------------------------------------------------
NOTE B: Management Fee and Other Transactions With Affiliates
Under the terms of the management agreement, the Fund pays Alliance Capital
Management L.P. (the "Manager"), a fee at an annual rate of .75% on the first
$500 million of average daily net assets, .65% on the next $500 million of
average daily net assets and .55% on average daily net assets in excess of $1
billion. The fee is accrued daily and paid monthly.
Pursuant to the management agreement, the Fund paid $124,000 to the Manager
representing the cost of certain legal and accounting services provided to the
Fund by the Manager for the year ended November 30, 1998.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Manager, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $900,389 for the year ended November 30, 1998.
Alliance Fund Distributors, Inc., (the "Distributor"), a wholly-owned subsidiary
of the Manager, serves as the Distributor of the Fund's shares. The Distributor
received front-end sales charges of $95,833 from the sale of Class A shares and
$6,052, $128,714 and $9,172 in contingent deferred sales charges imposed upon
redemptions by shareholders of Class A, Class B and Class C shares,
respectively, for the year ended November 30, 1998.
Brokerage commissions paid on investment transactions for the year ended
November 30, 1998 amounted to $3,941,458, of which $55,430 was paid to
Donaldson, Lufkin & Jenrette Securities Corp., an affiliate of the Manager.
- --------------------------------------------------------------------------------
NOTE C: Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual rate
of up to .30% of the Fund's average daily net assets attributable to Class A
shares and 1% of the average daily net assets attributable to both Class B and
Class C shares. There is no distribution fee on the Advisor Class shares. The
fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution assistance
and promotional activities. The Distributor has incurred expenses in excess of
the distribution costs
14
<PAGE>
The Alliance Fund
================================================================================
reimbursed by the Fund in the amount of $5,530,463 and $1,205,589, for Class B
and Class C shares, respectively; such costs may be recovered from the Fund in
future periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution costs
incurred by the Distributor beyond the current fiscal year for Class A shares.
The Agreement also provides that the Manager may use its own resources to
finance the distribution of the Fund's shares.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $1,296,496,226 and $1,458,642,049,
respectively, for the year ended November 30, 1998. There were no purchases or
sales of U.S. government or government agency obligations for the year ended
November 30, 1998. At November 30, 1998, the cost of investments for federal
income tax purposes was substantially the same as the cost for financial
reporting purposes. Gross unrealized appreciation of investments was
$137,207,509 and gross unrealized depreciation of investments was $85,832,841,
resulting in net unrealized appreciation of $51,374,668.
- --------------------------------------------------------------------------------
NOTE E: Capital Stock
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
----------------------------------- -----------------------------------
SHARES AMOUNT
----------------------------------- -----------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Class A
Shares sold....................... 19,105,150 6,987,684 $ 127,532,913 $ 57,214,484
Shares issued in reinvestment of
dividends and distributions.... 36,393,823 16,635,560 236,559,827 106,301,324
Shares converted from Class B..... 195,410 212,659 1,290,096 1,657,992
Shares redeemed................... (34,273,913) (15,229,370) (226,164,435) (116,622,533)
-------------- -------------- -------------- --------------
Net increase...................... 21,420,470 8,606,533 $ 139,218,401 $ 48,551,267
============== ============== ============== ==============
Class B
Shares sold....................... 8,241,290 4,424,115 $ 52,183,984 $ 33,748,548
Shares issued in reinvestment of
distributions.................. 2,936,987 865,292 17,768,641 5,287,064
Shares converted to Class A....... (210,591) (223,476) (1,290,096) (1,657,992)
Shares redeemed................... (4,012,134) (2,525,999) (23,782,439) (18,835,577)
-------------- -------------- -------------- --------------
Net increase...................... 6,955,552 2,539,932 $ 44,880,090 $ 18,542,043
============== ============== ============== ==============
Class C
Shares sold....................... 40,005,443 2,634,424 $ 228,800,301 $ 20,389,284
Shares issued in reinvestment of
distributions.................. 783,141 248,536 4,745,791 1,518,562
Shares redeemed................... (39,217,160) (2,472,942) (225,320,097) (19,320,033)
-------------- -------------- -------------- --------------
Net increase...................... 1,571,424 410,018 $ 8,225,995 $ 2,587,813
============== ============== ============== ==============
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) The Alliance Fund
================================================================================
<TABLE>
<CAPTION>
----------------------------------- -----------------------------------
SHARES AMOUNT
----------------------------------- -----------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Advisor Class
Shares sold...................... 1,262,591 2,621,487 $ 8,223,010 $ 21,634,966
Shares issued in reinvestment of
dividends and distributions.... 394,506 22,857 2,560,344 145,601
Shares redeemed................... (948,689) (1,602,903) (6,491,901) (14,215,119)
-------------- -------------- -------------- --------------
Net increase...................... 708,408 1,041,441 $ 4,291,453 $ 7,565,448
============== ============== ============== ==============
</TABLE>
16
<PAGE>
FINANCIAL HIGHLIGHTS The Alliance Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
CLASS A
------------------------------------------------------------------------------------
January 1,
Year Ended November 30, 1994 to Year Ended
--------------------------------------------------- November 30, December 31,
1998 1997 1996 1995 1994(a) 1993
-------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 8.70 $ 7.71 $ 7.72 $ 6.63 $ 6.85 $ 6.68
-------- -------- -------- -------- -------- --------
Income from Investment Operations
Net investment income (loss) .............. (.02)(b) (.02)(b) .02 .02(b) .01 .02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ........................... (.54) 2.09 1.06 2.08 (.23) .93
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset
value from operations .................. (.56) 2.07 1.08 2.10 (.22) .95
-------- -------- -------- -------- -------- --------
Less: Dividends and Distributions
Dividends from net investment income ...... -0- (.02) (.02) (.01) -0- (.02)
Distributions from net realized gains ..... (2.17) (1.06) (1.07) (1.00) -0- (.76)
-------- -------- -------- -------- -------- --------
Total dividends and distributions ......... (2.17) (1.08) (1.09) (1.01) -0- (.78)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............ $ 5.97 $ 8.70 $ 7.71 $ 7.72 $ 6.63 $ 6.85
======== ======== ======== ======== ======== ========
Total Return
Total investment return based on net
asset value (c) ........................ (8.48)% 31.82% 16.49% 37.87% (3.21)% 14.26%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).. $953,181 $1,201,435 $999,067 $945,309 $760,679 $831,814
Ratio of expenses to average net assets ... 1.03% 1.03% 1.04% 1.08% 1.05%(d) 1.01%
Ratio of net investment income (loss)
to average net assets .................. (.36)% (.29)% .30% .31% .21%(d) .27%
Portfolio turnover rate ................... 106% 158% 80% 81% 63% 66%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 20.
17
<PAGE>
FINANCIAL HIGHLIGHTS (continued) The Alliance Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
CLASS B
------------------------------------------------------------------------------------
January 1,
Year Ended November 30, 1994 to Year Ended
--------------------------------------------------- November 30, December 31,
1998 1997 1996 1995 1994(a) 1993
-------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 8.25 $ 7.40 $ 7.49 $ 6.50 $ 6.76 $ 6.64
-------- -------- -------- -------- -------- --------
Income From Investment Operations
Net investment loss ....................... (.07)(b) (.08)(b) (.01) (.03)(b) (.03) (.03)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ........................... (.50) 1.99 .99 2.02 (.23) .91
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset
value from operations .................. (.57) 1.91 .98 1.99 (.26) .88
-------- -------- -------- -------- -------- --------
Less: Distributions
Distributions from net realized gains ..... (2.17) (1.06) (1.07) (1.00) -0- (.76)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............ $ 5.51 $ 8.25 $ 7.40 $ 7.49 $ 6.50 $ 6.76
======== ======== ======== ======== ======== ========
Total Return
Total investment return based on net
asset value (c) ........................ (9.27)% 30.74% 15.47% 36.61% (3.85)% 13.28%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).. $ 85,456 $ 70,461 $ 44,450 $ 31,738 $ 18,138 $ 12,402
Ratio of expenses to average net assets ... 1.84% 1.85% 1.87% 1.90% 1.89%(d) 1.90%
Ratio of net investment loss
to average net assets .................. (1.17)% (1.12)% (.53)% (.53)% (.60)%(d) (.64)%
Portfolio turnover rate ................... 106% 158% 80% 81% 63% 66%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 20.
18
<PAGE>
The Alliance Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
CLASS C
------------------------------------------------------------------------------------
May 3,
January 1, 1993(e)
Year Ended November 30, 1994 to to
--------------------------------------------------- November 30, December 31,
1998 1997 1996 1995 1994(a) 1993
-------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $ 8.26 $ 7.41 $ 7.50 $ 6.50 $ 6.77 $ 6.67
-------- -------- -------- -------- -------- --------
Income From Investment Operations
Net investment loss ....................... (.07)(b) (.08)(b) (.02) (.03)(b) (.03) (.02)
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ........................... (.52) 1.99 1.00 2.03 (.24) .88
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset
value from operations .................. (.59) 1.91 .98 2.00 (.27) .86
-------- -------- -------- -------- -------- --------
Less: Distributions
Distributions from net realized gains ..... (2.17) (1.06) (1.07) (1.00) -0- (.76)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............ $ 5.50 $ 8.26 $ 7.41 $ 7.50 $ 6.50 $ 6.77
======== ======== ======== ======== ======== ========
Total Return
Total investment return based on net
asset value (c) ........................ (9.58)% 30.72% 15.48% 36.79% (3.99)% 13.95%
Ratios/Supplemental Data
Net assets, end of period (000's omitted).. $ 21,231 $ 18,871 $ 13,899 $ 10,078 $ 6,230 $ 4,006
Ratio of expenses to
average net assets ..................... 1.84% 1.83% 1.86% 1.89% 1.87%(d) 1.94%(d)
Ratio of net investment loss
to average net assets .................. (1.18)% (1.10)% (.51)% (.51)% (.59)%(d) (.74)%(d)
Portfolio turnover rate ................... 106% 158% 80% 81% 63% 66%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 20.
19
<PAGE>
FINANCIAL HIGHLIGHTS (continued) The Alliance Fund
================================================================================
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
---------------------------------------
ADVISOR CLASS
---------------------------------------
October 2,
1996(e)
Year Ended November 30, to
----------------------- November 30,
1998 1997 1996
--------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period ....... $ 8.69 $ 7.71 $ 6.99
------- ------- -------
Income From Investment Operations
Net investment income (loss) ............... (.01)(b) (.02)(b) -0-
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ............................ (.53) 2.10 .72
------- ------- -------
Net increase in net asset
value from operations ................... (.54) 2.08 .72
------- ------- -------
Less: Dividends and Distributions
Dividends from net investment income ....... -0- (.04) -0-
Distributions from net realized gains ...... (2.17) (1.06) -0-
------- ------- -------
Total dividends and distributions .......... (2.17) (1.10) -0-
------- ------- -------
Net asset value, end of period ............. $ 5.98 $ 8.69 $ 7.71
======= ======= =======
Total Return
Total investment return based on net
asset value (c) ......................... (8.19)% 32.00% 10.30%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .. $11,305 $10,275 $ 1,083
Ratio of expenses to average net assets .... .83% .83% .89%(d)
Ratio of net investment income (loss)
to average net assets ................... (.16)% (.21)% .38%(d)
Portfolio turnover rate .................... 106% 158% 80%
</TABLE>
- --------------------------------------------------------------------------------
(a) Fund changed its fiscal year end from December 31 to November 30.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period
of less than one year is not annualized.
(d) Annualized.
(e) Commencement of distribution.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS The Alliance Fund
================================================================================
To the Board of Directors and Shareholders of The Alliance Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Alliance Fund, Inc. (the
"Fund") at NovemberE30, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at November 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
January 8, 1999
TAX INFORMATION (unaudited)
================================================================================
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $182,453,983 and $26,919,440 of the capital gain distributions
paid by the Fund during the fiscal year November 30, 1998 are subject to the
maximum tax rates of 28% and 20% respectively. Shareholders should not use the
above information to prepare their tax returns. The information necessary to
complete your income tax returns will be included with your Form 1099 DIV which
will be sent to you separately in January 1999.
21
<PAGE>
The Alliance Fund
================================================================================
BOARD OF DIRECTORS
John D. Carifa, Chairman and President
Ruth Block (1)
David H. Dievler (1)
John H. Dobkin (1)
William H. Foulk, Jr. (1)
Dr. James M. Hester (1)
Clifford L. Michel (1)
Donald J. Robinson (1)
OFFICERS
Alden M. Stewart, Executive Vice President
Kathleen A. Corbet, Senior Vice President
Thomas J. Bardong, Vice President
Randall E. Haase, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, NY 10105
TRANSFER AGENT
Alliance Fund Services, Inc.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-Free 1-(800) 221-5672
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Seward & Kissel
One Battery Park Plaza
New York, NY 10004
- --------------------------------------------------------------------------------
(1) Member of the Audit Committee.
22
<PAGE>
THE ALLIANCE FAMILY OF MUTUAL FUNDS
================================================================================
Fixed Income
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
Tax-Free Income
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
Money Market
AFD Exchange Reserves
Growth
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Alliance/Regent Sector Opportunity Fund
Select Investors Series - Premier Portfolio
Growth & Income
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
Aggressive Growth
Alliance Global Small Cap Fund
Alliance Quasar Fund
Alliance Technology Fund
International
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
Institutional
Premier Growth
Quasar
Real Estate Investment
Closed-End Funds
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
Cash Management Services
ACM Institutional Reserves
Government Portfolio
Prime Portfolio
Tax-Free Portfolio
Trust Portfolio
Alliance Capital Reserves
Alliance Government Reserves
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
Government Portfolio
General Municipal Portfolio
23
<PAGE>
THE ALLIANCE FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
Alliance Capital[LOGO](R)
This report is intended solely for distribution to current shareholders of the
Fund.
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
ALLAR
