<PAGE>
As filed with the Securities and Exchange
Commission on October 30, 1998
File No. 2-70427
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
Pre-Effective Amendment
Post-Effective Amendment No. 31 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940
Amendment No. 27 X
ALLIANCE TECHNOLOGY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
Alliance Capital Management L.P.
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrants Telephone Number, Including Area Code:(800) 221-5672
EDMUND P. BERGAN, JR., ESQ.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box)
X immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
<PAGE>
The Registrant has registered an indefinite number of shares of
common stock pursuant to Rule 24f-2 under the Investment Company
Act of 1940. Registrant will file a notice pursuant to such Rule
for its fiscal year ended November 30, 1998 on February 27,
1999.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectus
PART A
Item 1. Cover Page............... Cover Page
Item 2. Synopsis................. Expense Information
Item 3. Financial Highlights..... Financial
Highlights
Item 4. General Description of
Registrant............... Description of the
Fund; General
Information
Item 5. Management of the Fund... Management of the
Fund; General
Information
Item 5a. Managements Discussion of
Fund Performance......... Not Applicable
Item 6. Capital Stock and Other
Securities............... General
Information;
Dividends,
Distributions and
Taxes
Item 7. Purchase of Securities
Being Offered ........... Purchase and Sale
of Shares; General
Information
Item 8. Redemption or Repurchase Purchase and Sale
of Shares; General
Information
Item 9. Pending Legal Proceedings Not Applicable
Item 10. Cover Page............... Cover Page
Item 11. Table of Contents........ Cover Page
Item 12. General Information and
History.................. Management of the
<PAGE>
Fund; General
Information
<PAGE>
PART B Location in Statement
of Additional Information
Item 13. Investment Objective and
Policies................. Investment
Objective; Policies
and Restrictions
Item 14. Management of the Fund... Management of the
Fund
Item 15. Control Persons and
Principal Holders of
Securities............... Management of the
Fund; General
Information
Item 16. Investment Advisory and
Other Services .......... Management of the
Fund
Item 17. Brokerage Allocation and
Other Practices.......... Portfolio
Transactions
Item 18. Capital Stock and Other
Securities............... General Information
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered ........... Purchase of Shares;
Redemption and
Repurchase of
Shares; Net Asset
Value
Item 20. Tax Status............... Dividends,
Distributions and
Taxes
Item 21. Underwriters............. General Information
Item 22. Calculation of
Performance Data......... General Information
Item 23. Financial Statements..... Financial
Statements; Report
of Independent
Auditors
<PAGE>
<PAGE>
THE ALLIANCE
- --------------------------------------------------------------------------------
STOCK FUNDS
- --------------------------------------------------------------------------------
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
November 2, 1998
Domestic Stock Funds Global Stock Funds
- -The Alliance Fund -Alliance International Fund
-Alliance International
Premier Growth Fund
- -Alliance Growth Fund -Alliance Worldwide Privatization Fund
- -Alliance Premier Growth Fund -Alliance New Europe Fund
- -Alliance Technology Fund -Alliance All-Asia Investment Fund
-Alliance Greater China '97
Fund
- -Alliance Quasar Fund -Alliance Global Small Cap Fund
-Alliance Global Environment Fund
Total Return Funds
-Alliance Balanced Shares
-Alliance Utility Income Fund
-Alliance Growth and Income Fund
-Alliance Real Estate Investment Fund
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
The Funds at a Glance ..................................................... 2
Expense Information ....................................................... 4
Financial Highlights ...................................................... 7
Glossary .................................................................. 19
Description of the Funds .................................................. 20
Investment Objectives and Policies ..................................... 20
Additional Investment Practices ........................................ 32
Certain Fundamental Investment Policies ................................ 40
Risk Considerations .................................................... 42
Purchase and Sale of Shares ............................................... 49
Management of the Funds ................................................... 52
Dividends, Distributions and Taxes ........................................ 57
General Information ....................................................... 58
</TABLE>
Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return. The Domestic Stock Funds
invest mainly in the United States equity markets and the Global Stock Funds
diversify their investments among equity markets around the world, while the
Total Return Funds invest in both equity and fixed-income securities.
Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, call or write Alliance Fund Services, Inc. at the indicated address
or call the "For Literature" telephone number shown above.
Each Fund offers three classes of shares through this Prospectus. These shares
may be purchased, at the investor's choice, at a price equal to their net asset
value (i) plus an initial sales charge imposed at the time of purchase (the
"Class A shares"), (ii) with a contingent deferred sales charge imposed on most
redemptions made within four years of purchase (the "Class B shares"), or (iii)
without any initial or contingent deferred sales charge, as long as the shares
are held for one year or more (the "Class C shares"). See "Purchase and Sale of
Shares."
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
Investors are advised to read this Prospectus carefully and to retain it for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[LOGO]Alliance(R)
Investing without the Mystery.(SM)
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>
The Funds At A Glance
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.
The Funds' Investment Adviser Is . . .
Alliance Capital Management L.P. ("Alliance"), a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including more than 120 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world with over $262
billion in assets under management as of June 30, 1998. Alliance provides
investment management services to employee benefit plans for 32 of the FORTUNE
100 companies.
Domestic Stock Funds
Alliance Fund
Seeks . . . Long-term growth of capital and income primarily through investment
in common stocks.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, have the potential to achieve capital appreciation.
Growth Fund
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities.
Invests Principally in . . . A diversified portfolio of equity securities of
companies with a favorable outlook for earnings and whose rate of growth is
expected to exceed that of the United States economy over time.
Premier Growth Fund
Seeks . . . Long-term growth of capital by investing in the equity securities of
a limited number of large, carefully selected, high-quality American companies
from a relatively small universe of intensively researched companies.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, are likely to achieve superior earnings growth.
Normally, approximately 40-50 companies will be represented in the Fund's
investment portfolio. The Fund's investments in 25 of these companies most
highly regarded at any point in time by Alliance will usually constitute
approximately 70% of the Fund's net assets.
Technology Fund
Seeks . . . Growth of capital through investment in companies expected to
benefit from advances in technology.
Invests Principally in . . . A diversified portfolio of securities of companies
which use technology extensively in the development of new or improved products
or processes.
Quasar Fund
Seeks . . . Growth of capital by pursuing aggressive investment policies.
Invests Principally in . . . A diversified portfolio of equity securities of any
company and industry and in any type of security which is believed to offer
possibilities for capital appreciation.
Global Stock Funds
International Fund
Seeks . . . A total return on its assets from long-term growth of capital and
from income.
Invests Principally in . . . A diversified portfolio of marketable securities of
established non-United States companies, companies participating in foreign
economies with prospects for growth, and foreign government securities.
International Premier Growth Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A diversified portfolio of equity securities of a
limited number of large, carefully selected, high-quality non-U.S. companies
that are judged likely to achieve superior earnings growth.
Worldwide Privatization Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities
issued by enterprises that are undergoing, or have undergone, privatization. The
balance of the Fund's investment portfolio will include securities of companies
that are believed by Alliance to be beneficiaries of the privatization process.
New Europe Fund
Seeks . . . Long-term capital appreciation through investment primarily in the
equity securities of companies based in Europe.
Invests Principally in . . . A non-diversified portfolio of equity securities of
European companies.
All-Asia Investment Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities of
Asian/Pacific companies.
Greater China '97 Fund
Seeks . . . Long-term capital appreciation.
Invests Prinicpally in . . . A non-diversified portfolio of equity securities of
Greater China companies.
Global Small Cap Fund
Seeks . . . Long-term growth of capital.
Invests Principally in . . . A diversified global portfolio of the equity
securities of small capitalization companies.
Global Environment Fund
Seeks . . . Long-term capital appreciation.
2
<PAGE>
Invests Principally in . . . A non-diversified portfolio of equity securities of
companies expected to benefit from advances or improvements in products,
processes or services intended to foster the protection of the environment.
Total Return Funds
Balanced Shares
Seeks . . . A high return through a combination of current income and capital
appreciation.
Invests Principally in . . . A diversified portfolio of equity and fixed-income
securities such as common and preferred stocks, U.S. Government and agency
obligations, bonds and senior debt securities.
Utility Income Fund
Seeks . . . Current income and capital appreciation through investment in the
utilities industry.
Invests Principally in . . . A diversified portfolio of equity securities, such
as common stocks, securities convertible into common stocks and rights and
warrants to subscribe for purchase of common stocks, and in fixed-income
securities such as bonds and preferred stocks.
Growth and Income Fund
Seeks . . . Income and appreciation through investment in dividend-paying common
stocks of quality companies.
Invests Principally in . . . A diversified portfolio of dividend-paying common
stocks of good quality, and, under certain market conditions, other types of
securities, including bonds, convertible bonds and preferred stocks.
Real Estate Investment Fund
Seeks . . . Total return on its assets from long-term growth of capital and from
income.
Invests Principally in . . . A diversified portfolio of equity securities of
issuers that are primarily engaged in or related to the real estate industry.
Distributions . . .
Balanced Shares, Utility Income Fund, Growth and Income Fund and Real Estate
Investment Fund intend to make distributions quarterly to shareholders. These
distributions may include ordinary income and capital gain (each of which is
taxable) and a return of capital (which is generally non-taxable). See
"Dividends, Distributions and Taxes."
A Word About Risk . . .
The price of the shares of the Alliance Stock Funds will fluctuate as the daily
prices of the individual securities in which they invest fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost. With
respect to those Funds permitted to invest in foreign currency denominated
securities, these fluctuations may be magnified by changes in foreign exchange
rates. Investment in the Global Stock Funds involves risks not associated with
funds that invest primarily in securities of U.S. issuers. While the Funds
invest principally in common stocks and other equity securities, in order to
achieve their investment objectives the Funds may at times use certain types of
investment derivatives such as options, futures, forwards and swaps. These
involve risks different from, and, in certain cases, greater than, the risks
presented by more traditional investments. An investment in the Real Estate
Investment Fund is subject to certain risks associated with the direct ownership
of real estate in general, including possible declines in the value of real
estate, general and local economic conditions, environmental problems and
changes in interest rates. Investments by Greater China '97 Fund in Greater
China companies entail certain risks which are different from, and in certain
cases, greater than, risks associated with investments in other international
markets. These risks are fully discussed in this Prospectus.
Getting Started . . .
Shares of the Funds are available through your financial representative and most
banks, insurance companies and brokerage firms nationwide. Shares can be
purchased for a minimum initial investment of $250, and subsequent investments
can be made for as little as $50. For detailed information about purchasing and
selling shares, see "Purchase and Sale of Shares." In addition, the Funds offer
several time and money saving services to investors. Be sure to ask your
financial representative about:
- --------------------------------------------------------------------------------
AUTOMATIC REINVESTMENT
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PROGRAM
- --------------------------------------------------------------------------------
RETIREMENT PLANS
- --------------------------------------------------------------------------------
SHAREHOLDER COMMUNICATIONS
- --------------------------------------------------------------------------------
DIVIDEND DIRECTION PLANS
- --------------------------------------------------------------------------------
AUTO EXCHANGE
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWALS
- --------------------------------------------------------------------------------
A CHOICE OF PURCHASE PLANS
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
- --------------------------------------------------------------------------------
24-HOUR INFORMATION
- --------------------------------------------------------------------------------
[LOGO]Alliance(R)
Investing without the Mystery.(SM)
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
3
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses are one of several factors to consider when you
invest in a Fund. The following table summarizes your maximum transaction costs
from investing in a Fund and annual expenses for each class of shares of each
Fund. For each Fund, the "Examples" to the right of the table below show the
cumulative expenses attributable to a hypothetical $1,000 investment in each
class for the periods specified.
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C> <C>
Maximum sales charge imposed on purchases (as a percentage of
offering price) ................................................. 4.25%(a) None None
Sales charge imposed on dividend reinvestments .................. None None None
Deferred sales charge (as a
percentage of original purchase
price or redemption proceeds,
whichever is lower) ............................................. None(a) 4.0% 1.0%
during the during the
first year, first year,
decreasing 1.0% 0% thereafter
annually to 0%
after the
fourth year (b)
Exchange fee .................................................... None None None
</TABLE>
- --------------------------------------------------------------------------------
(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1% deferred
sales charge on redemptions within one year of purchase. See "Purchase and
Sale of Shares-How to Buy Shares".
(b) Class B shares of each Fund automatically convert to Class A after eight
years. See "Purchase and Sale of Shares-How to Buy Shares."
<TABLE>
<CAPTION>
Operating Expenses Examples
- --------------------------------------------------------- -------------------------------------------------------------
Alliance Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .68% .68% .68% After 1 year $ 53 $ 59 $ 19 $ 29 $ 19
12b-1 fees .20% 1.00% 1.00% After 3 years $ 74 $ 78 $ 58 $ 58 $ 58
Other expenses (a) .15% .17% .15% After 5 years $ 97 $100 $100 $ 99 $ 99
---- ---- ---- After 10 years $163 $195(b) $195(b) $215 $215
Total fund
operating expenses 1.03% 1.85% 1.83%
==== ==== ====
<CAPTION>
Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .74% .74% .74% After 1 year $ 55 $ 60 $ 20 $ 30 $ 20
12b-1 fees .30% 1.00% 1.00% After 3 years $ 81 $ 82 $ 62 $ 62 $ 62
Other expenses (a) .22% .22% .23% After 5 years $109 $106 $106 $106 $106
---- ---- ---- After 10 years $188 $210(b) $210(b) $230 $230
Total fund
operating expenses 1.26% 1.96% 1.97%
==== ==== ====
<CAPTION>
Premier Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 58 $ 63 $ 23 $ 33 $ 23
12b-1 fees .33% 1.00% 1.00% After 3 years $ 90 $ 90 $ 70 $ 70 $ 70
Other expenses (a) .24% .25% .24% After 5 years $124 $120 $120 $120 $120
---- ---- ---- After 10 years $221 $241(b) $241(b) $257 $257
Total fund
operating expenses 1.57% 2.25% 2.24%
==== ==== ====
<CAPTION>
Technology Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees (f) 1.04% 1.04% 1.04% After 1 year $ 59 $ 64 $ 24 $ 34 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 94 $ 74 $ 74 $ 74
Other expenses (a) .33% .34% .34% After 5 years $129 $127 $127 $127 $127
---- ---- ---- After 10 years $232 $254(b) $254(b) $272 $272
Total fund
operating expenses 1.67% 2.38% 2.38%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 6.
4
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Operating Expenses Examples
- --------------------------------------------------------- -------------------------------------------------------------
Quasar Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees (f) 1.16% 1.16% 1.16% After 1 year $ 59 $ 65 $ 25 $ 35 $ 25
12b-1 fees .22% 1.00% 1.00% After 3 years $ 93 $ 98 $ 78 $ 78 $ 78
Other expenses (a) .29% .35% .34% After 5 years $129 $134 $134 $133 $133
---- ---- ---- After 10 years $232 $264(b) $264(b) $284 $284
Total fund
operating expenses 1.67% 2.51% 2.50%
==== ==== ====
<CAPTION>
International Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees
(after waiver) (c)(f) .85% .85% .85% After 1 year $ 59 $ 65 $ 25 $ 35 $ 25
12b-1 fees .21% 1.00% 1.00% After 3 years $ 92 $ 98 $ 78 $ 77 $ 77
Other expenses (a) .59% .64% .63% After 5 years $128 $133 $133 $132 $132
---- ---- ---- After 10 years $230 $262(b) $262(b) $282 $282
Total fund
operating expenses (d) 1.65% 2.49% 2.48%
==== ==== ====
<CAPTION>
International Premier
Growth Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 67 $ 72 $ 32 $ 42 $ 32
12b-1 fees .30% 1.00% 1.00% After 3 years $117 $119 $ 99 $ 99 $ 99
Other expenses (a) 1.20% 1.20% 1.20% After 5 years $170 $167 $167 $167 $167
---- ---- ---- After 10 years $314 $334(b) $334(b) $350 $350
Total fund
operating expenses (d) 2.50% 3.20% 3.20%
==== ==== ====
<CAPTION>
Worldwide Privatization Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 65 $ 25 $ 35 $ 25
12b-1 fees .30% 1.00% 1.00% After 3 years $ 95 $ 96 $ 76 $ 76 $ 76
Other expenses (a) .43% .45% .44% After 5 years $132 $131 $131 $130 $130
---- ---- ---- After 10 years $238 $261(b) $261(b) $278 $278
Total fund
operating expenses 1.73% 2.45% 2.44%
==== ==== ====
<CAPTION>
New Europe Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.02% 1.02% 1.02% After 1 year $ 60 $ 66 $ 26 $ 36 $ 26
12b-1 fees .30% 1.00% 1.00% After 3 years $ 98 $ 99 $ 79 $ 79 $ 79
Other expenses (a) .52% .52% .52% After 5 years $138 $135 $135 $135 $135
---- ---- ---- After 10 years $249 $270(b) $270(b) $288 $288
Total fund
operating expenses 1.84% 2.54% 2.54%
==== ==== ====
<CAPTION>
All-Asia Investment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees After 1 year $ 63 $ 68 $ 28 $ 38 $ 28
(after waiver) (c) .65% .65% .65% After 3 years $104 $106 $ 86 $ 86 $ 86
12b-1 fees .30% 1.00% 1.00% After 5 years $149 $146 $146 $146 $146
Other expenses After 10 years $271 $293(b) $293(b) $310 $310
Administration fees
(after waiver) (e) .00% .00% .00%
Other operating
expenses (a) 1.11% 1.12% 1.12%
---- ---- ----
Total fund
operating expenses (d) 2.06% 2.77% 2.77%
==== ==== ====
<CAPTION>
Greater China '97 Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 67 $ 72 $ 32 $ 42 $ 32
12b-1 fees .30% 1.00% 1.00% After 3 years $117 $119 $ 99 $ 99 $ 99
Other expenses (a) 1.20% 1.20% 1.20% After 5 years $170 $167 $167 $167 $167
---- ---- ---- After 10 years $314 $334(b) $334(b) $350 $350
Total fund
operating expenses 2.50% 3.20% 3.20%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 6.
5
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Operating Expenses Examples
- -------------------------------------------------------- -------------------------------------------------------------
Global Small Cap Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 63 $ 69 $ 29 $ 39 $ 29
12b-1 fees .30% 1.00% 1.00% After 3 years $107 $109 $ 89 $ 88 $ 88
Other expenses (a) .84% .86% .85% After 5 years $153 $151 $151 $150 $150
---- ---- ---- After 10 years $279 $301(b) $301(b) $318 $318
Total fund
operating expenses 2.14% 2.86% 2.85%
==== ==== ====
<CAPTION>
Global Environment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.10% 1.10% 1.10% After 1 year $ 69 $ 74 $ 34 $ 44 $ 34
12b-1 fees .30% 1.00% 1.00% After 3 years $122 $123 $103 $104 $104
Other expenses (a) 1.29% 1.26% 1.29% After 5 years $179 $175 $175 $176 $176
---- ---- ---- After 10 years $332 $350(b) $350(b) $368 $368
Total fund
operating expenses 2.69% 3.36% 3.39%
==== ==== ====
<CAPTION>
Balanced Shares Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .63% .63% .63% After 1 year $ 55 $ 61 $ 21 $ 31 $ 21
12b-1 fees .24% 1.00% 1.00% After 3 years $ 82 $ 84 $ 64 $ 64 $ 64
Other expenses (a) .42% .42% .41% After 5 years $110 $110 $110 $110 $110
---- ---- ---- After 10 years $192 $218(b) $218(b) $237 $237
Total fund
operating expenses 1.29% 2.05% 2.04%
==== ==== ====
<CAPTION>
Utility Income Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.00% 0.00% 0.00% After 1 year $ 57 $ 62 $ 22 $ 32 $ 22
(after waiver) (c) After 3 years $ 88 $ 89 $ 69 $ 69 $ 69
12b-1 fees .30% 1.00% 1.00% After 5 years $121 $118 $118 $118 $118
Other expenses (a) 1.20% 1.20% 1.20% After 10 years $214 $236(b) $236(b) $253 $253
---- ---- ----
Total fund
operating expenses (d) 1.50% 2.20% 2.20%
==== ==== ====
<CAPTION>
Growth and Income Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .49% .49% .49% After 1 year $ 51 $ 57 $ 17 $ 27 $ 17
12b-1 fees .22% 1.00% 1.00% After 3 years $ 71 $ 74 $ 54 $ 54 $ 54
Other expenses (a) .21% .23% .22% After 5 years $ 91 $ 93 $ 93 $ 93 $ 93
---- ---- ---- After 10 years $151 $182(b) $182(b) $202 $202
Total fund
operating expenses .92% 1.72% 1.71%
==== ==== ====
<CAPTION>
Real Estate Investment Fund Class A Class B Class C Class A Class B+ Class B++ Class C+ Class C++
------- ------- ------- ---------------- ------------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .90% .90% .90% After 1 year $ 58 $ 63 $ 23 $ 33 $ 23
12b-1 fees .30% 1.00% 1.00% After 3 years $ 89 $ 91 $ 71 $ 71 $ 71
Other expenses (a) .35% .36% .36% After 5 years $123 $121 $121 $121 $121
---- ---- ---- After 10 years $219 $242(b) $242(b) $260 $260
Total fund
operating expenses 1.55% 2.26% 2.26%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
+ Assumes redemption at end of period.
++ Assumes no redemption at end of period.
(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance. The expenses shown reflect the
application of credits that reduce Fund expenses.
(b) Assumes Class B shares converted to Class A shares after eight years.
(c) Net of voluntary fee waiver. In the absence of such waiver, management fees
would be .75% for Utility Income Fund, 1.00% for All-Asia Investment Fund
and 1.00% for International Fund.
(d) Net of voluntary fee waivers and expense reimbursements. Absent such
waivers and/or reimbursements, total fund annualized operating expenses
would have been as follows:
All-Asia Investment Fund Greater China '97 Fund
Class A 2.56% Class A 18.27%
Class B 3.27% Class B 19.18%
Class C 3.27% Class C 19.37%
International Fund International Premier Growth Fund
Class A 1.80% Class A 6.40%
Class B 2.64% Class B 7.05%
Class C 2.63% Class C 6.70%
Utility Income Fund
Class A 3.55%
Class B 4.28%
Class C 4.28%
(e) Net of voluntary fee waiver. Absent such fee waiver, administration fees
would have been .15% for the Fund's Class A, Class B and Class C shares.
Reflects the fees payable by All-Asia Investment Fund to Alliance pursuant
to an administration agreement.
(f) Calculated based on average daily net assets. Maximum contractual rate,
based on quarter-end net assets, is 1.00% for each of International Fund,
Quasar Fund and Technology Fund.
6
<PAGE>
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly or
indirectly. Long-term shareholders of a Fund may pay aggregate sales charges
totaling more than the economic equivalent of the maximum initial sales charges
permitted by the Conduct Rules of the National Association of Securities
Dealers, Inc. See "Management of the Funds--Distribution Services Agreements."
The Rule 12b-1 fee for each class comprises a service fee not exceeding .25% of
the aggregate average daily net assets of the Fund attributable to the class and
an asset-based sales charge equal to the remaining portion of the Rule 12b-1
fee. "Management fees" for All-Asia Investment Fund and "Administration fees"
for All-Asia Investment Fund have been restated to reflect current voluntary fee
waivers. "Other Expenses" for Global Environment Fund and International Premier
Growth are based on estimated amounts for its current fiscal year. The Examples
set forth above assume reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Commission regulations. The
Examples should not be considered representative of past or future expenses;
actual expenses may be greater or less than those shown.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, per share income and
capital changes for a share outstanding throughout each period indicated. Except
as otherwise indicated, the information in the tables for Alliance Fund, Growth
Fund, Premier Growth Fund, Balanced Shares, Utility Income Fund, Worldwide
Privatization Fund International Premier Growth Fund and Growth and Income Fund
has been audited by PricewaterhouseCooper LLP, the independent accountants for
each Fund, and for All-Asia Investment Fund, Technology Fund, Quasar Fund,
International Fund, New Europe Fund, Greater China '97 Fund, Global Small Cap
Fund, Global Environment Fund and Real Estate Investment Fund by Ernst & Young
LLP, the independent auditors for each Fund. A report of PricewaterhouseCooper
LLP or Ernst & Young LLP, as the case may be, on the information with respect to
each Fund, appears in the Fund's Statement of Additional Information. The
following information for each Fund should be read in conjunction with the
financial statements and related notes which are included in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's annual
report to shareholders, which may be obtained without charge by contacting
Alliance Fund Services, Inc. at the address or the "For Literature" telephone
number shown on the cover of this Prospectus.
7
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment
Fiscal Year or Period Period Income (Loss) Investments From Operations Income
------------------- ------------ -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Alliance Fund
Class A
12/1/97 to 5/31/98+++........... $8.70 $(.01)(b) $ .48 $. 47 $0.00
Year ended 11/30/97 ............ 7.71 (.02)(b) 2.09 2.07 (.02)
Year ended 11/30/96 ............ 7.72 .02 1.06 1.08 (.02)
Year ended 11/30/95 ............ 6.63 .02 2.08 2.10 (.01)
1/1/94 to 11/30/94** ........... 6.85 .01 (.23) (.22) 0.00
Year ended 12/31/93 ............ 6.68 .02 .93 .95 (.02)
Year ended 12/31/92 ............ 6.29 .05 .87 .92 (.05)
Year ended 12/31/91 ............ 5.22 .07 1.70 1.77 (.07)
Year ended 12/31/90 ............ 6.87 .09 (.32) (.23) (.18)
Year ended 12/31/89 ............ 5.60 .12 1.19 1.31 (.04)
Year ended 12/31/88 ............ 5.15 .08 .80 .88 (.08)
Class B
12/1/97 to 5/31/98+++........... $8.25 $(.04)(b) $ .45 $. 41 $0.00
Year ended 11/30/97 ............ 7.40 (.08)(b) 1.99 1.91 0.00
Year ended 11/30/96 ............ 7.49 (.01) .99 .98 0.00
Year ended 11/30/95 ............ 6.50 (.03) 2.02 1.99 0.00
1/1/94 to 11/30/94** ........... 6.76 (.03) (.23) (.26) 0.00
Year ended 12/31/93 ............ 6.64 (.03) .91 .88 0.00
Year ended 12/31/92 ............ 6.27 (.01)(b) .87 .86 (.01)
3/4/91++ to 12/31/91 ........... 6.14 .01 (b) .79 .80 (.04)
Class C
12/1/97 to 5/31/98+++........... $8.26 $(.04)(b) $ .45 $. 41 $0.00
Year ended 11/30/97 ............ 7.41 (.08)(b) 1.99 1.91 0.00
Year ended 11/30/96 ............ 7.50 (.02) 1.00 .98 0.00
Year ended 11/30/95 ............ 6.50 (.03) 2.03 2.00 0.00
1/1/94 to 11/30/94** ........... 6.77 (.03) (.24) (.27) 0.00
5/3/93++ to 12/31/93 ........... 6.67 (.02) .88 .86 0.00
Growth Fund (g)
Class A
11/1/97 to 4/30/98+++........... $43.95 $(.06)(b) $ 7.47 $ 7.53 $0.00
Year ended 10/31/97 ............ 34.91 (.10)(b) 10.17 10.07 0.00
Year ended 10/31/96 ............ 29.48 .05 6.20 6.25 (.19)
Year ended 10/31/95 ............ 25.08 .12 4.80 4.92 (.11)
5/1/94 to 10/31/94** ........... 23.89 .09 1.10 1.19 0.00
Year ended 4/30/94 ............. 22.67 (.01)(c) 3.55 3.54 0.00
Year ended 4/30/93 ............. 20.31 .05 (c) 3.68 3.73 (.14)
Year ended 4/30/92 ............. 17.94 .29 (c) 3.95 4.24 (.26)
9/4/90++ to 4/30/91 ............ 13.61 .17 (c) 4.22 4.39 (.06)
Class B
11/1/97 to 4/30/98+++........... $36.31 $(.09)(b) $ 6.11 $ 6.02 $0.00
Year ended 10/31/97 ............ 29.21 (.31)(b) 8.44 8.13 0.00
Year ended 10/31/96 ............ 24.78 (.12) 5.18 5.06 0.00
Year ended 10/31/95 ............ 21.21 (.02) 4.01 3.99 (.01)
5/1/94 to 10/31/94** ........... 20.27 .01 .93 .94 0.00
Year ended 4/30/94 ............. 19.68 (.07)(c) 2.98 2.91 0.00
Year ended 4/30/93 ............. 18.16 (.06)(c) 3.23 3.17 (.03)
Year ended 4/30/92 ............. 16.88 .17 (c) 3.67 3.84 (.21)
Year ended 4/30/91 ............. 14.38 .08 (c) 3.22 3.30 (.09)
Year ended 4/30/90 ............. 14.13 .01 (b)(c) 1.26 1.27 0.00
Year ended 4/30/89 ............. 12.76 (.01)(c) 2.44 2.43 0.00
10/23/87+ to 4/30/88 ........... 10.00 (.02)(c) 2.78 2.76 0.00
Class C
11/1/97 to 4/30/98+++........... $36.33 $(.09)(b) $ 6.11 $ 6.02 $0.00
Year ended 10/31/97 ............ 29.22 (.31)(b) 8.45 8.14 0.00
Year ended 10/31/96 ............ 24.79 (.12) 5.18 5.06 0.00
Year ended 10/31/95 ............ 21.22 (.03) 4.02 3.99 (.01)
5/1/94 to 10/31/94** ........... 20.28 .01 .93 .94 0.00
8/2/93++ to 4/30/94 ............ 21.47 (.02)(c) 1.15 1.13 0.00
Premier Growth Fund
Class A
12/1/97 to 5/31/98+++........... $22.00 $(.05)(b) $ 4.71 $ 4.66 $0.00
Year ended 11/30/97 ............ 17.98 (.10)(b) 5.20 5.10 0.00
Year ended 11/30/96 ............ 16.09 (.04)(b) 3.20 3.16 0.00
Year ended 11/30/95 ............ 11.41 (.03) 5.38 5.35 0.00
Year ended 11/30/94 ............ 11.78 (.09) (.28) (.37) 0.00
Year ended 11/30/93 ............ 10.79 (.05) 1.05 1.00 (.01)
9/28/92+ to 11/30/92 ........... 10.00 .01 .78 .79 0.00
Class B
12/1/97 to 5/31/98+++........... $21.26 $(.12)(b) $ 4.53 $ 4.41 $0.00
Year ended 11/30/97 ............ 17.52 (.23)(b) 5.05 4.82 0.00
Year ended 11/30/96 ............ 15.81 (.14)(b) 3.12 2.98 0.00
Year ended 11/30/95 ............ 11.29 (.11) 5.30 5.19 0.00
Year ended 11/30/94 ............ 11.72 (.15) (.28) (.43) 0.00
Year ended 11/30/93 ............ 10.79 (.10) 1.03 .93 0.00
9/28/92+ to 11/30/92 ........... 10.00 0.00 .79 .79 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 18.
8
<PAGE>
<TABLE>
<CAPTION>
Total
Total Net Asset Investment
Distributions Dividends Value Return Based
From Net And End Of on Net Asset
Fiscal Year or Period Realized Gains Distributions Period Value (a)
------------------- -------------- -------------- ---------- ------------
<S> <C> <C> <C> <C>
Alliance Fund
Class A $(2.17) $(2.17) $7.00 7.31%
Year ended 11/30/97 ............ (1.06) (1.08) 8.70 31.82
Year ended 11/30/96 ............ (1.07) (1.09) 7.71 16.49
Year ended 11/30/95 ............ (1.00) (1.01) 7.72 37.87
1/1/94 to 11/30/94** ........... 0.00 0.00 6.63 (3.21)
Year ended 12/31/93 ............ (.76) (.78) 6.85 14.26
Year ended 12/31/92 ............ (.48) (.53) 6.68 14.70
Year ended 12/31/91 ............ (.63) (.70) 6.29 33.91
Year ended 12/31/90 ............ (1.24) (1.42) 5.22 (4.36)
Year ended 12/31/89 ............ 0.00 (.04) 6.87 23.42
Year ended 12/31/88 ............ (.35) (.43) 5.60 17.10
Class B
$(2.17) $(2.17) $6.49 6.87%
Year ended 11/30/97 ............ (1.06) (1.06) 8.25 30.74
Year ended 11/30/96 ............ (1.07) (1.07) 7.40 15.47
Year ended 11/30/95 ............ (1.00) (1.00) 7.49 36.61
1/1/94 to 11/30/94** ........... 0.00 0.00 6.50 (3.85)
Year ended 12/31/93 ............ (.76) (.76) 6.76 13.28
Year ended 12/31/92 ............ (.48) (.49) 6.64 13.75
3/4/91++ to 12/31/91 ........... (.63) (.67) 6.27 13.10
Class C
$(2.17) $(2.17) $6.50 6.86%
Year ended 11/30/97 ............ (1.06) (1.06) 8.26 30.72
Year ended 11/30/96 ............ (1.07) (1.07) 7.41 15.48
Year ended 11/30/95 ............ (1.00) (1.00) 7.50 36.79
1/1/94 to 11/30/94** ........... 0.00 0.00 6.50 (3.99)
5/3/93++ to 12/31/93 ........... (.76) (.76) 6.77 13.95
Growth Fund (i)
Class A
$(2.91) $(2.91) $48.57 17.96%
Year ended 10/31/97 ............ (1.03) (1.03) 43.95 29.54
Year ended 10/31/96 ............ (.63) (.82) 34.91 21.65
Year ended 10/31/95 ............ (.41) (.52) 29.48 20.18
5/1/94 to 10/31/94** ........... 0.00 0.00 25.08 4.98
Year ended 4/30/94 ............. (2.32) (2.32) 23.89 15.66
Year ended 4/30/93 ............. (1.23) (1.37) 22.67 18.89
Year ended 4/30/92 ............. (1.61) (1.87) 20.31 23.61
9/4/90++ to 4/30/91 ............ 0.00 (.06) 17.94 32.40
Class B
$(2.91) $(2.91) $39.42 17.56%
Year ended 10/31/97 ............ (1.03) (1.03) 36.31 28.64
Year ended 10/31/96 ............ (.63) (.63) 29.21 20.82
Year ended 10/31/95 ............ (.41) (.42) 24.78 19.33
5/1/94 to 10/31/94** ........... 0.00 0.00 21.21 4.64
Year ended 4/30/94 ............. (2.32) (2.32) 20.27 14.79
Year ended 4/30/93 ............. (1.62) (1.65) 19.68 18.16
Year ended 4/30/92 ............. (2.35) (2.56) 18.16 22.75
Year ended 4/30/91 ............. (.71) (.80) 16.88 24.72
Year ended 4/30/90 ............. (1.02) (1.02) 14.38 8.81
Year ended 4/30/89 ............. (1.06) (1.06) 14.13 20.31
10/23/87+ to 4/30/88 ........... 0.00 0.00 12.76 27.60
Class C
$(2.91) $(2.91) $39.44 17.55%
Year ended 10/31/97 ............ (1.03) (1.03) 36.33 28.66
Year ended 10/31/96 ............ (.63) (.63) 29.22 20.81
Year ended 10/31/95 ............ (.41) (.42) 24.79 19.32
5/1/94 to 10/31/94** ........... 0.00 0.00 21.22 4.64
8/2/93++ to 4/30/94 ............ (2.32) (2.32) 20.28 5.27
Premier Growth Fund
Class A
$(1.44) $(1.44) $25.22 22.74%
Year ended 11/30/97 ............ (1.08) (1.08) 22.00 30.46
Year ended 11/30/96 ............ (1.27) (1.27) 17.98 21.52
Year ended 11/30/95 ............ (.67) (.67) 16.09 49.95
Year ended 11/30/94 ............ 0.00 0.00 11.41 (3.14)
Year ended 11/30/93 ............ 0.00 (.01) 11.78 9.26
9/28/92+ to 11/30/92 ........... 0.00 0.00 10.79 7.90
Class B
$(1.44) $(1.44) $24.23 22.33%
Year ended 11/30/97 ............ (1.08) (1.08) 21.26 29.62
Year ended 11/30/96 ............ (1.27) (1.27) 17.52 20.70
Year ended 11/30/95 ............ (.67) (.67) 15.81 49.01
Year ended 11/30/94 ............ 0.00 0.00 11.29 (3.67)
Year ended 11/30/93 ............ 0.00 0.00 11.72 8.64
9/28/92+ to 11/30/92 ........... 0.00 0.00 10.79 7.90
<CAPTION>
Net Assets Ratio Of Net
At End Of Ratio Of Investment
Period Expenses Income (Loss)
(000's To Average To Average Portfolio
Fiscal Year or Period omitted) Net Assets Net Assets Turnover Rate
------------------- ------------ ----------- ------------- -------------
<S> <C> <C> <C> <C>
Alliance Fund
Class A $1,188,742 98%* (.29)%* 53%
Year ended 11/30/97 ........... 1,201,435 1.03 (.29) 158
Year ended 11/30/96 ........... 999,067 1.04 .30 80
Year ended 11/30/95 ........... 945,309 1.08 .31 81
1/1/94 to 11/30/94** .......... 760,679 1.05* .21* 63
Year ended 12/31/93 ........... 831,814 1.01 .27 66
Year ended 12/31/92 ........... 794,733 .81 .79 58
Year ended 12/31/91 ........... 748,226 .83 1.03 74
Year ended 12/31/90 ........... 620,374 .81 1.56 71
Year ended 12/31/89 ........... 837,429 .75 1.79 81
Year ended 12/31/88 ........... 760,619 .82 1.38 65
Class B
$ 99,866 1.80%* 1.09%* 53%
Year ended 11/30/97 ........... 70,461 1.85 (1.12) 158
Year ended 11/30/96 ........... 44,450 1.87 (.53) 80
Year ended 11/30/95 ........... 31,738 1.90 (.53) 81
1/1/94 to 11/30/94** .......... 18,138 1.89* (.60)* 63
Year ended 12/31/93 ........... 12,402 1.90 (.64) 66
Year ended 12/31/92 ........... 3,825 1.64 (.04) 58
3/4/91++ to 12/31/91 .......... 852 1.64* .10* 74
Class C
$ 30,980 1.79%* 1.09%* 53%
Year ended 11/30/97 ........... 18,871 1.83 (1.10) 158
Year ended 11/30/96 ........... 13,899 1.86 (.51) 80
Year ended 11/30/95 ........... 10,078 1.89 (.51) 81
1/1/94 to 11/30/94** .......... 6,230 1.87* (.59)* 63
5/3/93++ to 12/31/93 .......... 4,006 1.94* (.74)* 66
Growth Fund (i)
Class A
$ 982,831 1.17%* .24%* 27%
ear ended 10/31/97 ........... 783,110 1.26 (i) (.25) 48
Year ended 10/31/96 ........... 499,459 1.30 .15 46
Year ended 10/31/95 ........... 285,161 1.35 .56 61
5/1/94 to 10/31/94** .......... 167,800 1.35* .86* 24
Year ended 4/30/94 ............ 102,406 1.40 (f) .32 87
Year ended 4/30/93 ............ 13,889 1.40 (f) .20 124
Year ended 4/30/92 ............ 8,228 1.40 1.44 137
9/4/90++ to 4/30/91 ........... 713 1.40* 1.99* 130
Class B
$4,352,301 1.88%* (.47)% 27%
Year ended 10/31/97 ........... 3,578,806 1.96 (i) (.94) 48
Year ended 10/31/96 ........... 2,498,097 1.99 (.54) 46
Year ended 10/31/95 ........... 1,052,020 2.05 (.15) 61
5/1/94 to 10/31/94** .......... 751,521 2.05* .16* 24
Year ended 4/30/94 ............ 394,227 2.10 (f) (.36) 87
Year ended 4/30/93 ............ 56,704 2.15 (f) (.53) 124
Year ended 4/30/92 ............ 37,845 2.15 .78 137
Year ended 4/30/91 ............ 22,710 2.10 .56 130
Year ended 4/30/90 ............ 15,800 2.00 .07 165
Year ended 4/30/89 ............ 7,672 2.00 (.03) 139
10/23/87+ to 4/30/88 .......... 1,938 2.00* (.40)* 52
Class C
$ 730,631 1.88% (.47)%* 27%
Year ended 10/31/97 ........... 599,449 1.97 (i) (.95)% 48
Year ended 10/31/96 ........... 403,478 2.00 (.55) 46
Year ended 10/31/95 ........... 226,662 2.05 (.15) 61
5/1/94 to 10/31/94** .......... 114,455 2.05* .16* 24
8/2/93++ to 4/30/94 ........... 64,030 2.10*(f) (.31)* 87
Premier Growth Fund
Class A
$ 796,794 1.51%* (.40)% 30%
Year ended 11/30/97 ........... 373,099 1.57 (.52) 76
Year ended 11/30/96 ........... 172,870 1.65 (.27) 95
Year ended 11/30/95 ........... 72,366 1.75 (.28) 114
Year ended 11/30/94 ........... 35,146 1.96 (.67) 98
Year ended 11/30/93 ........... 40,415 2.18 (.61) 68
9/28/92+ to 11/30/92 .......... 4,893 2.17* .91* 0
Class B
$1,633,922 2.20% (1.10)%* 30%
Year ended 11/30/97 ........... 858,449 2.25 (1.20)% 76
Year ended 11/30/96 ........... 404,137 2.32 (.94) 95
Year ended 11/30/95 ........... 238,088 2.43 (.95) 114
Year ended 11/30/94 ........... 139,988 2.47 (1.19) 98
Year ended 11/30/93 ........... 151,600 2.70 (1.14) 68
9/28/92+ to 11/30/92 .......... 19,941 2.68* .35* 0
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment
Fiscal Year or Period Period Income (Loss) Investments From Operations Income
------------------- ------------ -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Premier Growth Fund (continued)
Class C
12/1/97 to 5/31/98+++........... $21.29 $(.12)(b) $4.54 $4.42 $0.00
Year ended 11/30/97 ............ 17.54 (.24)(b) 5.07 4.83 0.00
Year ended 11/30/96 ............ 15.82 (.14)(b) 3.13 2.99 0.00
Year ended 11/30/95 ............ 11.30 (.08) 5.27 5.19 0.00
Year ended 11/30/94 ............ 11.72 (.09) (.33) (.42) 0.00
5/3/93++ to 11/30/93 ........... 10.48 (.05) 1.29 1.24 0.00
Technology Fund
Class A
12/1/97 to 5/31/98+++........... $54.44 $(.30)(b) $6.90 $6.60 $0.00
Year ended 11/30/97 ............ 51.15 (.51)(b) 4.22 3.71 0.00
Year ended 11/30/96 ............ 46.64 (.39)(b) 7.28 6.89 0.00
Year ended 11/30/95 ............ 31.98 (.30) 18.13 17.83 0.00
1/1/94 to 11/30/94** ........... 26.12 (.32) 6.18 5.86 0.00
Year ended 12/31/93 ............ 28.20 (.29) 6.39 6.10 0.00
Year ended 12/31/92 ............ 26.38 (.22)(b) 4.31 4.09 0.00
Year ended 12/31/91 ............ 19.44 (.02) 10.57 10.55 0.00
Year ended 12/31/90 ............ 21.57 (.03) (.56) (.59) 0.00
Year ended 12/31/89 ............ 20.35 0.00 1.22 1.22 0.00
Year ended 12/31/88 ............ 20.22 (.03)(c) .16 .13 0.00
Class B
12/1/97 to 5/31/98+++........... $52.58 $(.49)(b) $6.66 $6.17 $0.00
Year ended 11/30/97 ............ 49.76 (.88)(b) 4.12 3.24 0.00
Year ended 11/30/96 ............ 45.76 (.70)(b) 7.08 6.38 0.00
Year ended 11/30/95 ............ 31.61 (.60)(b) 17.92 17.32 0.00
1/1/94 to 11/30/94** ........... 25.98 (.23) 5.86 5.63 0.00
5/3/93++ to 12/31/93 ........... 27.44 (.12) 6.84 6.72 0.00
Class C
12/1/97 to 5/31/98+++........... $52.57 $(.48)(b) $6.65 $6.17 $0.00
Year ended 11/30/97 ............ 49.76 (.88)(b) 4.11 3.23 0.00
Year ended 11/30/96 ............ 45.77 (.70)(b) 7.07 6.37 0.00
Year ended 11/30/95 ............ 31.61 (.58)(b) 17.91 17.33 0.00
1/1/94 to 11/30/94** ........... 25.98 (.24) 5.87 5.63 0.00
5/3/93++ to 12/31/93 ........... 27.44 (.13) 6.85 6.72 0.00
Quasar Fund
Class A
10/1/97 to 3/31/98+++........... $30.37 $(.09)(b) $2.36 $2.27 $0.00
Year ended 9/30/97 ............. 27.92 (.24)(b) 6.80 6.56 0.00
Year ended 9/30/96 ............. 24.16 (.25) 8.82 8.57 0.00
Year ended 9/30/95 ............. 22.65 (.22)(b) 5.59 5.37 0.00
Year ended 9/30/94 ............. 24.43 (.60) (.36) (.96) 0.00
Year ended 9/30/93 ............. 19.34 (.41) 6.38 5.97 0.00
Year ended 9/30/92 ............. 21.27 (.24) (1.53) (1.77) 0.00
Year ended 9/30/91 ............. 15.67 (.05) 5.71 5.66 (.06)
Year ended 9/30/90 ............. 24.84 .03(b) (7.18) (7.15) 0.00
Year ended 9/30/89 ............. 17.60 .02(b) 7.40 7.42 0.00
Year ended 9/30/88 ............. 24.47 (.08)(c) (2.08) (2.16) 0.00
Class B
10/1/97 to 3/31/98+++........... $27.83 $(.19)(b) $2.15 $1.96 $0.00
Year ended 9/30/97 ............. 26.13 (.42)(b) (6.23) 5.81 0.00
Year ended 9/30/96 ............. 23.03 (.20) 8.11 7.91 0.00
Year ended 9/30/95 ............. 21.92 (.37)(b) 5.34 4.97 0.00
Year ended 9/30/94 ............. 23.88 (.53) (.61) (1.14) 0.00
Year ended 9/30/93 ............. 19.07 (.18) 5.87 5.69 0.00
Year ended 9/30/92 ............. 21.14 (.39) (1.52) (1.91) 0.00
Year ended 9/30/91 ............. 15.66 (.13) 5.67 5.54 (.06)
9/17/90++ to 9/30/90 ........... 17.17 (.01) (1.50) (1.51) 0.00
Class C
10/1/97 to 3/31/98+++........... $27.85 $(.19)(b) $2.14 $1.95 $0.00
Year ended 9/30/97 ............. 26.14 (.42)(b) 6.24 5.82 0.00
Year ended 9/30/96 ............. 23.05 (.20) 8.10 7.90 0.00
Year ended 9/30/95 ............. 21.92 (.37)(b) 5.36 4.99 0.00
Year ended 9/30/94 ............. 23.88 (.36) (.78) (1.14) 0.00
5/3/93++ to 9/30/93 ............ 20.33 (.10) 3.65 3.55 0.00
International Fund
Class A
Year ended 6/30/98+++........... $18.69 $(.01)(b)(c) $1.13 $1.12 $(.05)
Year ended 6/30/97 ............. 18.32 .06(b) 1.51 1.57 (.12)
Year ended 6/30/96 ............. 16.81 .05(b) 2.51 2.56 0.00
Year ended 6/30/95 ............. 18.38 .04 .01 .05 0.00
Year ended 6/30/94 ............. 16.01 (.09) 3.02 2.93 0.00
Year ended 6/30/93 ............. 14.98 (.01) 1.17 1.16 (.04)
Year ended 6/30/92 ............. 14.00 .01(b) 1.04 1.05 (.07)
Year ended 6/30/91 ............. 17.99 .05 (3.54) (3.49) (.03)
Year ended 6/30/90 ............. 17.24 .03 2.87 2.90 (.04)
Year ended 6/30/89 ............. 16.09 .05 3.73 3.78 (.13)
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 18.
10
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets
Total Net Asset Investment At End Of
Distributions Dividends Value Return Based Period
From Net And End of on Net Asset (000's
Fiscal Year or Period Realized Gains Distributions Period Value (a) omitted)
--------------------- -------------- ------------- ------ --------- ----------
<S> <C> <C> <C> <C> <C>
Premier Growth Fund (continued)
Class C
12/1/97 to 5/31/98+++............. $(1.44) $(1.44) $24.27 22.35% $ 422,016
Year ended 11/30/97............... (1.08) (1.08) 21.29 29.64 177,923
Year ended 11/30/96............... (1.27) (1.27) 17.54 20.76 60,194
Year ended 11/30/95............... (.67) (.67) 15.82 48.96 20,679
Year ended 11/30/94............... 0.00 0.00 11.30 (3.58) 7,332
5/3/93++ to 11/30/93.............. 0.00 0.00 11.72 11.83 3,899
Technology Fund
Class A
12/1/97 to 5/31/98+++............. $(.58) $ (.58) $60.46 12.25% $ 720,675
Year ended 11/30/97............... (.42) (.42) 54.44 7.32 624,716
Year ended 11/30/96............... (2.38) (2.38) 51.15 16.05 594,861
Year ended 11/30/95............... (3.17) (3.17) 46.64 61.93 398,262
1/1/94 to 11/30/94/**/............ 0.00 0.00 31.98 22.43 202,929
Year ended 12/31/93............... (8.18) (8.18) 26.12 21.63 173,732
Year ended 12/31/92............... (2.27) (2.27) 28.20 15.50 173,566
Year ended 12/31/91............... (3.61) (3.61) 26.38 54.24 191,693
Year ended 12/31/90............... (1.54) (1.54) 19.44 (3.08) 131,843
Year ended 12/31/89............... 0.00 0.00 21.57 6.00 141,730
Year ended 12/31/88............... 0.00 0.00 20.35 0.64 169,856
Class B
12/1/97 to 5/31/98+++............. $ (.58) $ (.58) $58.17 11.87% $1,248,323
Year ended 11/30/97............... (.42) (.42) 52.58 6.57 1,053,436
Year ended 11/30/96............... (2.38) (2.38) 49.76 15.20 660,921
Year ended 11/30/95............... (3.17) (3.17) 45.76 60.95 277,111
1/1/94 to 11/30/94/**/............ 0.00 0.00 31.61 21.67 18,397
5/3/93++ to 12/31/93.............. (8.18) (8.18) 25.98 24.49 1,645
Class C
12/1/97 to 5/31/98+++............. $ (.58) $ (.58) $58.16 11.86% $ 219,120
Year ended 11/30/97............... (.42) (.42) 52.57 6.55 184,194
Year ended 11/30/96............... (2.38) (2.38) 49.76 15.17 108,488
Year ended 11/30/95............... (3.17) (3.17) 45.77 60.98 43,161
1/1/94 to 11/30/94/**/............ 0.00 0.00 31.61 21.67 7,470
5/3/93++ to 12/31/93.............. (8.18) (8.18) 25.98 24.49 1,096
Quasar Fund
Class A
10/1/97 to 3/31/98+++............. $(1.23) $(1.23) $31.41 7.97% $ 562,517
Year ended 9/30/97................ (4.11) (4.11) 30.37 27.81 402,081
Year ended 9/30/96................ (4.81) (4.81) 27.92 42.42 229,798
Year ended 9/30/95................ (3.86) (3.86) 24.16 30.73 146,663
Year ended 9/30/94................ (.82) (.82) 22.65 (4.05) 155,470
Year ended 9/30/93................ (.88) (.88) 24.43 31.58 228,874
Year ended 9/30/92................ (.16) (.16) 19.34 (8.34) 252,140
Year ended 9/30/91................ 0.00 (.06) 21.27 36.28 333,806
Year ended 9/30/90................ (2.02) (2.02) 15.67 (30.81) 251,102
Year ended 9/30/89................ (.18) (.18) 24.84 42.68 263,099
Year ended 9/30/88................ (4.71) (4.71) 17.60 (8.61) 90,713
Class B
10/1/97 to 3/31/98+++............. $(1.23) $(1.23) $28.56 7.57% $ 716,818
Year ended 9/30/97................ (4.11) (4.11) 27.83 26.70 503,037
Year ended 9/30/96................ (4.81) (4.81) 26.13 41.48 112,490
Year ended 9/30/95................ (3.86) (3.86) 23.03 29.78 16,604
Year ended 9/30/94................ (.82) (.82) 21.92 (4.92) 13,901
Year ended 9/30/93................ (.88) (.88) 23.88 30.53 16,779
Year ended 9/30/92................ (.16) (.16) 19.07 (9.05) 9,454
Year ended 9/30/91................ 0.00 (.06) 21.14 35.54 7,346
9/17/90++ to 9/30/90.............. 0.00 0.00 15.66 (8.79) 71
Class C
10/1/97 to 3/31/98+++............. $(1.23) $(1.23) $28.57 7.53% $ 206,104
Year ended 9/30/97................ (4.11) (4.11) 27.85 26.74 145,494
Year ended 9/30/96................ (4.81) (4.81) 26.14 41.46 28,541
Year ended 9/30/95................ (3.86) (3.86) 23.05 29.87 1,611
Year ended 9/30/94................ (.82) (.82) 21.92 (4.92) 1,220
5/3/93++ to 9/30/93............... 0.00 0.00 23.88 17.46 118
International Fund
Class A
Year ended 6/30/98................ $(1.21) $(1.26) $18.55 6.79% $ 131,565
Year ended 6/30/97................ (1.08) (1.20) 18.69 9.30 190,173
Year ended 6/30/96................ (1.05) (1.05) 18.32 15.83 196,261
Year ended 6/30/95................ (1.62) (1.62) 16.81 .59 165,584
Year ended 6/30/94................ (.56) (.56) 18.38 18.68 201,916
Year ended 6/30/93................ (.09) (.13) 16.01 7.86 161,048
Year ended 6/30/92................ 0.00 (.07) 14.98 7.52 179,807
Year ended 6/30/91................ (.47) (.50) 14.00 (19.34) 214,442
Year ended 6/30/90................ (2.11) (2.15) 17.99 16.98 265,999
Year ended 6/30/89................ (2.50) (2.63) 17.24 27.65 166,003
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratio Of Net
Ratio Of Investment
Expenses Income (Loss)
To Average To Average Portfolio
Fiscal Year or Period Net Assets Net Assets Turnover Rate
--------------------- ---------- ---------- -------------
<S> <C> <C> <C>
Premier Growth Fund (continued)
Class C
12/1/97 to 5/31/98+++............. 2.19%* (1.10)%* 30%
Year ended 11/30/97............... 2.24 (1.22) 76
Year ended 11/30/96............... 2.32 (.94) 95
Year ended 11/30/95............... 2.42 (.97) 114
Year ended 11/30/94............... 2.47 (1.16) 98
5/3/93++ to 11/30/93.............. 2.79* (1.35)* 68
Technology Fund
Class A
12/1/97 to 5/31/98+++............. 1.63%* (1.04)%* 31%
Year ended 11/30/97............... 1.67(i) (.97) 51
Year ended 11/30/96............... 1.74 (.87) 30
Year ended 11/30/95............... 1.75 (.77) 55
1/1/94 to 11/30/94/**/............ 1.66* (1.22)* 55
Year ended 12/31/93............... 1.73 (1.32) 64
Year ended 12/31/92............... 1.61 (.90) 73
Year ended 12/31/91............... 1.71 (.20) 134
Year ended 12/31/90............... 1.77 (.18) 147
Year ended 12/31/89............... 1.66 .02 139
Year ended 12/31/88............... 1.42 (.16) 139
Class B
12/1/97 to 5/31/98+++............. 2.35%(i)* (1.76)%* 31%
Year ended 11/30/97............... 2.38(i) (1.70) 51
Year ended 11/30/96............... 2.44 (1.61) 30
Year ended 11/30/95............... 2.48 (1.47) 55
1/1/94 to 11/30/94/**/............ 2.43* (1.95)* 55
5/3/93++ to 12/31/93.............. 2.57* (2.30)* 64
Class C
12/1/97 to 5/31/98+++............. 2.35%(i)* (1.77)%* 31%
Year ended 11/30/97............... 2.38(i) (1.70) 51
Year ended 11/30/96............... 2.44 (1.60) 30
Year ended 11/30/95............... 2.48 (1.47) 55
1/1/94 to 11/30/94/**/............ 2.41* (1.94)* 55
5/3/93++ to 12/31/93.............. 2.52* (2.25)* 64
Quasar Fund
Class A
10/1/97 to 3/31/98+++............. 1.56%* (.66)%* 63%
Year ended 9/30/97................ 1.67 (.91) 135
Year ended 9/30/96................ 1.79 (1.11) 168
Year ended 9/30/95................ 1.83 (1.06) 160
Year ended 9/30/94................ 1.67 (1.15) 110
Year ended 9/30/93................ 1.65 (1.00) 102
Year ended 9/30/92................ 1.62 (.89) 128
Year ended 9/30/91................ 1.64 (.22) 118
Year ended 9/30/90................ 1.66 .16 90
Year ended 9/30/89................ 1.73 .10 90
Year ended 9/30/88................ 1.28 (.40) 58
Class B
10/1/97 to 3/31/98+++............. 2.34%* (1.44)%* 63%
Year ended 9/30/97................ 2.51 (1.73) 135
Year ended 9/30/96................ 2.62 (1.96) 168
Year ended 9/30/95................ 2.65 (1.88) 160
Year ended 9/30/94................ 2.50 (1.98) 110
Year ended 9/30/93................ 2.46 (1.81) 102
Year ended 9/30/92................ 2.42 (1.67) 128
Year ended 9/30/91................ 2.41 (1.28) 118
9/17/90++ to 9/30/90.............. 2.09* (.26)* 90
Class C
10/1/97 to 3/31/98+++............. 2.33%* (1.44)%* 63%
Year ended 9/30/97................ 2.50 (1.72) 135
Year ended 9/30/96................ 2.61 (1.94) 168
Year ended 9/30/95................ 2.64* (1.76)* 160
Year ended 9/30/94................ 2.48 (1.96) 110
5/3/93++ to 9/30/93............... 2.49* (1.90)* 102
International Fund
Class A
Year ended 6/30/98................ 1.65%(f) (.05)% 121%
Year ended 6/30/97................ 1.74(i) .31 94
Year ended 6/30/96................ 1.72 .31 78
Year ended 6/30/95................ 1.73 .26 119
Year ended 6/30/94................ 1.90 (.50) 97
Year ended 6/30/93................ 1.88 (.14) 94
Year ended 6/30/92................ 1.82 .07 72
Year ended 6/30/91................ 1.73 .37 71
Year ended 6/30/90................ 1.45 .33 37
Year ended 6/30/89................ 1.41 .39 87
- ------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase Distributions
Value Unrealized (Decrease) In Dividends From In Excess Of
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment Net Investment
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Income
------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
International Fund (continued)
Class B
Year ended 6/30/98 ............. $17.71 $(.16)(b)(c) $ 1.07 $ .91 $0.00 $0.00
Year ended 6/30/97 ............. 17.45 (.09)(b) 1.43 1.34 0.00 0.00
Year ended 6/30/96 ............. 16.19 (.07)(b) 1.38) 2.31 0.00 0.00
Year ended 6/30/95 ............. 17.90 (.01) (0.08) (.09) 0.00 0.00
Year ended 6/30/94 ............. 15.74 (.19)(b) 2.91 2.72 0.00 0.00
Year ended 6/30/93 ............. 14.81 (.12) 1.14 1.02 0.00 0.00
Year ended 6/30/92 13.93 (.11)(b) 1.02 .91) (.03) 0.00
9/17/90++ to 6/30/91 ........... 15.52 .03 (1.12) (1.09) (.03) 0.00
Class C
Year ended 6/30/98 ............. $17.73 $(.15)(b)(c) $ 1.05 $ .90 $0.00 $0.00
Year ended 6/30/97 ............. 17.46 (.09)(b) 1.44 1.35 0.00 0.00
Year ended 6/30/96 ............. 16.20 (.07)(b) 2.38 2.31 0.00 0.00
Year ended 6/30/95 ............. 17.91 (.14) .05 (.09) 0.00 0.00
Year ended 6/30/94 ............. 15.74 (.11) 2.84 2.73 0.00 0.00
5/3/93++ to 6/30/93 ............ 15.93 0.00 (.19) (.19) 0.00 0.00
International Premier Growth fund
Class A
-------
3/3/98+ to 5/31/98+++ .......... $10.00 $ .04(b)(c) $ .30 $ .34 $0.00 $0.00
Class B
-------
3/3/98+ to 5/31/98+++ .......... $10.00 $ .03(b)(c) $ .30 $ .33 $0.00 $0.00
Class C
-------
3/3/98+ to 5/31/98+++ .......... $10.00 $ .02(b)(c) $ .30 $ .32 $0.00 $0.00
Worldwide Privatization Fund
Class A
Year ended 6/30/98 ............. $13.26 $ .10(b) $ .85 $ .95 $(.18) $0.00
Year ended 6/30/97 ............. 12.13 .15(b) 2.55 2.70 (.15) 0.00
Year ended 6/30/96 ............. 10.18 .10(b) 1.85 1.95 0.00 0.00
Year ended 6/30/95 ............. 9.75 .06 .37 .43 0.00 0.00
6/2/94+ to 6/30/94 ............. 10.00 .01 (.26) (.25) 0.00 0.00
Class B
Year ended 6/30/98 ............. $13.04 $ .02(b) $ .82 $ .84 $(.15) $0.00
Year ended 6/30/97 ............. 11.96 .08(b) 2.50 2.58 (.08) 0.00
Year ended 6/30/96 ............. 10.10 (.02) 1.88 1.86 0.00 0.00
Year ended 6/30/95 ............. 9.74 .02 .34 .36 0.00 0.00
6/2/94+ to 6/30/94 ............. 10.00 .00 (.26) (.26) 0.00 0.00
Class C
Year ended 6/30/98 ............. $13.04 $ .05(b) $ .79 $ .84 $(.15) $0.00
Year ended 6/30/97 ............. 11.96 .12(b) 2.46 2.58 (.08) 0.00
Year ended 6/30/96 ............. 10.10 .03 1.83 1.86 0.00 0.00
2/8/95++ to 6/30/9 ............. 9.53 .05 .52 .57 0.00 0.00
New Europe Fund
Class A
Year ended 7/31/98 ............. $18.61 $ .05(b) $ 5.28 $ 5.33 $0.00 $(.04)
Year ended 7/31/97 ............. 15.84 .07(b) 4.20 4.27 (.15) (.03)
Year ended 7/31/96 ............. 15.11 .18 1.02 1.20 0.00 0.00
Year ended 7/31/95 ............. 12.66 .04 2.50 2.54 (.09) 0.00
Period ended 7/31/94**.......... 12.53 .09 .04 .13 0.00 0.00
Year ended 2/28/94 ............. 9.37 .02(b) 3.14 3.16 0.00 0.00
Year ended 2/28/93 ............. 9.81 .04 (.33) (.29) (.15) 0.00
Year ended 2/29/92 ............. 9.76 .02(b) .05 .07 (.02) 0.00
4/2/90+ to 2/28/91 ............. 11.11(e) .26 (.91) (.65) (.26) 0.00
Class B
Year ended 7/31/98 ............. $17.87 $(.08)(b) $ 5.02 $ 4.94 $0.00 $0.00
Year ended 7/31/97 ............. 15.31 (.04)(b) 4.02 3.98 0.00 (.10)
Year ended 7/31/96 ............. 14.71 .08 .99 1.07 0.00 0.00
Year ended 7/31/95 ............. 12.41 (.05) 2.44 2.39 (.09) 0.00
Period ended 7/31/94**.......... 12.32 .07 .02 .09 0.00 0.00
Year ended 2/28/94 ............. 9.28 (.05)(b) 3.09 3.04 0.00 0.00
Year ended 2/28/93 ............. 9.74 (.02) (.33) (.35) (.11) 0.00
3/5/91++ to 2/29/92 ............ 9.84 (.04)(b) (.04) (.08) (.02) 0.00
Class C
Year ended 7/31/98 ............. $17.89 $(.08)(b) $ 5.01 $ 4.93 $0.00 $0.00
Year ended 7/31/97 ............. 15.33 (.04)(b) 4.02 3.98 0.00 (.10)
Year ended 7/31/96 ............. 14.72 .08 1.00 1.08 0.00 0.00
Year ended 7/31/95 ............. 12.42 (.07) 2.46 2.39 (.09) 0.00
Period ended 7/31/94**.......... 12.33 .06 .03 .09 0.00 0.00
5/3/93++ to 2/28/94 ............. 10.21 (.04)(b) 2.16 2.12 0.00 0.00
All-Asia Investment Fund
Class A
11/1/97 to 4/30/98+++........... $ 7.54 $(.07)(b)(c) $ (.26) $ (.33) $0.00 $0.00
Year ended 10/31/97 ............. 11.04 (.21)(b)(c) (2.95) (3.16) 0.00 0.00
Year ended 10/31/96 ............. 10.45 (.21)(b)(c) .88 .67 0.00 0.00
11/28/94+ to 10/31/9 ............ 10.00 (.19)(c) .64 .45 0.00 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 18.
12
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets
Total Net Asset Investment At End of
Distributions Dividends Value Return Based Period
From Net And End of On Net Asset (000's
Fiscal Year or Period Realized Gains Distributions Period Value (a) omitted)
------------------- -------------- -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
International Fund (continued)
Class B
Year ended 6/30/98 ............. $(1.21) $(1.21) $17.41 5.92% $ 71,370
Year ended 6/30/97 ............. (1.08) (1.08) 17.71 8.37 77,725
Year ended 6/30/96 ............. (1.05) (1.05) 17.45 14.87 72,470
Year ended 6/30/95 ............. (1.62) (1.62) 16.19 (.22) 48,998
Year ended 6/30/94 ............. (.56) (.56) 17.90 17.65 29,943
Year ended 6/30/93 ............. (.09) (.09) 14.74 6.98 6,363
Year ended 6/30/92 ............. 0.00 (.03) 14.81 6.54 5,585
9/17/90++ to 6/30/91 ........... (.47) (.50) 13.93 (6.97) 3,515
Class C
Year ended 6/30/98 ............. $(1.21) $(1.21) $17.42 5.85% $ 20,428
Year ended 6/30/97 ............. (1.08) (1.08) 17.73 8.42 23,268
Year ended 6/30/96 ............. (1.05) (1.05) 17.46 14.85 26.965
Year ended 6/30/95 ............. (1.62) (1.62) 16.20 (.22) 19,395
Year ended 6/30/94 ............. (.56) (.56) 17.91 17.72 13,503
5/3/93++ to 6/30/93 ............ 0.00 0.00 15.74 (1.19) 229
International Premier Growth fund
Class A
3/3/98+ to 5/31/98+++ .......... 0.00 0.00 10.34 3.40 2,764
Class B
3/3/98+ to 5/31/98+++ .......... 0.00 0.00 10.33 3.30 7,042
Class C
3/3/98+ to 5/31/98+++ .......... 0.00 0.00 10.32 3.20 1,017
Worldwide Privatization Fund
Class A
Year ended 6/30/98 ............. $(1.36) $(1.54) $12.67 9.11% $ 467,960
Year ended 6/30/97 ............. (1.42) (1.57) 13.26 25.16 561,793
Year ended 6/30/96 ............. 0.00 0.00 12.13 19.16 672,732
Year ended 6/30/95 ............. 0.00 0.00 10.18 4.41 13,535
6/2/94+ to 6/30/94 ............. 0.00 0.00 9.75 (2.50) 4,990
Class B
Year ended 6/30/98 ............. $(1.36) $(1.51) $12.37 8.34% $ 156,348
Year ended 6/30/97 ............. (1.42) (1.50) 13.04 24.34 121,173
Year ended 6/30/96 ............. 0.00 0.00 11.96 18.42 83,050
Year ended 6/30/95 ............. 0.00 0.00 10.10 3.70 79,359
6/2/94+ to 6/30/94 ............. 0.00 0.00 9.74 (2.60) 22,859
Class C
Year ended 6/30/98 ............. $(1.36) $(1.51) $12.37 8.34% $ 26,635
Year ended 6/30/97 ............. (1.42) (1.50) 13.04 24.33 12,929
Year ended 6/30/96 ............. 0.00 0.00 11.96 18.42 2,383
2/8/95++ to 6/30/9 ............. 0.00 0.00 10.10 5.98 338
New Europe Fund
Class A
Year ended 7/31/98 ............. $(2.05) $(2.09) $21.85 32.21% $ 130,777
Year ended 7/31/97 ............. (1.32) (1.50) 18.61 28.78 78,578
Year ended 7/31/96 ............. (.47) (.47) 15.84 8.20 74,026
Year ended 7/31/95 ............. 0.00 (.09) 15.11 20.22 86,112
Period ended 7/31/94**.......... 0.00 0.00 12.66 1.04 86,739
Year ended 2/28/94 ............. 0.00 0.00 12.53 33.73 90,372
Year ended 2/28/93 ............. 0.00 (.15) 9.37 (2.82) 79,285
Year ended 2/29/92 ............. 0.00 (.02) 9.81 .74 108,510
4/2/90+ to 2/28/91 ............. (.44) (.70) 9.76 (5.63) 188,016
Class B
Year ended 7/31/98 ............. $(2.05) $(2.05) $20.76 31.22% $ 137,425
Year ended 7/31/97 ............. (1.32) (1.42) 17.87 27.76 77,032
Year ended 7/31/96 ............. (.47) (.47) 15.31 7.53 42,662
Year ended 7/31/95 ............. 0.00 (.09) 14.71 19.42 34,527
Period ended 7/31/94**.......... 0.00 0.00 12.41 .73 31,404
Year ended 2/28/94 ............. 0.00 0.00 12.32 32.76 20,729
Year ended 2/28/93 ............. 0.00 (.11) 9.28 (3.49) 1,732
3/5/91++ to 2/29/92............. 0.00 (.02) 9.74 .03 1,423
Class C
Year ended 7/31/98 ............. $(2.05) $(2.05) $20.77 31.19% $ 39,618
Year ended 7/31/97 ............. (1.32) (1.42) 17.89 27.73 16,907
Year ended 7/31/96 ............. (.47) (.47) 15.33 7.59 10,141
Year ended 7/31/95 ............. 0.00 (.09) 14.72 19.40 7,802
Period ended 7/31/94**.......... 0.00 0.00 12.42 .73 11,875
5/3/93++ to 2/28/94............. 0.00 0.00 12.33 20.77 10,886
All-Asia Investment Fund
Class A
11/1/97 to 4/30/98 ............ $ 0.00 $(0.00) $ 7.21 (4.38)% $ 4,816
Year ended 10/31/97 ............ .34 .34 7.54 (29.61) 5,916
Year ended 10/31/96 ............ (.08) (.08) 11.04 6.43 12,284
11/28/94+ to 10/31/95........... 0.00 0.00) 10.45 4.50 2,870
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
To Average To Average Portfolio
Net Assets Net Assets Turnover Rate
------------ ------------- ---------------
Class B
Year ended 6/30/98 ............. 2.49%(f) (.90)% 121%
Year ended 6/30/97 ............. 2.59 (i) (.51) 94
Year ended 6/30/96 ............. 2.55 (.46) 78
Year ended 6/30/95 ............. 2.57 (.62) 119
Year ended 6/30/94 ............. 2.78 (1.15) 97
Year ended 6/30/93 ............. 2.70 (.96) 94
Year ended 6/30/92 ............. 2.68 (.70) 72
9/17/90++ to 6/30/91 ........... 3.39* .84* 71
Class C
Year ended 6/30/98 ............. 2.48%(f) (.90)% 121%
Year ended 6/30/97 ............. 2.58 (.51) 94
Year ended 6/30/96 ............. 2.53 (.47) 78
Year ended 6/30/95 ............. 2.54 (.88) 119
Year ended 6/30/94 ............. 2.78 (1.12) 97
5/3/93++ to 6/30/93 ............ 2.57* .08* 94
International Premier Growth fund
Class A
3/3/98+ to 5/31/98+++ .......... 2.50%* 2.08%* 26%
Class B
3/3/98+ to 5/31/98+++ .......... 3.20% 1.59%* 26%
Class C
3/3/98+ to 5/31/98+++ .......... 3.20% 1.42%* 26%
Worldwide Privatization Fund
Class A
Year ended 6/30/98 ............. 1.73% .80% 53%
Year ended 6/30/97 ............. 1.72 1.27 48
Year ended 6/30/96 ............. 1.87 .95 28
Year ended 6/30/95 ............. 2.56 .66 36
6/2/94+ to 6/30/94 ............. 2.75* 1.03* 0
Class B
Year ended 6/30/98 ............. 2.45% .20% 53%
Year ended 6/30/97 ............. 2.43 .66 48
Year ended 6/30/96 ............. 2.83 (.20) 28
Year ended 6/30/95 ............. 3.27 .01 36
6/2/94+ to 6/30/94 ............. 3.45* .33* 0
Class C
Year ended 6/30/98 ............. 2.44% .38% 53%
Year ended 6/30/97 ............. 2.42 1.06 48
Year ended 6/30/96 ............. 2.57 .63 28
2/8/95++ to 6/30/9 ............. 3.27* 2.65* 36
New Europe Fund
Class A
Year ended 7/31/98 ............. 1.85%(i) .25% 99%
Year ended 7/31/97 ............. 2.05 (i) .40 89
Year ended 7/31/96 ............. 2.14 1.10 69
Year ended 7/31/95 ............. 2.09 .37 74
Period ended 7/31/94**.......... 2.06* 1.85* 35
Year ended 2/28/94 ............. 2.30 .17 94
Year ended 2/28/93 ............. 2.25 .47 125
Year ended 2/29/92 ............. 2.24 .16 34
4/2/90+ to 2/28/91 ............. 1.52* 2.71* 48
Class B
Year ended 7/31/98 ............. 2.56%(i) (.40)% 99%
Year ended 7/31/97 ............. 2.75 (i) (.23) 89
Year ended 7/31/96 ............. 2.86 .59 69
Year ended 7/31/95 ............. 2.79 (.33) 74
Period ended 7/31/94**.......... 2.76 1.15* 35
Year ended 2/28/94 ............. 3.02 (.52) 94
Year ended 2/28/93 ............. 3.00 (.50) 125
3/5/91++ to 2/29/92............. 3.02* (.71)* 34
Class C
Year ended 7/31/98 ............. 2.56%(i) (.41)% 99%
Year ended 7/31/97 ............. 2.74 (i) (.23) 89
Year ended 7/31/96 ............. 2.87 .58 69
Year ended 7/31/95 ............. 2.78 (.33) 74
Period ended 7/31/94**.......... 2.76* 1.15* 35
5/3/93++ to 2/28/94............. 3.00* (.52)* 94
All-Asia Investment Fund
Class A
11/1/97 to 4/30/98 ............ 3.74%* (1.86)%* 87%
Year ended 10/31/97 ............ 3.45 (f) (1.97) 70
Year ended 10/31/96 ............ 3.37*(f) (1.75) 66
11/28/94+ to 10/31/95........... 4.42*(f) (1.87)* 90
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment
Fiscal Year or Period Period Income (Loss) Investments From Operations Income
------------------- ------------ -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
All-Asia Investment Fund (continued)
Class B
11/1/97 to 4/30/98+++..... $ 7.39 $(.09)(b)(c) $ (.25) $ (.34) $0.00
Year ended 10/31/97....... 10.90 (.28)(b)(c) (2.89) (3.17) 0.00
Year ended 10/31/96....... 10.41 (.28)(b)(c) .85 .57 0.00
11/28/94+ to 10/31/95..... 10.00 (.25)(c) .66 .41 0.00
Class C
11/1/97 to 4/30/98+++..... $ 7.40 $(.09)(b)(c) $ (.25) $ (.34) $0.00
Year ended 10/31/97....... $10.91 $(.27)(b)(c) $(2.90) $(3.17) $0.00
Year ended 10/31/96....... 10.41 (.28)(b)(c) .86 .58 0.00
11/28/94+ to 10/31/95..... 10.00 (.35)(c) .76 .41 0.00
Greater China '97 Fund
Class A
September 3, 1997 to 7/31/98..... $10.00 $ .08(b)(c) $(5.18) $(5.10) $(.06)
Class B
September 3, 1997 to 7/31/98..... $10.00 $ .03(b)(c) $(5.17) $(5.14) $(.03)
Class c
September 3, 1997 to 7/31/98..... $10.00 $ .03(b)(c) $(5.17) $(5.14) $(.03)
Global Small Cap Fund
Class A
Year ended 7/31/98........ $12.87 $(.11)(b) $ .37 $ .26 $0.00
Year ended 7/31/97........ 11.61 (.15)(b) 2.97 2.82 0.00
Year ended 7/31/96........ 10.38 (.14)(b) 1.90 1.76 0.00
Year ended 7/31/95........ 11.08 (.09) 1.50 1.41 0.00
Period ended 7/31/94**.... 11.24 (.15)(b) (.01) (.16) 0.00
Year ended 9/30/93........ 9.33 (.15) 2.49 2.34 0.00
Year ended 9/30/92........ 10.55 (.16) (1.03) (1.19) 0.00
Year ended 9/30/91........ 8.26 (.06) 2.35 2.29 0.00
Year ended 9/30/90........ 15.54 (.05)(b) (4.12) (4.17) 0.00
Year ended 9/30/89........ 11.41 (.03) 4.25 4.22 0.00
Class B
Year ended 7/31/98........ $12.03 $(.18)(b) $ .34 $ .16 $0.00
Year ended 7/31/97........ 11.03 (.21)(b) 2.77 2.56 0.00
Year ended 7/31/96........ 9.95 (.20)(b) 1.81 1.61 0.00
Year ended 7/31/95........ 10.78 (.12) 1.40 1.28 0.00
Period ended 7/31/94**.... 11.00 (.17)(b) (.05) (.22) 0.00
Year ended 9/30/93........ 9.20 (.15) 2.38 2.23 0.00
Year ended 9/30/92........ 10.49 (.20) (1.06) (1.26) 0.00
Year ended 9/30/91........ 8.26 (.07) 2.30 2.23 0.00
9/17/90++ to 9/30/90...... 9.12 (.01) (.85) (.86) 0.00
Class C
Year ended 7/31/98........ $12.05 $(.19)(b) $ .35 $ .16 $0.00
Year ended 7/31/97........ 11.05 (.22)(b) 2.78 2.56 0.00
Year ended 7/31/96........ 9.96 (.20)(b) 1.82 1.62 0.00
Year ended 7/31/95........ 10.79 (.17) 1.45 1.28 0.00
Period ended 7/31/94**.... 11.00 (.17)(b) (.04) (.21) 0.00
5/3/93++ to 9/30/93....... 9.86 (.05) 1.19 1.14 0.00
Global Environment Fund (k)
Class A
11/1/97 to 4/30/98++...... $18.77 $(.14)(b) $ 1.30 $ 1.16 $0.00
Year ended 10/31/97 ...... 16.48 (.23)(b) 3.65 3.42 0.00
Year ended 10/31/96 ...... 12.37 (.13)(b) 4.26 4.13 (.02)
Year ended 10/31/95 ...... 11.74 .03 .60 .63 0.00
Year ended 10/31/94 ...... 10.97 0.00 .77 .77 0.00
Year ended 10/31/93 ...... 10.78 .01 .18 .19 0.00
Year ended 10/31/92 ...... 13.12 .01 (2.17) (2.16) (.10)
Year ended 10/31/91 ...... 12.46 .13 .87 1.00 (.25)
6/1/90+ to 10/31/90 ...... 13.83 .20 (1.57) (1.37) 0.00
Class B
11/1/97 to 4/30/98++...... $18.76 $(.15)(b) $ 1.30 $ 1.15 $0.00
10/3/97++to 10/31/97...... 19.92 (.20)(b) (.96) (1.16) 0.00
Class C
11/1/97 to 4/30/98++...... $19.15 $(.16)(b) $ 0.88 $ .72 $0.00
Balanced Shares
Class A
Year ended 7/31/98 ....... $16.17 $ .33 (b) $ 1.86 $ 2.19 $(.32)
Year ended 7/31/97 ....... 14.01 .31(b) 3.97 4.28 (.32)
Year ended 7/31/96 ....... 15.08 .37 .45 .82 (.41)
Year ended 7/31/95 ....... 13.38 .46 1.62 2.08 (.36)
Period ended 7/31/94** ... 14.40 .29 (.74) (.45) (.28)
Year ended 9/30/93 ....... 13.20 .34 1.29 1.63 (.43)
Year ended 9/30/92 ....... 12.64 .44 .57 1.01 (.45)
Year ended 9/30/91 ....... 10.41 .46 2.17 2.63 (.40)
Year ended 9/30/90 ....... 14.13 .45 (2.14) (1.69) (.40)
Year ended 9/30/89 ....... 12.53 .42 2.18 2.60 (.46)
Class B
Year ended 7/31/98 ....... $15.83 $ .21(b) $ 1.81 $ 2.02 $(.24)
Year ended 7/31/97 ....... 13.79 .19(b) 3.89 4.08 (.24)
Year ended 7/31/96 ....... 14.88 .28 .42 .70 (.31)
Year ended 7/31/95 ....... 13.23 .30 1.65 1.95 (.28)
Period ended 7/31/94** ... 14.27 .22 (.75) (.53) (.22)
Year ended 9/30/93 ....... 13.13 .29 1.22 1.51 (.37)
Year ended 9/30/92 ....... 12.61 .37 .54 .91 (.39)
2/4/91++ to 9/30/91 ...... 11.84 .25 .80 1.05 (.28)
2/4/91++ to 9/30/91 ...... 11.84 .25 .80 1.05 (.28)
<CAPTION>
Distributions
In Excess Of
Net Investment
Fiscal Year or Period Income
------------------- --------------
<S> <C>
All-Asia Investment Fund (continued)
Class B
11/1/97 to 4/30/98+++..... $0.00
Year ended 10/31/97....... 0.00
Year ended 10/31/96....... 0.00
11/28/94+ to 10/31/95..... 0.00
Class C
11/1/97 to 4/30/98+++..... $0.00
Year ended 10/31/97....... 0.00
Year ended 10/31/96....... 0.00
11/28/94+ to 10/31/95..... 0.00
Greater China '97 Fund
Class A
September 3, 1997 to 7/31/98..... $0.00
Class B
September 3, 1997 to 7/31/98..... $(.01)
Class c
September 3, 1997 to 7/31/98..... $(.01)
Global Small Cap Fund
Class A
Year ended 7/31/97........ $0.00
Year ended 7/31/97........ 0.00
Year ended 7/31/96........ 0.00
Year ended 7/31/95........ 0.00
Period ended 7/31/94**.... 0.00
Year ended 9/30/93........ 0.00
Year ended 9/30/92........ 0.00
Year ended 9/30/91........ 0.00
Year ended 9/30/90........ 0.00
Year ended 9/30/89........ 0.00
Year ended 9/30/88........ 0.00
Class B
Year ended 7/31/97........ $0.00
Year ended 7/31/97........ 0.00
Year ended 7/31/96........ 0.00
Year ended 7/31/95........ 0.00
Period ended 7/31/94**.... 0.00
Year ended 9/30/93........ 0.00
Year ended 9/30/92........ 0.00
Year ended 9/30/91........ 0.00
9/17/90++ to 9/30/90...... 0.00
Class C
Year ended 7/31/98........ $0.00
Year ended 7/31/97........ 0.00
Year ended 7/31/97........ 0.00
Year ended 7/31/96........ 0.00
Year ended 7/31/95........ 0.00
Period ended 7/31/94**.... 0.00
5/3/93++ to 9/30/93....... 0.00
Global Environment Fund (k)
Class A
11/1/97 to 4/30/98++...... $0.00
Year ended 10/31/97 ...... 0.00
Year ended 10/31/96 ...... 0.00
Year ended 10/31/95 ...... 0.00
Year ended 10/31/94 ...... 0.00
Year ended 10/31/93 ...... 0.00
Year ended 10/31/92 ...... 0.00
Year ended 10/31/91 ...... 0.00
6/1/90+ to 10/31/90 ...... 0.00
Class B
11/1/97 to 4/30/98++...... $0.00
10/3/97++to 10/31/97...... 0.00
Class C
11/1/97 to 4/30/98++...... $0.00
Balanced Shares
Class A
Year ended 7/31/98 ....... $0.00
Year ended 7/31/97 ....... 0.00
Year ended 7/31/96 ....... 0.00
Year ended 7/31/95 ....... 0.00
Period ended 7/31/94** ... 0.00
Year ended 9/30/93 ....... 0.00
Year ended 9/30/92 ....... 0.00
Year ended 9/30/91 ....... 0.00
Year ended 9/30/90 ....... 0.00
Year ended 9/30/89 ....... 0.00
Class B
Year ended 7/31/98 ....... $0.00
Year ended 7/31/97 ....... 0.00
Year ended 7/31/96 ....... 0.00
Year ended 7/31/95 ....... 0.00
Period ended 7/31/94** ... 0.00
Year ended 9/30/93 ....... 0.00
Year ended 9/30/92 ....... 0.00
2/4/91++ to 9/30/91 ...... 0.00
2/4/91++ to 9/30/91 ...... 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to footnotes on page 18.
14
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets
Total Net Asset Investment At End Of
Distributions Dividends Value Return Based Period
From Net And End Of on Net Asset (000's
Fiscal Year or Period Realized Gains Distributions Period Value (a) omitted)
------------------- -------------- ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
All-Asia Investment Fund (continued)
Class B
11/1/97 to 4/30/98+++..... $ (0.00) $ (.00) $ 7.05 (4.60)% $ 11,139
Year ended 10/31/97....... (.34) (.34) 7.39 (30.09) 11,439
Year ended 10/31/96....... (.08) (.08) 10.90 5.49 23,784
11/28/94+ to 10/31/95..... 0.00 0.00 10.41 4.10 5,170
Class C
11/1/97 to 4/30/98+++..... $ (0.00) $(0.00) $ 7.06 (4.60)% $ 1,981
Year ended 10/31/97....... (.34) (.34) 7.40 (30.06) 1,859
Year ended 10/31/96....... (.08) (.08) 10.91 5.59 4,228
11/28/94+ to 10/31/95..... 0.00 0.00 10.41 4.10 597
Greater China '97 Fund
Class A
September 3, 1997 to 7/31/98..... $ 0.00 $ (.06) $ 4.84 (51.20)% $ 445
Class B
September 3, 1997 to 7/31/98..... $ 0.00 (.04) $ 4.82 (51.53)% $ 1,551
Class C
September 3, 1997 to 7/31/98..... $ 0.00 (.04) $ 4.82 (51.53)% $ 102
Global Small Cap Fund
Class A
Year ended 7/31/98........ $ ( .99) $( .99) $12.14 2.49% $ 82,843
Year ended 7/31/97........ (1.56) (1.56) 12.87 26.47 85,217
Year ended 7/31/96........ (.53) (.53) 11.61 17.46 68,623
Year ended 7/31/95........ (2.11)(h) (2.11) 10.38 16.62 60,057
Period ended 7/31/94**.... 0.00 0.00 11.08 (1.42) 61,372
Year ended 9/30/93........ (.43) (.43) 11.24 25.83 65,713
Year ended 9/30/92........ (.03) (.03) 9.33 (11.30) 58,491
Year ended 9/30/91........ 0.00 0.00 10.55 27.72 84,370
Year ended 9/30/90........ (3.11) (3.11) 8.26 (31.90) 68,316
Year ended 9/30/89........ (.09) (.09) 15.54 37.34 113,583
Class B
Year ended 7/31/98........ $ ( .99) $( .99) $11.20 1.80% $ 38,827
Year ended 7/31/97........ (1.56) (1.56) 12.03 25.42 31,946
Year ended 7/31/96........ (.53) (.53) 11.03 16.69 14,247
Year ended 7/31/95........ (2.11)(h) (2.11) 9.95 15.77 5,164
Period ended 7/31/94**.... 0.00 0.00 10.78 (2.00) 3,889
Year ended 9/30/93........ (.43) (.43) 11.00 24.97 1,150
Year ended 9/30/92........ (.03) (.03) 9.20 (12.03) 819
Year ended 9/30/91........ 0.00 0.00 10.49 27.00 121
9/17/90++ to 9/30/90...... 0.00 0.00 8.26 (9.43) 183
Class C
Year ended 7/31/98........ $ ( .99) $( .99) $11.22 1.79% $ 9,471
Year ended 7/31/97........ (1.56) (1.56) 12.05 25.37 8,718
Year ended 7/31/96........ (.53) (.53) 11.05 16.77 4,119
Year ended 7/31/95........ (2.11)(h) (2.11) 9.96 15.75 1,407
Period ended 7/31/94**.... 0.00 0.00 10.79 (1.91) 1,330
5/3/93++ to 9/30/93....... 0.00 0.00 11.00 11.56 261
Global Environment Fund (k)
Class A
11/1/97 to 4/30/98++...... $(9.07) $(9.07) $10.86 16.53% $ 29,087
Year ended 10/31/97 ...... (1.13) (1.13) 18.77 23.51 52,378
Year ended 10/31/96 ...... 0.00 (.02) 16.48 33.48 100,271
Year ended 10/31/95 ...... 0.00 0.00 12.37 5.37 85,416
Year ended 10/31/94 ...... 0.00 0.00 11.74 7.02 81,102
Year ended 10/31/93 ...... 0.00 0.00 10.97 1.76 75,805
Year ended 10/31/92 ...... (.08) (.18) 10.78 (16.59) 74,442
Year ended 10/31/91 ...... (.09) (.34) 13.12 8.66 90,612
6/1/90+ to 10/31/90 ...... 0.00 0.00 12.46 (10.68) 86,041
Class B
11/1/97 to 4/30/98++...... $(9.07) $(9.07) $10.84 16.50% $ 114
10/3/97++to 10/31/97...... 0.00 $0.00 $18.76 (5.82) 235
Class C
11/1/97 to 4/30/98++...... $(9.07) $(9.07) $10.80 13.78% $ 4
Balanced Shares
Class A
Year ended 7/31/98 ....... $ 2.07 $(2.39) $15.97 14.99% $123,623
Year ended 7/31/97 ....... 1.80 (2.12) 16.17 33.46 115,500
Year ended 7/31/96 ....... (1.48) (1.89) 14.01 5.23 102,567
Year ended 7/31/95 ....... (.02) (.38) 15.08 15.99 122,033
Period ended 7/31/94** ... (.29) (.57) 13.38 (3.21) 157,637
Year ended 9/30/93 ....... 0.00 (.43) 14.40 12.52 172,484
Year ended 9/30/92 ....... 0.00 (.45) 13.20 8.14 143,883
Year ended 9/30/91 ....... 0.00 (.40) 12.64 25.52 154,230
Year ended 9/30/90 ....... (1.63) (2.03) 10.41 (13.12) 140,913
Year ended 9/30/89 ....... (.54) (1.00) 14.13 22.27 159,290
Class B
Year ended 7/31/98 ....... $ 2.07 $(2.31) $15.54 14.13% $ 47,728
Year ended 7/31/97 ....... 1.80 (2.04) 15.83 32.34 24,192
Year ended 7/31/96 ....... (1.48) (1.79) 13.79 4.45 18,393
Year ended 7/31/95 ....... (.02) (.30) 14.88 15.07 15,080
Period ended 7/31/94** ... (.29) (.51) 13.23 (3.80) 14,347
Year ended 9/30/93 ....... 0.00 (.37) 14.27 11.65 12,789
Year ended 9/30/92 ....... 0.00 (.39) 13.13 7.32 6,499
2/4/91++ to 9/30/91 ...... 0.00 (.28) 12.61 8.96 1,830
2/4/91++ to 9/30/91 ...... 0.00
<CAPTION>
Ratio Of Net
Ratio Of Investment
Expenses Income (Loss)
To Average To Average Portfolio
Fiscal Year or Period Net Assets Net Assets Turnover Rate
--------------------- ---------- ---------- -------------
<S> <C> <C> <C>
All-Asia Investment Fund (continued)
Class B
11/1/97 to 4/30/98+++..... 4.46%* (2.56)%* 87%
Year ended 10/31/97....... 4.15(f) (2.67) 70
Year ended 10/31/96....... 4.07(f) (2.44) 66
11/28/94+ to 10/31/95..... 5.20*(f) (2.64)* 90
Class C
11/1/97 to 4/30/98+++..... 4.47%* (2.56)%* 87%
Year ended 10/31/97....... 4.15(f) (2.66) 70
Year ended 10/31/96....... 4.07(f) (2.42) 66
11/28/94+ to 10/31/95..... 5.84*(f) (3.41) 90
Greater China '97 Fund
Class A
September 3, 1997 to 7/31/98..... 2.52%(f)(i) 1.20% 58%
Class B
September 3, 1997 to 7/31/98..... 3.22%(f)(i) .53%* 58%
Class C
September 3, 1997 to 7/31/98..... 3.22%(f)(i) .50% 58%
Global Small Cap Fund
Class A
Year ended 7/31/98........ 2.16%(i) (.88)% 113%
Year ended 7/31/97........ 2.41(i) (1.25) 129
Year ended 7/31/96........ 2.51 (1.22) 139
Year ended 7/31/95........ 2.54(f) (1.17) 128
Period ended 7/31/94**.... 2.42* (1.26)* 78
Year ended 9/30/93........ 2.53 (1.13) 97
Year ended 9/30/92........ 2.34 (.85) 108
Year ended 9/30/91........ 2.29 (.55) 104
Year ended 9/30/90........ 1.73 (.46) 89
Year ended 9/30/89........ 1.56 (.17) 106
Class B
Year ended 7/31/98........ 2.88%(i) (1.58)% 113%
Year ended 7/31/97........ 3.11(i) (1.92) 129
Year ended 7/31/96........ 3.21 (1.88) 139
Year ended 7/31/95........ 3.20(f) (1.92) 128
Period ended 7/31/94**.... 3.15* (1.93)* 78
Year ended 9/30/93........ 3.26 (1.85) 97
Year ended 9/30/92........ 3.11 (1.31) 108
Year ended 9/30/91........ 2.98 (1.39) 104
9/17/90++ to 9/30/90...... 2.61* (1.30)* 89
Class C
Year ended 7/31/98........ 2.88%(i) (1.59)% 113%
Year ended 7/31/97........ 3.10(i) (1.93) 129
Year ended 7/31/96........ 3.19 (1.85) 139
Year ended 7/31/95........ 3.25(f) (2.10) 128
Period ended 7/31/94**.... 3.13* (1.92)* 78
5/3/93++ to 9/30/93....... 3.75* (2.51)* 97
Global Environment Fund (k)
Class A
11/1/97 to 4/30/98++............ 2.75%* (2.31)%* 199%
Year ended 10/31/97 ............ 2.39 (1.35) 145
Year ended 10/31/96 ............ 1.60 (.85) 268
Year ended 10/31/95 ............ 1.57 .21 109
Year ended 10/31/94 ............ 1.67 (.04) 42
Year ended 10/31/93 ............ 1.62 .15 25
Year ended 10/31/92 ............ 1.63 .10 41
Year ended 10/31/91 ............ 1.49 .95 32
6/1/90+ to 10/31/90 ............ 1.72* 3.95* 4
Class B
11/1/97++ to 4/30/98++.......... 3.55% (3.08)%* 199%
10/3/97++ to 10/31/97 .......... 20.84 (1.03) 145
Class C
11/1/97++ to 4/30/98++.......... 3.32%* (2.71)% 199%
Balanced Shares
Class A
Year ended 7/31/98 ............. 1.30%(i) 2.07% 145%
Year ended 7/31/97 ............. 1.47(i) 2.11 207
Year ended 7/31/96 ............. 1.38 2.41 227
Year ended 7/31/95 ............. 1.32 3.12 179
Period ended 7/31/94** ......... 1.27* 2.50* 116
Year ended 9/30/93 ............. 1.35 2.50 188
Year ended 9/30/92 ............. 1.40 3.26 204
Year ended 9/30/91 ............. 1.44 3.75 70
Year ended 9/30/90 ............. 1.36 4.01 169
Year ended 9/30/89 ............. 1.42 3.29 132
Class B
Year ended 7/31/98 ............. 2.06%(i) 1.34% 145%
Year ended 7/31/97 ............. 2.25(i) 1.32 207
Year ended 7/31/96 ............. 2.16 1.61 227
Year ended 7/31/95 ............. 2.11 2.30 179
Period ended 7/31/94** ......... 2.05* 1.73* 116
Year ended 9/30/93 ............. 2.13 1.72 188
Year ended 9/30/92 ............. 2.16 2.46 204
2/4/91++ to 9/30/91 ............ 2.13* 3.19* 70
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
___________________ ______________ _____________ _______________ ______________ ______________ ______________
<S> <C> <C> <C> <C> <C> <C>
Balanced Shares (continued)
Class C
Year ended 7/31/98 ............. $15.86 $ .21(b) $1.81 $ 2.02 $ (.24) $(2.07)
Year ended 7/31/97 ............. 13.81 .20(b) 3.89 4.09 (.24) (1.80)
Year ended 7/31/96 ............. 14.89 .26 .45 .71 (.31) (1.48)
Year ended 7/31/95 ............. 13.24 .30 1.65 1.95 (.28) (.02)
Period ended 7/31/94** ......... 14.28 .24 (.77) (.53) (.22) (.29)
5/3/93++ to 9/30/93............. 13.63 .11 .71 .82 (.17) 0.00
Utility Income Fund
Class A
12/1/97 to 5/31/98+++............ $12.48 $ .15(b)(c) $1.41 $ 1.56 $ (.16) $ (.47)
Year ended 11/30/97 ............. 10.59 .32(b)(c) 2.04 2.36 (.34) (.13)
Year ended 11/30/96 ............. 10.22 .18(b)(c) .65 .83 (.46) 0.00
Year ended 11/30/95 ............. 8.97 .27(c) 1.43 1.70 (.45) 0.00
Year ended 11/30/94 ............. 9.92 .42(c) (.89) (.47) (.48) 0.00
10/18/93+ to 11/30/93............ 10.00 .02(c) (.10) (.08) 0.00 0.00
Class B
12/1/97 to 5/31/98+++............ $12.46 $ .11(b)(c) $1.38 $ 1.49 $ (.12) $ (.47)
Year ended 11/30/97 ............. 10.57 .25(b)(c) 2.04 2.29 (.27) (.13)
Year ended 11/30/96 ............. 10.20 .10(b)(c) .67 .77 (.40) 0.00
Year ended 11/30/95 ............. 8.96 .18(c) 1.45 1.63 (.39) 0.00
Year ended 11/30/94 ............. 9.91 .37(c) (.91) (.54) (.41) 0.00
10/18/93+ 11/30/93............... 10.00 .01(c) (.10) (.09) 0.00 0.00
Class C
12/1/97 to 5/31/98+++............ $12.47 $ .10(b)(c) $1.41 $ 1.51 $ (.12) $ (.47)
Year ended 11/30/97 ............. 10.59 .25(b)(c) 2.03 2.28 (.27) (.13)
Year ended 11/30/96 ............. 10.22 .11(b)(c) .66 .77 (.40) 0.00
Year ended 11/30/95 ............. 8.97 .18(c) 1.46 1.64 (.39) 0.00
Year ended 11/30/94 ............. 9.92 .39(c) (.93) (.54) (.41) 0.00
10/27/93+ to 11/30/93............ 10.00 .01(c) (.09) (.08) 0.00 0.00
Growth and Income Fund
Class A
11/1/97 to 4/30/98+++............ $ 3.48 $ .02(b) $ .58 $ .60 $ (.02) $ (.46)
Year ended 10/31/97 ............. 3.00 .04(b) .87 .91 (.05) (.38)
Year ended 10/31/96 ............. 2.71 .05 .50 .55 (.05) (.21)
Year ended 10/31/95 ............. 2.35 .02 .52 .54 (.06) (.12)
Year ended 10/31/94 ............. 2.61 .06 (.08) (.02) (.06) (.18)
Year ended 10/31/93 ............. 2.48 .06 .29 .35 (.06) (.16)
Year ended 10/31/92 ............. 2.52 .06 .11 .17 (.06) (.15)
Year ended 10/31/91 ............. 2.28 .07 .56 .63 (.09) (.30)
Year ended 10/31/90 ............. 3.02 .09 (.30) (.21) (.10) (.43)
Year ended 10/31/89 ............. 3.05 .10 .43 .53 (.08) (.48)
Year ended 10/31/88 ............. 3.48 .10 .33 .43 (.08) (.78)
Class B
11/1/97 to 4/30/98+++............ $ 3.45 $0.00(b) $ .59 $ .59 $ (.01) $ (.46)
Year ended 10/31/97 ............. 2.99 .02(b) .85 .87 (.03) (.38)
Year ended 10/31/96 ............. 2.69 .03 .51 .54 (.03) (.21)
Year ended 10/31/95 ............. 2.34 .01 .49 .50 (.03) (.12)
Year ended 10/31/94 ............. 2.60 .04 (.08) (.04) (.04) (.18)
Year ended 10/31/93 ............. 2.47 .05 .28 .33 (.04) (.16)
Year ended 10/31/92 ............. 2.52 .04 .11 .15 (.05) (.15)
2/8/91++ to 10/31/91 2.40 .04 .12 .16 (.04) 0.00
Class C
11/1/97 to 4/30/98+++............ $ 3.45 $0.00(b) $ .59 $ .59 $ (.01) $ (.46)
Year ended 10/31/97 ............. 2.99 .02(b) .85 .87 (.03) (.38)
Year ended 10/31/96 ............. 2.70 .03 .50 .53 (.03) (.21)
Year ended 10/31/95 ............. 2.34 .01 .50 .51 (.03) (.12)
Year ended 10/31/94 ............. 2.60 .04 (.08) (.04) (.04) (.18)
5/3/93 ++ to 10/31/93............ 2.43 .02 .17 .19 (.02) 0.00
Real Estate Investment Fund
Class A
Year ended 8/31/98 .............. $12.80 $ .52(b) $(2.33) $(1.81) $ (.51) $ (.01)
10/1/96+ to 8/31/97.............. 10.00 .30(b) 2.88 3.18 (.38)(j) 0.00
Class B
Year ended 8/31/98 .............. $12.79 $ .42(b) $(2.33) $(1.91) $ (.43) $ (.01)
10/1/96+ to 8/31/97.............. 10.00 .23(b) 2.89 3.12 (.33)(j) 0.00
Class C
Year ended 8/31/98 .............. $12.79 $ .42(b) $(2.33) $(1.91) $ (.43) $ (.01)
10/1/96+ to 8/31/97.............. 10.00 .23(b) 2.89 3.12 (.33)(j) 0.00
</TABLE>
Please refer to the footnotes on page 18.
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets
Total Net Asset Investment At End Of
Dividends Value Return Based Period
And End Of on Net Asset (000's
Fiscal Year or Period Distributions Period Value (a) omitted)
------------------- -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Balanced Shares (continued)
Class C
Year ended 7/31/98 ............. $(2.31) $15.57 14.09% $ 10,855
Year ended 7/31/97 ............. (2.04) 15.86 32.37 5,510
Year ended 7/31/96 ............. (1.79) 13.81 4.52 6,096
Year ended 7/31/95 ............. (.30) 14.89 15.06 5,108
Period ended 7/31/94** ......... (.51) 13.24 (3.80) 6,254
5/3/93++ to 9/30/93 ............ (.17) 14.28 6.01 1,487
Utility Income Fund
Class A
12/1/97 to 5/31/98+++........... $(.63) $13.41 12.83% $ 6,196
Year ended 11/30/97 ............ (.47) 12.48 23.10% 4,117
Year ended 11/30/96 ............ (.46) 10.59 8.47 3,294
Year ended 11/30/95 ............ (.45) 10.22 19.58 2,748
Year ended 11/30/94 ............ (.48) 8.97 (4.86) 1,068
10/18/93+ to 11/30/93 .......... 0.00 9.92 (.80) 229
Class B
12/1/97 to 5/31/98+++........... $(.59) $13.36 12.29% $ 19,744
Year ended 11/30/97 ............ (.40) 12.46 22.35 14,782
Year ended 11/30/96 ............ (.40) 10.57 7.82 13,561
Year ended 11/30/95 ............ (.39) 10.20 18.66 10,988
Year ended 11/30/94 ............ (.41) 8.96 (5.59) 2,353
10/18/93+ 11/30/93 ............. 0.00 9.91 (.90) 244
Class C
12/1/97 to 5/31/98+++........... $(.59) $13.39 12.44% $ 4,259
Year ended 11/30/97 ............ (.40) 12.47 22.21 3,413
Year ended 11/30/96 ............ (.40) 10.59 7.81 3,376
Year ended 11/30/95 ............ (.39) 10.22 18.76 3,500
Year ended 11/30/94 ............ (.41) 8.97 (5.58) 2,651
10/27/93+ to 11/30/93 .......... 0.00 9.92 (.80) 18
Growth and Income Fund
Class A
11/1/97 to 4/30/98+++........... $(.48) $3.60 19.32% $ 966,167
Year ended 10/31/97 ............ (.43) 3.48 33.28 787,566
Year ended 10/31/96 ............ (.26) 3.00 21.51 553,151
Year ended 10/31/95 ............ (.18) 2.71 24.21 458,158
Year ended 10/31/94 ............ (.24) 2.35 (.67) 414,386
Year ended 10/31/93 ............ (.22) 2.61 14.98 459,372
Year ended 10/31/92 ............ (.21) 2.48 7.23 417,018
Year ended 10/31/91 ............ (.39) 2.52 31.03 409,597
Year ended 10/31/90 ............ (.53) 2.28 (8.55) 314,670
Year ended 10/31/89 ............ (.56) 3.02 21.59 377,168
Year ended 10/31/88 ............ (.86) 3.05 16.45 350,510
Class B
11/1/97 to 4/30/98+++........... $(.47) $3.57 19.14% $ 666,923
Year ended 10/31/97 ............ (.41) 3.45 31.83 456,399
Year ended 10/31/96 ............ (.24) 2.99 21.20 235,263
Year ended 10/31/95 ............ (.15) 2.69 22.84 136,758
Year ended 10/31/94 ............ (.22) 2.34 (1.50) 102,546
Year ended 10/31/93 ............ (.20) 2.60 14.22 76,633
Year ended 10/31/92 ............ (.20) 2.47 6.22 29,656
2/8/91++ to 10/31/91 ........... (.04) 2.52 6.83 10,221
Class C
11/1/97 to 4/30/98+++........... $(.47) $3.57 19.14% $ 150,335
Year ended 10/31/97 ............ (.41) 3.45 31.83 106,526
Year ended 10/31/96 ............ (.24) 2.99 20.72 61,356
Year ended 10/31/95 ............ (.15) 2.70 23.30 35,835
Year ended 10/31/94 ............ (.22) 2.34 (1.50) 19,395
5/3/93 ++ to 10/31/93 .......... (.02) 2.60 7.85 7,774
Real Estate Investment Fund
Class A
Year ended 8/31/98 ............. $(.52) $10.47 (14.90)% $ 51,214
10/1/96+ to 8/31/97 ............ (.38) 12.80 32.24 37,638
Class B
Year ended 8/31/98 ............. $(.44) $10.44 (15.56)% $ 268,856
10/1/96+ to 8/31/97 ............ (.33) 12.79 31.49 186,802
Class C
Year ended 8/31/98 ............. $(.44) $10.44 (15.56)% $ 69,575
10/1/96+ to 8/31/97 ............ (.33) 12.79 31.49 42,719
Ratio Of Net
Ratio Of Investment
Expenses Income (Loss)
To Average To Average Portfolio
Fiscal Year or Period Net Assets Net Assets Turnover Rate
------------------- ----------- ------------- -------------
<S> <C> <C> <C>
Balanced Shares (continued)
Class C
Year ended 7/31/98 ............. 2.05%(i) 1.36% 145%
Year ended 7/31/97 ............. 2.23(l) 1.37 207
Year ended 7/31/96 ............. 2.15 1.63 227
Year ended 7/31/95 ............. 2.09 2.32 179
Period ended 7/31/94** ......... 2.03* 1.81* 116
5/3/93++ to 9/30/93 ............ 2.29* 1.47* 188
Utility Income Fund
Class A
12/1/97/ to 5/31/98+++.......... 1.51%(i) 2.30% 9%
Year ended 11/30/97 ............ 1.50(i) 2.89 37
Year ended 11/30/96 ............ 1.50(f) 1.67 98
Year ended 11/30/95 ............ 1.50(f) 2.48 162
Year ended 11/30/94 ............ 1.50(f) 4.13 30
10/18/93+ to 11/30/93 .......... 1.50*(f) 2.35* 11
Class B
12/1/97/ to 5/31/98+++.......... 2.21%(i) 1.60% 9%
Year ended 11/30/97 ............ 2.20(f) 2.27 37
Year ended 11/30/96 ............ 2.20(f) .95 98
Year ended 11/30/95 ............ 2.20(f) 1.60 162
Year ended 11/30/94 ............ 2.20(f) 3.53 30
10/18/93+ 11/30/93 ............. 2.20*(f) 2.84* 11
Class C
12/1/97/ to 5/31/98+++.......... 2.21%(i) 1.59% 9%
Year ended 11/30/97 ............ 2.20(f) 2.27 37
Year ended 11/30/96 ............ 2.20(f) .94 98
Year ended 11/30/95 ............ 2.20(f) 1.88 162
Year ended 11/30/94 ............ 2.20(f) 3.60 30
10/27/93+ to 11/30/93 .......... 2.20*(f) 3.08* 11
Growth and Income Fund
Class A
11/1/97/ to 4/30/98+++.......... .88% .97% 41%
Year ended 10/31/97 ............ .92(i) 1.39* 88
Year ended 10/31/96 ............ .97 1.73 88
Year ended 10/31/95 ............ 1.05 1.88 142
Year ended 10/31/94 ............ 1.03 2.36 68
Year ended 10/31/93 ............ 1.07 2.38 91
Year ended 10/31/92 ............ 1.09 2.63 104
Year ended 10/31/91 ............ 1.14 2.74 84
Year ended 10/31/90 ............ 1.09 3.40 76
Year ended 10/31/89 ............ 1.08 3.49 79
Year ended 10/31/88 ............ 1.09 3.09 66
Class B
11/1/97/ to 4/30/98+++.......... 1.66% .18% 41%
Year ended 10/31/97 ............ 1.72(i) .56 88
Year ended 10/31/96 ............ 1.78 .91 88
Year ended 10/31/95 ............ 1.86 1.05 142
Year ended 10/31/94 ............ 1.85 1.56 68
Year ended 10/31/93 ............ 1.90 1.58 91
Year ended 10/31/92 ............ 1.90 1.69 104
2/8/91++ to 10/31/91 ........... 1.99* 1.67* 84
Class C
11/1/97/ to 4/30/98+++.......... 1.66% .18% 41%
Year ended 10/31/97 ............ 1.71(i) .58 88
Year ended 10/31/96 ............ 1.76 .93 88
Year ended 10/31/95 ............ 1.84 1.04 142
Year ended 10/31/94 ............ 1.84 1.61 68
5/3/93 ++ to 10/31/93 .......... 1.96* 1.45* 91
Real Estate Investment Fund
Class A
Year ended 8/31/98 ............ 1.55% 3.87% 23%
10/1/96+ to 8/31/97 ............ 1.77*(l) 2.73* 20
Class B
Year ended 8/31/98 ............ 2.26% 3.16% 23%
10/1/96+ to 8/31/97 ............ 2.44*(i) 2.08* 20
Class C
Year ended 8/31/98 ............ 2.26% 3.15% 23%
10/1/96+ to 8/31/97 ............ 2.43*(i) 2.06* 20
</TABLE>
- --------------------------------------------------------------------------------
17
<PAGE>
- ----------
+ Commencement of operations.
++ Commencement of distribution.
+++ Unaudited
* Annualized.
** Reflects a change in fiscal year end.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment returns calculated for periods of
less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waiver and expense reimbursement.
(d) Not Applicable.
(e) Net of offering costs of ($.05).
(f) Net of expenses assumed and/or waived/reimbursed. If the following Funds
had borne all expenses in their most recent five fiscal years, their
expense ratios, without giving effect to the expense offset arrangement
described in (l) below, would have been as follows:
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
All-Asia Investment Fund
<S> <C> <C> <C> <C> <C> <C>
Class A -- -- 10.57%* 3.61% 3.57% --
Class B -- -- 11.32%* 4.33% 4.27% --
Class C -- -- 11.38%* 4.30% 4.27% --
Growth Fund
Class A 1.84% 1.46% -- -- -- --
Class B 2.52% 2.13% -- -- -- --
Class C -- 2.13%* -- -- -- --
Global Small Cap Fund
Class A -- -- 2.61% -- -- --
Class B -- -- 3.27% -- -- --
Class C -- -- 3.31% -- -- --
Utility Income Fund
Class A 145.63%* 13.72% 4.86%* 3.38% 3.55% --
Class B 133.62%* 14.42% 5.34%* 4.08% 4.28% --
Class C 148.03%* 14.42% 5.99%* 4.07% 4.28% --
International Fund
Class A -- -- -- -- -- 1.80%
Class B -- -- -- -- -- 2.64%
Class C -- -- -- -- -- 2.63%
Greater China '97 Fund
Class A -- -- -- -- -- 18.27%*
Class B -- -- -- -- -- 19.18%*
Class C -- -- -- -- -- 19.37%*
</TABLE>
- ----------
For the expense ratios of the Funds in years prior to fiscal year 1993, assuming
the Funds had borne all expenses, please see the Financial Statements in each
Fund's Statement of Additional Information.
(g) Prior to July 22, 1993, Equitable Capital Management Corporation
("Equitable Capital") served as the investment adviser to the predecessor
to The Alliance Portfolios, of which Growth Fund is a series. On July 22,
1993, Alliance acquired the business and substantially all assets of
Equitable Capital and became investment adviser to the Fund.
(h) "Distributions from Net Realized Gains" includes a return of capital of
$(.12).
(i) Amounts do not reflect the impact of expense offset arrangements with the
transfer agent. Taking into account such expense offset arrangements, the
ratio of expenses to average net assets, assuming the assumption and/or
waiver/reimbursement of expenses described in (f) above, would have been as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balanced Shares 1997 1998 Technology Fund 1997 1998
Class A 1.46% 1.29% Class A 1.66% --
Class B 2.24% 2.05% Class B 2.36% --
Class C 2.22% 2.04% Class C 2.37% --
Real Estate Greater China
Investment Fund 1997 1998 '97 Fund 1997 1998
Class A 1.77% -- Class A -- 2.50%
Class B 2.43% -- Class B -- 3.20%
Class C 2.42% -- Class C -- 3.20%
Growth Fund 1997 1998 New Europe Fund 1997 1998
Class A 1.25% -- Class A 2.04% 1.84%
Class B 1.95% -- Class B 2.74% 2.54%
Class C 1.95% -- Class C 2.73% 2.54%
International Fund 1997 1998 Growth and Income Fund 1997 1998
Class A 1.73% -- Class A .91% --
Class B 2.58% -- Class B 1.71% --
Class C 2.56% -- Class C 1.70% --
Global Small Cap Fund 1997 1998
Class A 2.38% 2.14%
Class B 3.08% 2.86%
Class C 3.08% 2.85%
</TABLE>
(j) Distributions from net investment income include a tax return of capital of
$.08, $.09 and $.08 for Class A, B and C shares, respectively.
(k) Global Environment Fund operated as a closed-end investment company
through October 3, 1997, when it converted to an open-end investment
company and all shares of its common stock then outstanding were
reclassified as Class A shares.
18
<PAGE>
- --------------------------------------------------------------------------------
GLOSSARY
- --------------------------------------------------------------------------------
The following terms are frequently used in this Prospectus.
Equity securities, except as noted otherwise, are (i) common stocks, partnership
interests, business trust shares and other equity or ownership interests in
business enterprises, and (ii) securities convertible into, and rights and
warrants to subscribe for the purchase of, such stocks, shares and
interests.
Debt securities are bonds, debentures, notes, bills, repurchase agreements,
loans, other direct debt instruments and other fixed, floating and variable rate
debt obligations, but do not include convertible securities.
Fixed-income securities are debt securities and dividend-paying preferred stocks
and include floating rate and variable rate instruments.
Convertible securities are fixed-income securities that are convertible into
common stock.
U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
Foreign government securities are securities issued or guaranteed, as to payment
of principal and interest, by governments, quasi-governmental entities,
governmental agencies or other governmental entities.
Asian company is an entity that (i) is organized under the laws of an Asian
country and conducts business in an Asian country, (ii) derives 50% or more of
its total revenues from business in Asian countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in an Asian
country.
Asian countries are Australia, the Democratic Socialist Republic of Sri Lanka,
the Hong Kong Special Administrative Region of the People's Republic of China
(Hong Kong), the Islamic Republic of Pakistan, Japan, the Kingdom of Thailand,
Malaysia, Negara Brunei Darussalam (Brunei), New Zealand, the People's Republic
of China, the People's Republic of Kampuchea (Cambodia), the Republic of China
(Taiwan), the Republic of India, the Republic of Indonesia, the Republic of
Korea (South Korea), the Republic of the Philippines, the Republic of Singapore,
the Socialist Republic of Vietnam and the Union of Myanmar.
Greater China company is an entity that (i) is organized under the laws of a
Greater China country and conducts business in a Greater China country, (ii)
derives 50% or more of its total revenues from businesses in Greater China
countries, or (iii) issues equity or debt securities that are trade principally
on a stock exchange in a Greater China country. A company of a particular
Greater China country is a company that meets any of these criteria with respect
to that country.
Greater China countries are the People's Republic of China ("China"), the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong") and the Republic of China ("Taiwan").
Non-U.S. company is an entity that (i) is organized under the laws of a foreign
country and conducts business in a foreign country, (ii) derives 50% or more of
its total revenues from business in foreign countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in a foreign
country.
Eligible Companies are companies expected to benefit from advances or
improvements in products, processes or services intended to foster the
protection of the environment.
Environmental Companies are Eligible Companies that have a principal business
involving the sale of systems or services intended to foster environmental
protection, such as waste treatment and disposal, remediation, air pollution
control and recycling.
Beneficiary Companies are Eligible Companies whose principal businesses lie
outside the environmental sector but nevertheless anticipate environmental
regulations or consumer preferences through the development of new products,
processes or services that are intended to contribute to a cleaner and healthier
environment, such as companies that anticipate the demand for plastic
substitutes, aerosol substitutes, alternative fuels and processes that generate
less hazardous waste.
Moody's is Moody's Investors Service, Inc.
S&P is Standard & Poor's Ratings Services.
Duff & Phelps is Duff & Phelps Credit Rating Co.
Fitch is Fitch IBCA, Inc
Investment grade securities are fixed-income securities rated Baa and above by
Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by
Alliance to be of equivalent quality.
Lower-rated securities are fixed-income securities rated Ba or below by Moody's
or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be
of equivalent quality, and are commonly referred to as "junk bonds."
Prime commercial paper is commercial paper rated Prime 1 by Moody's or A-1 or
higher by S&P or, if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
Qualifying bank deposits are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than $1
billion and which are members of the Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act").
Depositary receipts include American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts.
Commission is the Securities and Exchange Commission.
1940 Act is the Investment Company Act of 1940, as amended.
Code is the Internal Revenue Code of 1986, as amended.
Exchange is the New York Stock Exchange.
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DESCRIPTION OF THE FUNDS
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Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder vote.
No Fund will change a non-fundamental objective or policy without notifying its
shareholders. There is no guarantee that any Fund will achieve its investment
objective.
INVESTMENT OBJECTIVES AND POLICIES
DOMESTIC STOCK FUNDS
The Domestic Stock Funds have been designed to offer investors seeking capital
appreciation a range of alternative approaches to investing in the U.S. equity
markets.
The Alliance Fund
The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company
that seeks long-term growth of capital and income primarily through investment
in common stocks. The Fund normally invests substantially all of its assets in
common stocks that Alliance believes will appreciate in value, but it may invest
in other types of securities such as convertible securities, high grade
instruments, U.S. Government securities and high quality, short-term obligations
such as repurchase agreements, bankers' acceptances and domestic certificates of
deposit, and may invest without limit in foreign securities. While the
diversification and generally high quality of the Fund's investments cannot
prevent fluctuations in market values, they tend to limit investment risk and
contribute to achieving the Fund's objective. The Fund generally does not effect
portfolio transactions in order to realize short-term trading profits or
exercise control.
The Fund may also: (i) make secured loans of its portfolio securities equal in
value up to 25% of its total assets to brokers, dealers and financial
institutions; (ii) enter into repurchase agreements of up to one week in
duration with commercial banks, but only if those agreements together with any
restricted securities and any securities which do not have readily available
market quotations do not exceed 10% of its net assets; and (iii) write
exchange-traded covered call options with respect to up to 25% of its total
assets. For additional information on the use, risks and costs of these policies
and practices see "Additional Investment Practices."
Alliance Growth Fund
Alliance Growth Fund ("Growth Fund") is a diversified investment company that
seeks long-term growth of capital. Current income is only an incidental
consideration. The Fund seeks to achieve its objective by investing primarily in
equity securities of companies with favorable earnings outlooks and whose
long-term growth rates are expected to exceed that of the U.S. economy over
time. The Fund's investment objective is not fundamental.
The Fund may also invest up to 25% of its total assets in lower-rated
fixed-income and convertible bonds. See "Risk Considerations--Securities
Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund
generally will not invest in securities rated at the time of purchase below Caa-
by Moody's and CCC- by S&P, Duff & Phelps or Fitch or in securities judged by
Alliance to be of comparable investment quality. However, from time to time, the
Fund may invest in securities rated in the lowest grades (i.e., C by Moody's or
D or equivalent by S&P, Duff & Phelps or Fitch), or securities Alliance judges
to be of comparable investment quality, if there are prospects for an upgrade or
a favorable conversion into equity securities. If the credit rating of a
security held by the Fund falls below its rating at the time of purchase (or
Alliance determines that the quality of such security has so deteriorated), the
Fund may continue to hold the security if such investment is considered
appropriate under the circumstances.
The Fund may also: (i) invest in "zero-coupon" bonds and "payment-in-kind"
bonds; (ii) invest in foreign securities, although the Fund will not generally
invest more than 15% of its total assets in foreign securities; (iii) invest in
securities that are not publicly traded, including Rule 144A securities; (iv)
buy or sell foreign currencies, options on foreign currencies, foreign currency
futures contracts (and related options) and deal in forward foreign exchange
contracts; (v) lend portfolio securities amounting to not more than 25% of its
total assets; (vi) enter into repurchase agreements of up to 25% of its total
assets and purchase and sell securities on a forward commitment basis; (vii) buy
and sell stock index futures contracts and buy and sell options on those
contracts and on stock indices; (viii) purchase and sell futures contracts,
options thereon and options with respect to U.S. Treasury securities; (ix) write
covered call and put options on securities it owns or in which it may invest;
and (x) purchase and sell put and call options. For additional information on
the use, risks and costs of these policies and practices see "Additional
Investment Practices."
Alliance Premier Growth Fund
Alliance Premier Growth Fund, Inc. ("Premier Growth Fund") is a diversified
investment company that seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth. Normally, about 40-50 companies will be represented in the
Fund's portfolio, with the 25 most highly regarded of these companies usually
constituting approximately 70% of the Fund's net assets. The Fund is thus
atypical from most equity mutual funds in its focus on a relatively small number
of intensively researched companies and is designed for those seeking to
accumulate capital over time with less volatility than that associated with
investment in smaller companies.
As a matter of fundamental policy, the Fund normally invests at least 85% of its
total assets in the equity securities of U.S. companies. These are companies (i)
organized under U.S. law that have their principal office in the U.S., and (ii)
the equity securities of which are traded principally in the U.S.
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Alliance's investment strategy for the Fund emphasizes stock selection and
investment in the securities of a limited number of issuers. Alliance relies
heavily upon the fundamental analysis and research of its large internal
research staff, which generally follows a primary research universe of more than
600 companies that have strong management, superior industry positions,
excellent balance sheets and superior earnings growth prospects. An emphasis is
placed on identifying companies whose substantially above average prospective
earnings growth is not fully reflected in current market valuations.
In managing the Fund, Alliance seeks to utilize market volatility judiciously
(assuming no change in company fundamentals), striving to capitalize on
apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. The Fund
normally remains nearly fully invested and does not take significant cash
positions for market timing purposes. During market declines, while adding to
positions in favored stocks, the Fund becomes somewhat more aggressive,
gradually reducing the number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund becomes somewhat more conservative, gradually increasing the
number of companies represented in its portfolio. Alliance thus seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets.
Alliance expects the average market capitalization of companies represented in
the Fund's portfolio normally to be in the range, or in excess, of the average
market capitalization of companies comprising the "S&P 500" (the Standard &
Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of
market activity).
The Fund may also: (i) invest up to 20% of its net assets in convertible
securities of companies whose common stocks are eligible for purchase by it;
(ii) invest up to 5% of its net assets in rights or warrants; (iii) invest up to
15% of its total assets in securities of foreign issuers whose common stocks are
eligible for purchase by it; (iv) purchase and sell exchange-traded index
options and stock index futures contracts; and (v) write covered exchange-traded
call options on common stocks, unless as a result, the amount of its securities
subject to call options would exceed 15% of its total assets, and purchase and
sell exchange-traded call and put options on common stocks written by others,
but the total cost of all options held by the Fund (including exchange-traded
index options) may not exceed 10% of its total assets. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices." The Fund will not write put options.
Alliance Technology Fund
Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment
company that emphasizes growth of capital and invests for capital appreciation,
and only incidentally for current income. The Fund may seek income by writing
listed call options. The Fund invests primarily in securities of companies
expected to benefit from technological advances and improvements (i.e.,
companies that use technology extensively in the development of new or improved
products or processes). The Fund will normally have at least 80% of its assets
invested in the securities of these companies. The Fund normally will have
substantially all its assets invested in equity securities, but it also invests
in debt securities offering an opportunity for price appreciation. The Fund will
invest in listed and unlisted securities and U.S. and foreign securities, but it
will not purchase a foreign security if as a result 10% or more of the Fund's
total assets would be invested in foreign securities.
The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies.
The Fund may also: (i) write and purchase exchange-listed call options and
purchase listed put options, including exchange-traded index put options; (ii)
invest up to 10% of its total assets in warrants; (iii) invest in restricted
securities and in other assets having no ready market if as a result no more
than 10% of the Fund's net assets are invested in such securities and assets;
(iv) lend portfolio securities equal in value to not more than 30% of the Fund's
total assets; and (v) invest up to 10% of its total assets in foreign
securities. For additional information on the use, risks and costs of the
policies and practices see "Additional Investment Practices."
Alliance Quasar Fund
Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment company
that seeks growth of capital by pursuing aggressive investment policies. It
invests for capital appreciation and only incidentally for current income. The
selection of securities based on the possibility of appreciation cannot prevent
loss in value. Moreover, because the Fund's investment policies are aggressive,
an investment in the Fund is risky and investors who want assured income or
preservation of capital should not invest in the Fund.
The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities for the
Fund, Alliance considers the economic and political outlook, the values of
specific securities relative to other investments, trends in the determinants of
corporate profits and management capability and practices.
The Fund invests principally in equity securities, but it also invests to a
limited degree in non-convertible bonds and preferred stocks. The Fund invests
in listed and unlisted U.S. and foreign securities. The Fund periodically
invests in special situations, which occur when the securities of a company are
expected to appreciate due to a development particularly or uniquely applicable
to that company and regardless of general business conditions or movements of
the market as a whole.
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The Fund may also: (i) invest in restricted securities and in other assets
having no ready market, but not more than 10% of its total assets may be
invested in such securities or assets; (ii) make short sales of securities
"against the box," but not more than 15% of its net assets may be deposited on
short sales; and (iii) write call options and purchase and sell put and call
options written by others. For additional information on the use, risks and
costs of these policies and practices see "Additional Investment Practices."
Global Stock Funds
The Global Stock Funds have been designed to enable investors to participate in
the potential for long-term capital appreciation available from investment in
foreign securities.
Alliance International Fund
Alliance International Fund ("International Fund") is a diversified investment
company that seeks a total return on its assets from long-term growth of capital
and from income primarily through a broad portfolio of marketable securities of
established non-U.S. companies, companies participating in foreign economies
with prospects for growth, including U.S. companies having their principal
activities and interests outside the U.S. and foreign government securities.
Normally, more than 80% of the Fund's assets will be invested in such issuers.
The Fund expects to invest primarily in common stocks of established non-U.S.
companies that Alliance believes have potential for capital appreciation or
income or both, but the Fund is not required to invest exclusively in common
stocks or other equity securities, and it may invest in any other type of
investment grade security, including convertible securities, as well as in
warrants, or obligations of the U.S. or foreign governments and their political
subdivisions.
The Fund intends to diversify its investments broadly among countries and
normally invests in at least three foreign countries, although it may invest a
substantial portion of its assets in one or more of such countries. In this
regard, at June 30, 1998, approximately 15% of the Fund's assets were invested
in securities of Japanese issuers. The Fund may invest in companies, wherever
organized, that Alliance judges have their principal activities and interests
outside the U.S. These companies may be located in developing countries, which
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability,
than those of developed countries. The Fund currently does not intend to invest
more than 10% of its total assets in companies in, or governments of, developing
countries.
The Fund may also: (i) purchase or sell forward foreign currency exchange
contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put and
call options, including exchange-traded index options; (iii) enter into
financial futures contracts, including contracts for the purchase or sale for
future delivery of foreign currencies and stock index futures, and purchase and
write put and call options on futures contracts traded on U.S. or foreign
exchanges or over-the-counter; (iv) purchase and write put options on foreign
currencies traded on securities exchanges or boards of trade or over-the-
counter; (v) lend portfolio securities equal in value to not more than 30% of
its total assets; and (vi) enter into repurchase agreements of up to seven days'
duration, provided that not more than 10% of the Fund's total assets would be so
invested. For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices."
Alliance International Premier Growth Fund
Alliance International Premier Growth Fund, Inc. ("International Premier Growth
Fund") is a diversified investment company that seeks long term capital
appreciation by investing predominately in the equity securities of a limited
number of carefully selected non-U.S. companies that are judged likely to
achieve superior earnings growth. Investments will be made based upon their
potential for capital appreciation. Current income is incidental to that
objective.
In the main, the Fund's investments will be in comparatively large, high-quality
companies. Normally, about 60 companies will be represented in the Fund's
portfolio, and the 30 most highly regarded of these companies usually will
constitute approximately 70% of the Fund's net assets. The Fund thus differs
from more typical international equity mutual funds by focusing on a relatively
small number of intensively researched companies. The Fund is designed for
investors seeking to accumulate capital over time. Because of the market risks
inherent in any investment, the selection of securities on the basis of their
appreciation possibilities cannot ensure against possible loss in value, and
there is, of course, no assurance that the Fund's investment objective will be
met.
Alliance expects the average weighted market capitalization of the companies
represented in the Fund's portfolio (i.e., the number of a company's outstanding
shares multiplied by the price per share) normally will be in the range of, or
in excess of, that of the companies comprising the Morgan Stanley Capital
International Europe, Australasia and Far East ("EAFE") Index. As of December
31, 1997, the average weighted market capitalization of those companies was
approximately $2.6 billion.
Within the investment framework described herein, Alliance's Large Cap Growth
Group, headed by Alfred Harrison, Alliance's Vice Chairman, has responsibility
for managing the Fund's portfolio. As discussed below, in selecting the Fund's
portfolio investments Alliance's Large Cap Growth Group will follow a
structured, disciplined research and investment process which is essentially
similar to that which it employs in managing Premier Growth Fund.
In managing the Fund's assets, Alliance's investment strategy will emphasize
stock selection and investment in the securities of a limited number of issuers.
Alliance depends heavily upon the fundamental analysis and research of its large
global equity research team situated in numerous locations around the world. Its
global equity analysts follow a research universe of approximately 900
companies. As one of the largest multinational investment management firms,
Alliance has
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access to considerable information concerning the companies in its research
universe, an in-depth understanding of the products, services, markets and
competition of these companies and a good knowledge of their managements.
Research emphasis is placed on the identification of companies whose superior
prospective earnings growth is not fully reflected in current market valuations.
Companies are constantly added to and deleted from this universe as fundamentals
and valuations change. Alliance's global equity analysts rate companies in three
categories. The performance of each analyst's ratings is an important
determinant of his or her incentive compensation. The equity securities of "one-
rated" companies are expected to significantly outperform the local market in
local currency terms. All equity securities purchased for the Fund's portfolio
will be selected from the universe of approximately 100 "one-rated" companies.
As noted above, approximately 70% of the Fund's net assets will usually be
invested in the approximately 30 most highly regarded such companies. The Fund
will not concentrate more than 25% of its total assets in any one industry.
Within this limit, portfolio emphasis upon particular industries or sectors will
be a by-product of the stock selection process rather than the result of
assigned targets or ranges.
The Fund's investments will be diversified among at least four, and usually
considerably more, countries. No more than 15% of the Fund's total assets will
be invested in issuers in any one foreign country, except that the Fund may
invest up to 25% of its total assets in issuers in each of Canada, France,
Germany, Italy, Japan, The Netherlands, Switzerland and the United Kingdom.
Within these limits, geographic distribution of the Fund's investments among
countries or regions will also be a product of the stock selection process
rather than predetermined allocation. To the extent that the Fund's assets will
be concentrated within any one region, the Fund may be subject to any special
risks that may be associated with that region. While the Fund may engage in
currency hedging programs in periods in which Alliance perceives extreme
exchange rate risk, the Fund will not normally make significant use of currency
hedging strategies.
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. To the extent consistent
with local market liquidity considerations, the Fund will strive to capitalize
on apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. Under normal
circumstances, the Fund will remain substantially fully invested in equity
securities and will not take significant cash positions for market timing
purposes. Rather, through "buying into declines" and "selling into strength,"
Alliance seeks superior relative returns over time.
As a matter of fundamental policy, which may not be changed without shareholder
approval, the Fund will invest under normal circumstances at least 85% of the
value of its total assets in equity securities. The Fund's other investment
policies are not fundamental and, therefore, may be changed by the Board of
Directors of the Fund without shareholder approval. For temporary defensive
purposes, the Fund may vary from its investment policies during periods in which
Alliance believes that business or financial conditions warrant, and may then
invest in high-grade short-term fixed-income securities, including U.S.
Government securities, or hold its assets in cash.
The Fund may invest up to 20% of its total assets in convertible securities of
issuers whose common stocks are eligible for purchase by the Fund. The Fund may
also: (i) invest up to 20% of its total assets in rights or warrants; (ii) write
covered put and call options and purchase put and call options on securities of
the types in which it is permitted to invest and on exchange-traded index
options and may also write uncovered options for cross hedging purposes; (iii)
enter into contracts for the purchase or sale for future delivery of fixed-
income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, foreign government
securities, or common stock and may purchase and write options on such future
contracts; (iv) purchase and write put and call options on foreign currencies
for hedging purposes; (v) purchase or sell forward contracts; (vi) enter into
forward commitments for the purchase or sale of securities; (vii) enter into
currency swaps for hedging purposes; (ix) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (x) make short sales of
securities or maintain short positions, provided that the Fund may not make a
short sale if as a result more than 5% of its net assets would be held as
collateral for short sales; and (xi) make secured loans of its portfolio
securities not in excess of 30% of its total assets to entities with which it is
permitted to enter into repurchase agreements. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices".
Alliance Worldwide Privatization Fund
Alliance Worldwide Privatization Fund, Inc. ("Worldwide Privatization Fund") is
a non-diversified investment company that seeks long-term capital appreciation.
As a fundamental policy, the Fund invests at least 65% of its total assets in
equity securities issued by enterprises that are undergoing, or have undergone,
privatization (as described below), although normally significantly more of its
assets will be invested in such securities. The balance of its investments will
include securities of companies believed by Alliance to be beneficiaries of
privatizations. The Fund is designed for investors desiring to take advantage of
investment opportunities, historically inaccessible to U.S. individual
investors, that are created by privatizations of state enterprises in both
established and developing economies, including those in Western Europe and
Scandinavia, Australia, New Zealand, Latin America, Asia and Eastern and Central
Europe and, to a lesser degree, Canada and the United States.
The Fund's investments in enterprises undergoing privatization may comprise
three distinct situations. First, the Fund may invest in the initial offering of
publicly traded equity securities
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(an "initial equity offering") of a government-or state-owned or controlled
company or enterprise (a "state enterprise"). Secondly, the Fund may purchase
securities of a current or former state enterprise following its initial equity
offering. Finally, the Fund may make privately negotiated purchases of stock or
other equity interests in a state enterprise that has not yet conducted an
initial equity offering. Alliance believes that substantial potential for
capital appreciation exists as privatizing enterprises rationalize their
management structures, operations and business strategies in order to compete
efficiently in a market economy, and the Fund will thus emphasize investments in
such enterprises.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in at least four, and usually considerably more,
countries. No more than 15% of the Fund's total assets, however, will be
invested in issuers in any one foreign country, except that the Fund may invest
up to 30% of its total assets in issuers in any one of France, Germany, Great
Britain, Italy and Japan. The Fund may invest all of its assets within a single
region of the world. To the extent that the Fund's assets are invested within
any one region, the Fund may be subject to any special risks that may be
associated with that region.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany and Italy, and those with developing economies, including
Argentina, Mexico, Chile, Indonesia, Malaysia, Poland and Hungary, are engaged
in privatizations. The Fund will invest in any country believed to present
attractive investment opportunities.
A major premise of the Fund's approach is that the equity securities of
privatized companies offer opportunities for significant capital appreciation.
In particular, because privatizations are integral to a country's economic
restructuring, securities sold in initial equity offerings often are priced
attractively so as to secure the issuer's successful transition to private
sector ownership. Additionally, these enterprises often dominate their local
markets and typically have the potential for significant managerial and
operational efficiency gains.
Although the Fund anticipates that it will not concentrate its
investments in any industry, it is permitted to invest more than 25% of its
total assets in issuers whose primary business activity is that of national
commercial banking. Prior to so concentrating, however, the Fund's Directors
must determine that its ability to achieve its investment objective would be
adversely affected if it were not permitted to concentrate. The staff of the
Commission is of the view that registered investment companies may not, absent
shareholder approval, change between concentration and non-concentration in a
single industry. The Fund disagrees with the staff's position but has undertaken
that it will not concentrate in the securities of national commercial banks
until, if ever, the issue is resolved. If the Fund were to invest more than 25%
of its total assets in national commercial banks, the Fund's performance could
be significantly influenced by events or conditions affecting this industry,
which is subject to, among other things, increases in interest rates and
deteriorations in general economic conditions, and the Fund's investments may be
subject to greater risk and market fluctuation than if its portfolio represented
a broader range of investments.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities of issuers whose common stocks are eligible for
purchase by the Fund. The Fund may maintain not more than 5% of its net assets
in lower-rated securities. See "Risk Considerations--Securities Ratings" and
"--Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain
a non-convertible security that is downgraded below C or determined by Alliance
to have undergone similar credit quality deterioration following purchase.
The Fund may also: (i) invest up to 20% of its total assets in rights or
warrants; (ii) write covered put and call options and purchase put and call
options on securities of the types in which it is permitted to invest and on
exchange-traded index options; (iii) enter into contracts for the purchase or
sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of U.S. Government
securities, foreign government securities, or common stock and may purchase and
write options on future contracts; (iv) purchase and write put and call options
on foreign currencies for hedging purposes; (v) purchase or sell forward
contracts; (vi) enter into forward commitments for the purchase or sale of
securities; (vii) enter into standby commitment agreements; (viii) enter into
currency swaps for hedging purposes; (ix) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (x) make short sales of
securities or maintain a short position; and (xi) make secured loans of its
portfolio securities not in excess of 30% of its total assets to entities with
which it can enter into repurchase agreements. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices."
Alliance New Europe Fund
Alliance New Europe Fund, Inc. ("New Europe Fund") is a non-diversified
investment company that seeks long-term capital appreciation through investment
primarily in the equity securities of companies based in Europe. The Fund
intends to invest substantially all of its assets in the equity securities of
European companies and has a fundamental policy of normally investing at least
65% of its total assets in such securities. Up to 35% of its total assets may be
invested in high quality U.S. dollar or foreign currency denominated
fixed-income securities issued or guaranteed by European governmental entities,
or by European or multinational companies or supranational organizations.
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Alliance believes that the quickening pace of economic integration and political
change in Europe creates the potential for many European companies to experience
rapid growth and that the emergence of new market economies in Europe and the
broadening and strengthening of other European economies may significantly
accelerate economic development. The Fund will invest in companies that Alliance
believes possess rapid growth potential. Thus, the Fund will emphasize
investments in larger, established companies, but will also invest in smaller,
emerging companies.
In recent years, economic ties between the former "east bloc" countries of
Eastern Europe and certain other European countries have been strengthened.
Alliance believes that as this strengthening continues, some Western European
financial institutions and other companies will have special opportunities to
facilitate East-West transactions. The Fund will seek investment opportunities
among such companies and, as such become available, within the former "east
bloc," although the Fund will not invest more than 20% of its total assets in
issuers based therein, or more than 10% of its total assets in issuers based in
any one such country.
The Fund diversifies its investments among a number of European countries and,
under normal circumstances, will invest in companies based in at least three
such countries. Subject to the foregoing and to the limitation on investment in
any one former "east bloc" country, the Fund may invest without limit in a
single European country. While the Fund does not intend to concentrate its
investments in a single country, at times 25% or more of its assets may be
invested in issuers located in a single country. During such times, the Fund
would be subject to a correspondingly greater risk of loss due to adverse
political or regulatory developments, or an economic downturn, within that
country. In this regard, at July 31, 1998, approximately 20% of the Fund's
assets were invested in securities of issuers in the United Kingdom.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants and rights to purchase equity securities of European companies; (iii)
invest in depositary receipts or other securities convertible into securities of
companies based in European countries, debt securities of supranational entities
denominated in the currency of any European country, debt securities denominated
in European Currency Units of an issuer in a European country (including
supranational issuers) and "semi-governmental securities"; (iv) purchase and
sell forward contracts; (v) write, sell and purchase exchange-traded put and
call options, including exchange-traded index options; (vi) enter into financial
futures contracts, including contracts for the purchase or sale for future
delivery of foreign currencies and futures contracts based on stock indices, and
purchase and write options on futures contracts; (vii) purchase and write put
options on foreign currencies traded on securities exchanges or boards of trade
or over-the-counter; (viii) make secured loans of portfolio securities not in
excess of 30% of its total assets to brokers, dealers and financial
institutions; (ix) enter into forward commitments for the purchase or sale of
securities; and (x) enter into standby commitment agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Alliance All-Asia Investment Fund
Alliance All-Asia Investment Fund, Inc. ("All-Asia Investment Fund") is a
non-diversified investment company whose investment objective is to seek
long-term capital appreciation. In seeking to achieve its investment objective,
the Fund will invest at least 65% of its total assets in equity securities (for
the purposes of this investment policy, rights, warrants and options to purchase
common stocks are not deemed to be equity securities), preferred stocks and
equity-linked debt securities issued by Asian companies. The Fund may invest up
to 35% of its total assets in debt securities issued or guaranteed by Asian
companies or by Asian governments, their agencies or instrumentalities. The Fund
may also invest in securities issued by non-Asian issuers, provided that the
Fund will invest at least 80% of its total assets in securities issued by Asian
companies and the Asian debt securities referred to above. The Fund expects to
invest, from time to time, a significant portion, which may be in excess of 50%,
of its assets in equity securities of Japanese companies.
In the past decade, Asian countries generally have experienced a high level of
real economic growth due to political and economic changes, including foreign
investment and reduced government intervention in the economy. Alliance believes
that certain conditions exist in Asian countries which create the potential for
continued rapid economic growth. These conditions include favorable demographics
and competitive wage rates, increasing levels of foreign direct investment,
rising per capita incomes and consumer demand, a high savings rate and numerous
privatization programs. Asian countries are also becoming more industrialized
and are increasing their intra-Asian exports while reducing their dependence on
Western export demand. Alliance believes that these conditions are important to
the long-term economic growth of Asian countries.
As the economies of many Asian countries move through the "emerging market"
stage, thus increasing the supply of goods, services and capital available to
less developed Asian markets and helping to spur economic growth in those
markets, the potential is created for many Asian companies to experience rapid
growth. In addition, many Asian companies the securities of which are listed on
exchanges in more developed Asian countries will be participants in the rapid
economic growth of the lesser developed countries. These companies generally
offer the advantages of more experienced management and more developed market
regulation.
As their economies have grown, the securities markets in Asian countries have
also expanded. New exchanges have been created and the number of listed
companies, annual trading volume and overall market capitalization have
increased significantly. Additionally, new markets continue to open to foreign
investments. For example, South Korea and
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India have recently relaxed investment restrictions and Vietnamese direct
investments have recently become available to U.S. investors. The Fund also
offers investors the opportunity to access relatively restricted markets.
Alliance believes that investment opportunities in Asian countries will continue
to expand.
The Fund will invest in companies believed to possess rapid growth potential.
Thus, the Fund will invest in smaller, emerging companies, but will also invest
in larger, more established companies in such growing economic sectors as
capital goods, telecommunications and consumer services.
The Fund will invest in investment grade debt securities, except that the Fund
may maintain not more than 5% of its net assets in lower-rated securities and
lower-rated loans and other lower-rated direct debt instruments. See "Risk
Considerations--Securities Ratings," "--Investment in Lower-Rated Fixed-Income
Securities" and Appendix C in the Fund's Statement of Additional Information for
a description of such ratings. The Fund will not retain a security that is
downgraded below C or determined by Alliance to have undergone similar credit
quality deterioration following purchase.
The Fund may also: (i) invest up to 25% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii)
invest in depositary receipts, instruments of supranational entities denominated
in the currency of any country, securities of multinational companies and "semi-
governmental securities;" (iv) invest up to 25% of its net assets in equity-
linked debt securities with the objective of realizing capital appreciation; (v)
invest up to 25% of its net assets in loans and other direct debt instruments;
(vi) write covered put and call options on securities of the types in which it
is permitted to invest and on exchange-traded index options; (vii) enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices,
including any index of U.S. Government securities, securities issued by foreign
government entities, or common stock and may purchase and write options on
future contracts; (viii) purchase and write put and call options on foreign
currencies for hedging purposes; (ix) purchase or sell forward contracts; (x)
enter into interest rate swaps and purchase or sell interest rate caps and
floors; (xi) enter into forward commitments for the purchase or sale of
securities; (xii) enter into standby commitment agreements; (xiii) enter into
currency swaps for hedging purposes; (xiv) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (xv) make short sales of
securities or maintain a short position, in each case only if "against the box;"
and (xvi) make secured loans of its portfolio securities not in excess of 30% of
its total assets to entities with which it can enter into repurchase agreements.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
Alliance Greater China '97 Fund, Inc.
Alliance Greater China '97 Fund, Inc. ("Greater China '97 Fund") is a non-
diversified investment company that seeks long-term capital appreciation through
investment of at least 80% of its total assets in equity securities issued by
Greater China companies. In furtherance of its investment objective, the Fund
expects to invest a significant portion, which may be greater than 50%, of its
assets in equity securities of Hong Kong companies and may invest, from time to
time, all of its assets in Hong Kong companies or companies of either of the
other Greater China countries.
In recent years, China, Hong Kong and Taiwan have each experienced a high level
of real economic growth, although growth is expected to slow in 1998. This
growth has resulted from advantageous economic conditions, including favorable
demographics, competitive wage rates, and rising per capita income and consumer
demand. Significantly, the growth has also been fueled by an easing by both
China and Taiwan of government restrictions and an increased receptivity to
foreign investment. This expanded, if not yet complete, openness to foreign
investment extends as well to the securities markets of both countries. Hong
Kong's free-market economy has historically included securities markets
completely open to foreign investments. All three countries have regulated stock
exchanges upon which shares of an increasing number of Greater China companies
are traded.
With its population estimated at more than 1.2 billion as a driving force, and
notwithstanding its continuing political rigidity, China's economic growth has
been coupled with significantly reduced government economic intervention and
basic economic structural change. Recent years have seen large increases in
industrial production with a significant decline in the state sector share of
industrial output, and increased involvement of local governmental units and the
private sector in establishing new business enterprises.
With China's growth has come an increasing direct and indirect economic
involvement of all three Greater China countries. For some time, Hong Kong, a
world financial and trade center in its own right, with a large stock exchange
and offices of many of the world's multinational companies, has been the gateway
to trade with and foreign investment in China. With the long-awaited transfer on
July 1, 1997 of the sovereignty of Hong Kong from Great Britain to China, not
only the political but the economic ties between China and Hong Kong are
expected to continue to intensify, albeit with the continuation of Hong Kong's
economic system as provided for in the law governing its sovereignty.
Notwithstanding the, at times considerable, political tension between the two
countries, it is generally recognized that substantially increased trade and
investment with China has been generated from Taiwan, in many cases through Hong
Kong. Along with this increased interaction with China, Taiwan is becoming a
regional technological and telecommunication center, while continuing the
process of opening its economy up to foreign investment. Although geographically
limited, Taiwan
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boasts an economy among the world's twenty largest and its foreign exchange
reserves are third largest in the world measured in U.S. dollars. As
China's economy continues to expand, it is expected that Taiwan's economic
interaction with China will likewise increase.
Alliance believes that over the long term conditions are favorable for
continuing and expanding economic growth in all three Greater China countries.
It is this potential which the Fund hopes to take advantage of by investing both
in established and new and emerging companies.
Set forth below under "Certain Considerations and Risks" and in Appendix A to
the Fund's Statement of Additional Information is additional information
concerning the Greater China countries.
In addition to investing in equity securities of Greater China companies, the
Fund may invest up to 20% of its total assets in (i) debt securities issued or
guaranteed by Greater China companies or by Greater China governments, their
agencies or instrumentalities, and (ii) equity or debt securities issued by
issuers other than Greater China companies. The Fund will not invest in debt
securities other than investment grade securities. Should a debt security in
which the Fund is invested be downgraded below investment grade or be determined
by Alliance to have undergone a similar credit quality deterioration, the Fund
will dispose of that security.
The Fund may also: (i) invest up to 25% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii)
invest in depositary receipts, instruments of supranational entities denominated
in the currency of any country, securities of multinational companies and "semi-
governmental securities;" (iv) invest up to 25% of its net assets in equity-
linked debt securities with the objective of realizing capital appreciation; (v)
invest up to 20% of its net assets in loans and other direct debt securities;
(vi) write covered put and call options on securities of the types in which it
is permitted to invest and on exchange-traded index options; (vii) enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices,
including any index of U.S. Government securities, securities issued by foreign
government entities, or common stock, and may purchase and write options on
future contracts; (viii) purchase and write put and call options on foreign
currencies for hedging purposes; (ix) purchase or sell forward contracts; (x)
enter into interest rate swaps and purchase or sell interest rate caps and
floors; (xi) enter into forward commitments for the purchase or sale of
securities; (xii) enter into standby commitment agreements; (xiii) enter into
currency swaps for hedging purposes; (xiv) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (xv) make short sales of
securities or maintain a short position, in each case only if "against the box;"
and (xvi) make secured loans of its portfolio securities not in excess of 30% of
its total assets to entities with which it can enter into repurchase agreements.
All or some of the policies and practices listed above may not be available to
the Fund in the Greater China countries, and the Fund will utilize these
policies only to the extent permissible. For additional information on the use,
risks and costs of these policies and practices see "Additional Investment
Practices."
Alliance Global Small Cap Fund
Alliance Global Small Cap Fund, Inc. ("Global Small Cap Fund") is a diversified
investment company that seeks long-term growth of capital through investment in
a global portfolio of the equity securities of selected companies with
relatively small market capitalization. The Fund's portfolio emphasizes
companies with market capitalizations that would have placed them (when
purchased) in about the smallest 20% by market capitalization of actively traded
U.S. companies, or market capitalizations of up to about $1.5 billion. Because
the Fund applies the U.S. size standard on a global basis, its foreign
investments might rank above the lowest 20%, and, in fact, might in some
countries rank among the largest, by market capitalization in local markets.
Normally, the Fund invests at least 65% of its assets in equity securities of
these smaller capitalization issuers, and these issuers are located in at least
three countries, one of which may be the U.S. Up to 35% of the Fund's total
assets may be invested in securities of companies whose market capitalizations
exceed the Fund's size standard. The Fund's portfolio securities may be listed
on a U.S. or foreign exchange or traded over-the-counter.
Alliance believes that smaller capitalization issuers often have sales and
earnings growth rates exceeding those of larger companies, and that these growth
rates tend to cause more rapid share price appreciation. Investing in smaller
capitalization stocks, however, involves greater risk than is associated with
larger, more established companies. For example, smaller capitalization
companies often have limited product lines, markets, or financial resources.
They may be dependent for management on one or a few key persons, and can be
more susceptible to losses and risks of bankruptcy. Their securities may be
thinly traded (and therefore have to be sold at a discount from current market
prices or sold in small lots over an extended period of time), may be followed
by fewer investment research analysts and may be subject to wider price swings
and thus may create a greater chance of loss than when investing in securities
of larger capitalization companies. Transaction costs in small capitalization
stocks may be higher than in those of larger capitalization companies.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants to purchase equity securities; (iii) invest in depositary receipts or
other securities representing securities of companies based in countries other
than the U.S.; (iv) purchase or sell forward foreign currency contracts; (v)
write and purchase exchange-traded call options and purchase exchange-traded put
options, including put options on market indices; and (vi) make secured loans of
portfolio securities not in excess of 30% of its total assets to
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brokers, dealers and financial institutions. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices."
Alliance Global Environment Fund
Alliance Global Environment Fund, Inc. ("Global Environment Fund") is a
non-diversified investment company that seeks long-term capital appreciation
through investment in equity securities of Eligible Companies. For purposes of
the Fund's investment objective and investment policies, "equity securities" are
common stocks (but not preferred stocks), rights or warrants to subscribe for or
purchase common stocks, and preferred stocks or debt securities that are
convertible into common stocks without the payment of any further consideration.
Until October 3, 1997, the Fund operated as a closed-end investment company, and
its common stock (which then comprised a single class) was listed on the
Exchange.
The Fund invests in two categories of Eligible Companies--"Environmental
Companies" and "Beneficiary Companies." Environmental Companies are those that
have a principal business involving the sale of systems or services intended to
foster environmental protection, such as waste treatment and disposal,
remediation, air pollution control and recyclying. Under normal circumstances,
the Fund invests at least 65% of its total assets in equity securities of
Environmental Companies. Beneficiary Companies are those whose principal
businesses lie outside the environmental sector but nevertheless anticipate
environmental regulations or consumer preferences through the development of new
products, processes or services that are intended to contribute to a cleaner and
healthier environment. Examples of such companies could be companies that
anticipate the demand for plastic substitutes, aerosol substitutes, alternative
fuels and processes that generate less hazardous waste. In this regard, the Fund
may invest in an issuer with a broadly diversified business only a part of which
provides such products, processes or services, when Alliance believes that these
products, processes or services will yield a competitive advantage that
significantly enhances the issuer's growth prospects. As a matter of fundamental
policy, the Fund will, under normal circumstances, invest substantially all of
its total assets in equity securities of Eligible Companies.
A major premise of the Fund's investment approach is that environmental concerns
will be a significant source of future growth opportunities, and that
Environmental Companies will see an increased demand for their systems and
services. Environmental Companies operate in the areas of pollution control,
clean energy, solid waste management, hazardous waste treatment and disposal,
pulp and paper recycling, waste-to-energy alternatives, biodegradable cartons,
packages, plastics and other products, remedial projects and emergency cleanup
efforts, manufacture of environmental supplies and equipment, the achievement of
purer air, groundwater and foods and the detection, evaluation and treatment of
both existing and potential environmental problems including, among others, air
pollution and acid rain.
The environmental services industry is generally positively affected by
increasing governmental action intended to foster environmental protection. As
environmental regulations are developed and enforced, Environmental Companies
providing the means of compliance with such regulations are afforded substantial
opportunities for growth. Beneficiary Companies may also derive an advantage to
the extent that they have anticipated environmental regulation and are therefore
at a competitive advantage.
In the view of Alliance, increasing public and political awareness of
environmental concerns and resultant environmental regulations are long-term
phenomena that are driven by an emerging global consensus that environmental
protection is a vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other economically
developed countries will have increasing opportunities for earnings growth
resulting not only from an increased demand for their existing products or
services but also from innovative responses to changing regulations and
priorities and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also within many
economically developing countries, such as those of Eastern Europe and the
Pacific Rim. These countries lag well behind developed countries in the
conservation and efficient use of natural resources and in their implementation
of policies which protect the environment.
Alliance believes that global investing offers opportunities for superior
investment returns. The Fund spreads investment risk among the capital markets
of a number of countries and invests in equity securities of companies based in
at least three, and normally considerably more, such countries. The percentage
of the Fund's assets invested in securities of companies in a particular country
or denominated in a particular currency will vary in accordance with Alliance's
assessment of the appreciation potential of such securities and the strength of
that currency. As of August 31, 1998, approximately 82% of the Fund's net
assets were invested in equity securities of U.S. companies.
The Fund may also: (i) invest up to 20% of its total assets in warrants to
purchase equity securities to the extent consistent with its investment
objective: (ii) invest in depositary receipts; (iii) purchase and write put and
call options on foreign currencies for hedging purposes; (iv) enter into forward
foreign currency transactions for hedging purposes; (v) invest in currency
futures and options on such futures for hedging purposes; and (vi) make secured
loans of its portfolio securities not in excess of 30% of its total assets. For
additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
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TOTAL RETURN FUNDS
The Total Return Funds have been designed to provide a range of investment
alternatives to investors seeking both growth of capital and current
income.
Alliance Balanced Shares
Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment
company that seeks a high return through a combination of current income and
capital appreciation. Although the Fund's investment objective is not
fundamental, the Fund is a "balanced fund" as a matter of fundamental policy.
The Fund will not purchase a security if as a result less than 25% of its total
assets will be in fixed-income senior securities (including short- and long-term
debt securities, preferred stocks, and convertible debt securities and
convertible preferred stocks to the extent that their values are attributable to
their fixed-income characteristics). Subject to these restrictions, the
percentage of the Fund's assets invested in each type of security will vary. The
Fund's assets are invested in U.S. Government securities, bonds, senior debt
securities and preferred and common stocks in such proportions and of such type
as are deemed best adapted to the current economic and market outlooks. The Fund
may invest up to 15% of the value of its total assets in foreign equity and
fixed-income securities eligible for purchase by the Fund under its investment
policies described above. See "Risk Considerations--Foreign Investment."
The Fund may also: (i) enter into contracts for the purchase or sale for future
delivery of foreign currencies; and (ii) purchase and write put and call options
on foreign currencies and enter into forward foreign currency exchange contracts
for hedging purposes. Subject to market conditions, the Fund may also seek to
realize income by writing covered call options listed on a domestic exchange.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
Alliance Utility Income Fund
Alliance Utility Income Fund, Inc. ("Utility Income Fund") is a diversified
investment company that seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. The Fund may invest in securities of both U.S. and foreign
issuers, although no more than 15% of the Fund's total assets will be invested
in issuers in any one foreign country. The utilities industry consists of
companies engaged in (i) the manufacture, production, generation, provision,
transmission, sale and distribution of gas and electric energy, and
communications equipment and services, including telephone, telegraph,
satellite, microwave and other companies providing communication facilities for
the public, or (ii) the provision of other utility or utility-related goods and
services, including, but not limited to, entities engaged in water provision,
cogeneration, waste disposal system provision, solid waste electric generation,
independent power producers and non-utility generators. The Fund is designed to
take advantage of the characteristics and historical performance of securities
of utility companies, many of which pay regular dividends and increase their
common stock dividends over time. As a fundamental policy, the Fund normally
invests at least 65% of its total assets in securities of companies in the
utilities industry. The Fund considers a company to be in the utilities industry
if, during the most recent twelve-month period, at least 50% of the company's
gross revenues, on a consolidated basis, were derived from its utilities
activities.
At least 65% of the Fund's total assets are invested in income-producing
securities, but there is otherwise no limit on the allocation of the Fund's
investments between equity securities and fixed-income securities. The Fund may
maintain up to 35% of its net assets in lower-rated securities. See "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." The Fund will not retain a security that is downgraded
below B or determined by Alliance to have undergone similar credit quality
deterioration following purchase.
The United States utilities industry has experienced significant changes in
recent years. Electric utility companies in general have been favorably affected
by lower fuel costs, the full or near completion of major construction programs
and lower financing costs. In addition, many utility companies have generated
cash flows in excess of current operating expenses and construction
expenditures, permitting some degree of diversification into unregulated
businesses. Regulatory changes with respect to nuclear and conventionally fueled
generating facilities, however, could increase costs or impair the ability of
such electric utilities to operate such facilities, thus reducing their ability
to service dividend payments with respect to the securities they issue.
Furthermore, rates of return of utility companies generally are subject to
review and limitation by state public utilities commissions and tend to
fluctuate with marginal financing costs. Rate changes, however, ordinarily lag
behind the changes in financing costs, and thus can favorably or unfavorably
affect the earnings or dividend pay-outs on utilities stocks depending upon
whether such rates and costs are declining or rising.
Gas transmission companies, gas distribution companies and telecommunications
companies are also undergoing significant changes. Gas utilities have been
adversely affected by declines in the prices of alternative fuels, and have also
been affected by oversupply conditions and competition. Telephone utilities are
still experiencing the effects of the break-up of American Telephone & Telegraph
Company, including increased competition and rapidly developing technologies
with which traditional telephone companies now compete. Although there can be no
assurance that increased competition and other structural changes will not
adversely affect the profitability of such utilities, or that other negative
factors will not develop in the future, in Alliance's opinion, increased
competition and change may provide better positioned utility companies with
opportunities for enhanced profitability.
Utility companies historically have been subject to the risks of increases in
fuel and other operating costs, high interest costs,
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costs associated with compliance with environmental and nuclear safety
regulations, service interruptions, economic slowdowns, surplus capacity,
competition and regulatory changes. There can also be no assurance that
regulatory policies or accounting standards changes will not negatively affect
utility companies' earnings or dividends. Utility companies are subject to
regulation by various authorities and may be affected by the imposition of
special tariffs and changes in tax laws. To the extent that rates are
established or reviewed by governmental authorities, utility companies are
subject to the risk that such authorities will not authorize increased rates.
Because of the Fund's policy of concentrating its investments in utility
companies, the Fund is more susceptible than most other mutual funds to
economic, political or regulatory occurrences affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although such regulations may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their respective governments than utility companies located in the
U.S. and, as in the U.S., generally are required to seek government approval for
rate increases. In addition, because many foreign utility companies use fuels
that cause more pollution than those used in the U.S., such utilities may yet be
required to invest in pollution control equipment. Foreign utility regulatory
systems vary from country to country and may evolve in ways different from
regulation in the U.S. The percentage of the Fund's assets invested in issuers
of particular countries will vary. See "Risk Considerations--Foreign
Investment."
The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other than
utility companies, including U.S. Government securities and repurchase
agreements pertaining thereto, foreign government securities, corporate
fixed-income securities of domestic issuers, corporate fixed-income securities
of foreign issuers denominated in foreign currencies or in U.S. dollars (in each
case including fixed-income securities of an issuer in one country denominated
in the currency of another country), qualifying bank deposits and prime
commercial paper.
The Fund may also: (i) invest up to 30% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest
in depositary receipts, securities of supranational entities denominated in the
currency of any country, securities denominated in European Currency Units and
"semi-governmental securities;" (iv) write covered put and call options and
purchase put and call options on securities of the types in which it is
permitted to invest that are exchange-traded and over-the-counter; (v) purchase
and sell exchange-traded options on any securities index composed of the types
of securities in which it may invest; (vi) enter into contracts for the purchase
or sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including an index of U.S. Government
securities, foreign government securities, corporate fixed-income securities, or
common stock, and may purchase and write options on futures contracts; (vii)
purchase and write put and call options on foreign currencies traded on U.S. and
foreign exchanges or over-the-counter for hedging purposes; (viii) purchase or
sell forward contracts; (ix) enter into interest rate swaps and purchase or sell
interest rate caps and floors; (x) enter into forward commitments for the
purchase or sale of securities; (xi) enter into standby commitment agreements;
(xii) enter into repurchase agreements pertaining to U.S. Government securities
with member banks of the Federal Reserve System or primary dealers in such
securities; (xiii) make short sales of securities or maintain a short position
as described below under "Additional Investment Practices--Short Sales;" and
(xiv) make secured loans of its portfolio securities not in excess of 20% of its
total assets to brokers, dealers and financial institutions. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Alliance Growth and Income Fund
Alliance Growth and Income Fund, Inc. ("Growth and Income Fund") is a
diversified investment company that seeks appreciation through investments
primarily in dividend-paying common stocks of good quality, although it is
permitted to invest in fixed-income securities and convertible securities.
The Fund may also try to realize income by writing covered call options listed
on domestic securities exchanges. The Fund also invests in foreign securities.
Since the purchase of foreign securities entails certain political and economic
risks, the Fund has restricted its investments in securities in this category to
issues of high quality. The Fund may also purchase and sell financial forward
and futures contracts and options thereon for hedging purposes. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Alliance Real Estate Investment Fund
Alliance Real Estate Investment Fund, Inc. ("Real Estate Investment Fund") is a
diversified investment company that seeks a total return on its assets from
long-term growth of capital and from income principally through investing in a
portfolio of equity securities of issuers that are primarily engaged in or
related to the real estate industry.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in equity securities of real estate investment trusts ("REITs") and
other real estate industry companies. A "real estate industry company" is a
company that derives at least 50% of its gross revenues or net profits from the
ownership, development, construction, financing, management or sale of
commercial, industrial or residential real estate or interests therein. The
equity securities in which the Fund will invest for this purpose consist of
common stock, shares of beneficial interest of REITs and securities with common
stock characteristics, such as preferred stock or convertible securities ("Real
Estate Equity Securities").
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The Fund may invest up to 35% of its total assets in (a) securities that
directly or indirectly represent participations in, or are collateralized by and
payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real estate mortgage
investment conduit ("REMIC") certificates and collateralized mortgage
obligations ("CMOs") and (b) short-term investments. These instruments are
described below. The risks associated with the Fund's transactions in REMICs,
CMOs and other types of mortgage-backed securities, which are considered to be
derivative securities, may include some or all of the following: market risk,
leverage and volatility risk, correlation risk, credit risk and liquidity and
valuation risk. See "Risk Considerations" for a description of these and other
risks.
As to any investment in Real Estate Equity Securities, Alliance's analysis will
focus on determining the degree to which the company involved can achieve
sustainable growth in cash flow and dividend paying capability. Alliance
believes that the primary determinant of this capability is the economic
viability of property markets in which the company operates and that the
secondary determinant of this capability is the ability of management to add
value through strategic focus and operating expertise. The Fund will purchase
Real Estate Equity Securities when, in the judgment of Alliance, their market
price does not adequately reflect this potential. In making this determination,
Alliance will take into account fundamental trends in underlying property
markets as determined by proprietary models, site visits conducted by
individuals knowledgeable in local real estate markets, price-earnings ratios
(as defined for real estate companies), cash flow growth and stability, the
relationship between asset value and market price of the securities, dividend
payment history, and such other factors which Alliance may determine from time
to time to be relevant. Alliance will attempt to purchase for the Fund Real
Estate Equity Securities of companies whose underlying portfolios are
diversified geographically and by property type.
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles which invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to investment companies
such as the Fund, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Code. The Fund will
indirectly bear its proportionate share of expenses incurred by REITs in which
the Fund invests in addition to the expenses incurred directly by the Fund.
Investment Process for Real Estate Equity Securities. The Fund's investment
strategy with respect to Real Estate Equity Securities is based on the premise
that property market fundamentals are the primary determinant of growth
underlying the performance of Real Estate Equity Securities. Value added
management further distinguishes the most attractive Real Estate Equity
Securities. The Fund's research and investment process is designed to identify
those companies with strong property fundamentals and strong management teams.
This process is comprised of real estate market research, specific property
inspection and securities analysis. Alliance believes that this process will
result in a portfolio that will consist of Real Estate Equity Securities of
companies that own assets in the most desirable markets across the country,
diversified geographically and by property type.
In implementing the Fund's research and investment process, Alliance will avail
itself of the consulting services of CB Richard Ellis, Inc. ("CBRE"), a publicly
held company and the largest real estate services company in the United States,
comprised of real estate brokerage, property and facilities management, and real
estate finance and investment advisory activities. In 1997, CBRE completed
22,100 sale and lease transactions, managed over 6,600 client properties,
created over $5 billion in mortgage originations, and completed over 3,600
appraisal and consulting assignments. In addition, it advised and managed for
institutions over $4 billion in real estate investments. As consultant to
Alliance, CBRE provides access to its proprietary model, REIT o Score, that
analyzes the approximately 18,000 properties owned by these 142 companies. Using
proprietary databases and algorithms, CBRE analyzes local market rent, expense,
and occupancy trends, market specific transaction pricing, demographic and
economic trends, and leading indicators of real estate supply such as building
permits. Over 1,000 asset-type specific geographic markets are analyzed and
ranked on a relative scale by CBRE in compiling its REIT o Score database. The
relative attractiveness of these real estate industry companies is similarly
ranked based on the composite rankings of the properties they own. See
"Management of the Funds--Consultant to Alliance with Respect to Investments in
Real Estate Securities" for more information about CBRE.
The universe of property-owning real estate industry firms consists of
approximately 142 companies of sufficient size and quality to merit
consideration for investment by the Fund. Once the universe of real estate
industry companies has been distilled through the market research process,
CBRE's local market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific location,
condition, and sub-market trends. CBRE's use of locally based real estate
professionals provides Alliance with a window on the operations of the portfolio
companies as information can immediately be put in the context of local market
events. Only those companies whose specific property portfolios reflect the
promise of their general markets will be considered for initial and continued
investment by the Fund.
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Alliance further screens the universe of real estate industry companies by using
rigorous financial models and by engaging in regular contact with management of
targeted companies. Each management's strategic plan and ability to execute the
plan are determined and analyzed. Alliance will make extensive use of CBRE's
network of industry analysts in order to assess trends in tenant industries.
This information is then used to further interpret management's strategic plans.
Financial ratio analysis is used to isolate those companies with the ability to
make value-added acquisitions. This information is combined with property market
trends and used to project future earnings potential.
The short-term investments in which Real Estate Investment Fund may invest are:
corporate commercial paper and other short-term commercial obligations, in each
case rated or issued by companies with similar securities outstanding that are
rated Prime-1, Aa or better by Moody's or A-1, AA or better by S&P; obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.
The Fund may invest in debt securities rated BBB or higher by S&P or Baa or
higher by Moody's or, if not so rated, of equivalent credit quality as
determined by Alliance. The Fund expects that it will not retain a debt security
which is downgraded below BBB or Baa or, if unrated, determined by Alliance to
have undergone similar credit quality deterioration, subsequent to purchase by
the Fund.
The Fund may also engage in the following investment practices to the extent
indicated: (i) invest up to 10% of its net assets in rights or warrants; (ii)
invest up to 15% of its net assets in the convertible securities of companies
whose common stocks are eligible for purchase by the Fund; (iii) lend portfolio
securities equal in value to not more than 25% of total assets; (iv) enter into
repurchase agreements of up to seven days' duration; (v) enter into forward
commitment transactions as long as the Fund's aggregate commitments under such
transactions are not more than 30% of the Fund's total assets; (vi) enter into
standby commitment agreements; (vii) make short sales of securities or maintain
a short position but only if at all times when a short position is open not more
than 25% of the Fund's net assets (taken at market value) is held as collateral
for such sales; and (viii) invest in illiquid securities unless, as a result,
more than 15% of its net assets would be so invested.
ADDITIONAL INVESTMENT PRACTICES
Some or all of the Funds may engage in the following investment practices to the
extent described above.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which generally
provide a stable stream of income with yields that are generally higher than
those of equity securities of the same or similar issuers. The price of a
convertible security will normally vary with changes in the price of the
underlying equity security, although the higher yield tends to make the
convertible security less volatile than the underlying equity security. As with
debt securities, the market value of convertible securities tends to decrease as
interest rates rise and increase as interest rates decline. While convertible
securities generally offer lower interest or dividend yields than non-
convertible debt securities of similar quality, they offer investors the
potential to benefit from increases in the market price of the underlying common
stock. Convertible debt securities that are rated Baa or lower by Moody's or BBB
or lower by S&P, Duff & Phelps or Fitch and comparable unrated securities as
determined by Alliance may share some or all of the risks of non-convertible
debt securities with those ratings. For a description of these risks, see "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-
Income Securities."
Rights and Warrants. A 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 security, although
the value of a right or warrant may decline because of a decrease in the value
of the underlying security, the passage of time or a change in perception as to
the potential of the underlying security, or any combination thereof. If the
market price of the underlying security is below the exercise price set forth in
the warrant on the expiration date, the warrant will expire worthless. Moreover,
a right or warrant ceases to have value if it is not exercised prior to the
expiration date.
Depositary Receipts and Securities of Supranational Entities. Depositary
receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the issuers
of the stock of unsponsored depositary receipts are not obligated to disclose
material information in the United States and, therefore, there may not be a
correlation between such information and the market value of the depositary
receipts. ADRs are depositary receipts typically issued by a U.S. bank or trust
company that evidence ownership of underlying securities issued by a foreign
corporation. GDRs and other types of depositary receipts are typically issued by
foreign banks or trust companies and evidence ownership of underlying securities
issued by either a foreign or a U.S. company. Generally, depositary receipts in
registered form are designed for use in the U.S. securities markets, and
depositary receipts in bearer form are designed
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for use in foreign securities markets. For purposes of determining the country
of issuance, investments in depositary receipts of either type are deemed to be
investments in the underlying securities except with respect to Growth Fund,
where investments in ADRs are deemed to be investments in securities issued by
U.S. issuers and those in GDRs and other types of depositary receipts are deemed
to be investments in the underlying securities.
A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include, among others, the World
Bank (International Bank for Reconstruction and Development) and the European
Investment Bank. A European Currency Unit is a basket of specified amounts of
the currencies of the member states of the European Economic Community.
"Semi-governmental securities" are securities issued by entities owned by either
a national, state or equivalent government or are obligations of one of such
government jurisdictions which are not backed by its full faith and credit and
general taxing powers.
Mortgage-Backed Securities. Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed securities are passed
through to the holders of the securities. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of principal than their
stated maturity would indicate. Prepayments occur when the mortgagor on a
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. Because the prepayment characteristics of the underlying
mortgages vary, it is impossible to predict accurately the realized yield or
average life of a particular issue of pass-through certificates. Prepayments are
important because of their effect on the yield and price of the mortgage-backed
securities. During periods of declining interest rates, prepayments can be
expected to accelerate and a Fund investing in such securities would be required
to reinvest the proceeds at the lower interest rates then available. Conversely,
during periods of rising interest rates, a reduction in prepayments may increase
the effective maturity of the securities, subjecting them to a greater risk of
decline in market value in response to rising interest rates. In addition,
prepayments of mortgages underlying securities purchased at a premium could
result in capital losses.
Adjustable Rate Securities. Adjustable rate securities have interest rates that
are reset at periodic intervals, usually by reference to some interest rate
index or market interest rate. Some adjustable rate securities are backed by
pools of mortgage loans. Although the rate-adjustment feature may reduce sharp
changes in the value of adjustable rate securities, these securities can change
in value based on changes in market interest rates or the issuer's
creditworthiness. Changes in the interest rate on adjustable rate securities may
lag behind changes in prevailing market interest rates. Also, some adjustable
rate securities (or the underlying mortgages) are subject to caps or floors that
limit the maximum change in interest rate.
Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables and other payment obligations, both secured
and unsecured. These assets are generally held by a trust and payments of
principal and interest or interest only are passed through monthly or quarterly
to certificate holders and may be guaranteed up to certain amounts by letters of
credit issued by a financial institution affiliated or unaffiliated with the
trustee or originator of the trust.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs of enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors.
Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate cash to
meet current interest payments. Accordingly, such bonds may involve greater
credit risks than bonds paying interest currently. Even though such bonds do not
pay current interest in cash, a Fund is nonetheless required to accrue interest
income on such investments and to distribute such amounts at least annually to
shareholders. Thus, a Fund could be required at times to liquidate other
investments in order to satisfy its dividend requirements.
Equity-Linked Debt Securities. Equity-linked debt securities are securities with
respect to which the amount of interest and/or principal that the issuer thereof
is obligated to pay is linked to the performance of a specified index of equity
securities. Such amount may be significantly greater or less than payment
obligations in respect of other types of debt securities. Adverse changes in
equity securities indices and other adverse changes in the securities markets
may reduce payments made under, and/or the principal of, equity-linked debt
securities held by a Fund. Furthermore, as with any debt securities, the values
of equity-linked debt securities will generally vary inversely with changes in
interest rates. A Fund's ability to dispose of equity-linked debt securities
will depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to be speculative.
As with other securities, a Fund could lose its entire investment in equity-
linked debt securities.
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Loans and Other Direct Debt Instruments. Loans and other direct debt instruments
are interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or services (trade claims
or other receivables), or to other creditors. Direct debt instruments involve
the risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to a Fund in the event of fraud or misrepresentation
than debt securities. In addition, loan participations involve a risk of
insolvency of the lending bank or other financial intermediary. Direct debt
instruments may also include standby financing commitments that obligate a
Fund to supply additional cash to the borrower on demand. Loans and other direct
debt instruments are generally illiquid and may be transferred only through
individually negotiated private transactions.
Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If a Fund does not receive scheduled interest or principal payments
on such indebtedness, the Fund's share price and yield could be adversely
affected. Loans that are fully secured offer a Fund more protection than
unsecured loans in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from a secured
loan would satisfy the borrower's obligation, or that the collateral can be
liquidated. Maturing loans to borrowers whose creditworthiness is poor may
involve substantial risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of Asian countries and Greater China countries will also involve a
risk that the governmental entities responsible for the repayment of the debt
may be unable, or unwilling, to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, a Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary.
A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified on the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be
subject to the claims of the agent's general creditors, the Fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.
Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
a Fund to pay additional cash on demand. These commitments may have the effect
of requiring a Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. Greater China '97 Fund will not
invest in lower-rated loans and other lower-rated direct debt instruments.
Mortgage-Backed Securities and Associated Risks. Mortgage-Backed Securities
include mortgage pass-through certificates and multiple-class pass-through
securities, such as REMIC pass-through certificates, CMOs and stripped
mortgage-backed securities ("SMBS"), and other types of Mortgage-Backed
Securities that may be available in the future.
Guaranteed Mortgage Pass-Through Securities. Real Estate Investment Fund may
invest in guaranteed mortgage pass-through securities which represent
participation interests in pools of residential mortgage loans and are issued by
U.S. governmental or private lenders and guaranteed by the U.S. Government or
one of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for timely payment of principal
and interest on the certificates. Fannie Mae certificates are guaranteed by
Fannie Mae, a federally chartered and privately-owned corporation for full and
timely payment of principal and interest on the certificates. Freddie Mac
certificates are guaranteed by Freddie Mac, a corporate instrumentality of the
United States Government, for timely payment of interest and the ultimate
collection of all principal of the related mortgage loans.
Multiple-Class Pass-Through Securities and Collateralized Mortgage Obligations.
Mortgage-Backed Securities also include CMOs and REMIC pass-through or
participation certificates, which may be issued by, among others, U.S.
Government agencies and instrumentalities as well as private lenders. CMOs and
REMIC certificates are issued in multiple classes and the principal of and
interest on the mortgage assets may be allocated among the several classes of
CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Generally, interest is paid or accrues on all classes
of CMOs or REMIC certificates on a monthly basis. Real Estate Investment Fund
will not invest in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac certificates but
also may be collateralized by other
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mortgage assets such as whole loans or private mortgage pass-through securities.
Debt service on CMOs is provided from payments of principal and interest on
collateral of mortgaged assets and any reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property and
other permitted investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts although Real Estate
investment fund does not intend to invest in residual interests.
Risks. Investing in Mortgage-Backed Securities involves certain unique risks in
addition to those generally associated with investing in the real estate
industry in general. These unique risks include the failure of a counterparty to
meet its commitments, adverse interest rate changes and the effects of
prepayments on mortgage cash flows. See "Risk Considerations--Mortgage-Backed
Securities" for a more complete description of the characteristics of
Mortgage-Backed Securities and associated risks.
Illiquid Securities. Subject to any more restrictive applicable fundamental
investment policy, none of the Funds will maintain more than 15% of its net
assets in illiquid securities. Illiquid securities generally include (i) direct
placements or other securities that are subject to legal or contractual
restrictions on resale or for which there is no readily available market (e.g.,
when trading in the security is suspended or, in the case of unlisted
securities, when market makers do not exist or will not entertain bids or
offers), including many individually negotiated currency swaps and any assets
used to cover currency swaps and most privately negotiated investments in state
enterprises that have not yet conducted an initial equity offering, (ii) over-
the-counter options and assets used to cover over-the-counter options, and (iii)
repurchase agreements not terminable within seven days.
Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. With respect to each Fund
that may invest in such securities, Alliance will monitor their illiquidity
under the supervision of the Directors of the Fund. To the extent permitted by
applicable law, Rule 144A securities will not be treated as "illiquid" for
purposes of the foregoing restriction so long as such securities meet liquidity
guidelines established by a Fund's Directors. Investment in non-publicly traded
securities by Growth Fund is restricted to 5% of its total assets (not including
for these purposes Rule 144A securities, to the extent permitted by applicable
law) and is also subject to the 15% restriction on investment in illiquid
securities described above.
A Fund that invests in securities for which there is no ready market may
therefore not be able to readily sell such securities. Such securities are
unlike securities which are traded on in the open market and which can be
expected to be sold immediately if the market is adequate. The sale price of
illiquid securities may be lower or higher than Alliance's most recent estimate
of their fair value. Generally, less public information is available with
respect to the issuers of such securities than with respect to companies whose
securities are traded on an exchange. To the extent that these securities are
foreign securities, there is no law in many of the countries in which a Fund may
invest similar to the Securities Act requiring an issuer to register the sale of
securities with a governmental agency or imposing legal restrictions on resales
of securities, either as to length of time the securities may be held or manner
of resale. However, there may be contractual restrictions on resales of
securities.
Options on Securities. An option gives the purchaser of the option, upon payment
of a premium, the right to deliver to (in the case of a put) or receive from (in
the case of a call) the writer a specified amount of a security on or before a
fixed date at a predetermined price. A call option written by a Fund is
"covered" if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or exchange of another
security it holds, or holds a call option on the underlying security with an
exercise price equal to or less than that of the call option it has written. A
put option written by a Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than that of
the put option it has written.
A call option is for cross-hedging purposes if a Fund does not own the
underlying security, and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire.
Worldwide Privatization Fund, All-Asia Investment Fund, Greater China '97 Fund,
International Premier Growth Fund and Utility Income Fund each may write call
options for cross-hedging purposes. A Fund would write a call option for cross-
hedging purposes, instead of writing a covered call option, when the premium to
be received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option, while at the same time achieving
the desired hedge.
In purchasing an option, a Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess of
the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then be purchased or
sold by the Fund at a disadvantageous price. These risks could be reduced by
entering into a closing transaction (i.e., by disposing of the option prior to
its exercise). A Fund retains the premium received from writing a put or call
option whether or not the option is exercised. The writing of covered call
options could result in increases in a Fund's portfolio turnover rate,
especially during periods when market prices of the underlying securities
appreciate.
Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global
Small Cap Fund will not write
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uncovered call options. Technology Fund and Global Small Cap Fund will not write
a call option if the premium to be received by the Fund in doing so would not
produce an annualized return of at least 15% of the then current market value of
the securities subject to the option (without giving effect to commissions,
stock transfer taxes and other expenses that are deducted from premium
receipts). Technology Fund, Quasar Fund and Global Small Cap Fund will not write
a call option if, as a result, the aggregate of the Fund's portfolio securities
subject to outstanding call options (valued at the lower of the option price or
market value of such securities) would exceed 15% of the Fund's total assets or
more than 10% of the Fund's assets would be committed to call options that at
the time of sale have a remaining term of more than 100 days. The aggregate cost
of all outstanding options purchased and held by each of Premier Growth Fund,
Technology Fund, Quasar Fund and Global Small Cap Fund will at no time exceed
10% of the Fund's total assets. Neither International Fund nor New Europe Fund
will write uncovered put options.
A Fund that purchases or writes options on securities in privately negotiated
(i.e., over-the-counter) transactions will effect such transactions only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan institutions) deemed creditworthy by Alliance, and Alliance has
adopted procedures for monitoring the creditworthiness of such entities. Options
purchased or written by a Fund in negotiated transactions are illiquid and it
may not be possible for the Fund to effect a closing transaction at an
advantageous time. See "Illiquid Securities."
Options on Securities Indices. An option on a securities index is similar to an
option on a security except that, rather than the right to take or make delivery
of a security at a specified price, an option on a securities index gives the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing level of the chosen index is greater than (in the case of a call) or
less than (in the case of a put) the exercise price of the option.
Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price on a specified date. A "purchase" of a futures contract
means the incurring of an obligation to acquire the securities, foreign
currencies or other commodity called for by the contract at a specified price on
a specified date. The purchaser of a futures contract on an index agrees to take
or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract ("current contract value") and the price at which the contract was
originally struck. No physical delivery of the securities underlying the index
is made.
Options on futures contracts written or purchased by a Fund will be traded on
U.S. or foreign exchanges or over-the-counter. These investment techniques will
be used only to hedge against anticipated future changes in market conditions
and interest or exchange rates which otherwise might either adversely affect the
value of the Fund's portfolio securities or adversely affect the prices of
securities which the Fund intends to purchase at a later date.
No Fund will enter into any futures contracts or options on futures contracts if
immediately thereafter the market values of the outstanding futures contracts of
the Fund and the currencies and futures contracts subject to outstanding options
written by the Fund would exceed 50% of its total assets, or in the case of
International Premier Growth Fund 100% of its total assets. Premier Growth
Fund and Growth and Income Fund may not purchase or sell a stock index future if
immediately thereafter more than 30% of its total assets would be hedged by
stock index futures. Premier Growth Fund and Growth and Income Fund may not
purchase or sell a stock index future if, immediately thereafter, the sum of the
amount of margin deposits on the Fund's existing futures positions would exceed
5% of the market value of the Fund's total assets.
Options on Foreign Currencies. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and a Fund could be required to purchase
or sell foreign currencies at disadvantageous exchange rates, 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 a Fund's position, it may forfeit the entire amount of
the premium plus related transaction costs. See the Statement of Additional
Information of each Fund that may invest in options on foreign currencies for
further discussion of the use, risks and costs of options on foreign currencies.
Forward Foreign Currency Exchange Contracts. A Fund purchases or sells forward
foreign currency exchange contracts to minimize the risk to it from adverse
changes in the relationship between the U.S. dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific currency for an
agreed price at a future date, and is individually negotiated and privately
traded.
A Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security
("transaction hedge"). A Fund will not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than the aggregate
amount of the Fund's transactions in that currency. When a Fund believes that a
foreign currency may suffer a substantial decline against the U.S. dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency, or when the Fund believes that
the U.S. dollar may suffer a substantial decline against a foreign currency, it
may enter into a forward purchase contract to buy that foreign currency for a
fixed dollar amount ("position hedge"). A Fund will not position hedge with
respect to a particular currency to an extent greater than the
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aggregate market value (at the time of making such sale) of the securities held
in its portfolio denominated or quoted in that currency. Instead of entering
into a position hedge, a Fund may, in the alternative, enter into a forward
contract to sell a different foreign currency for a fixed U.S. dollar amount
where the Fund believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a decline in the
U.S. dollar value of the currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not entered into such
forward contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. International Fund, New
Europe Fund and Global Small Cap Fund will not enter into a forward contract
with a term of more than one year or if, as a result, more than 50% of its total
assets would be committed to such contracts. The dealings of International Fund,
New Europe Fund and Global Small Cap Fund in forward contracts will be limited
to hedging involving either specific transactions or portfolio positions.
Growth Fund may also purchase and sell foreign currency on a spot basis.
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 settlements beyond two months may be negotiated.
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. At the time a Fund intends to enter into a forward commitment,
it records the transaction and thereafter reflects the value of the security
purchased or, if a sale, the proceeds to be received, in determining its net
asset value. Any unrealized appreciation or depreciation reflected in such
valuation of a "when, as and if issued" security would be canceled in the event
that the required conditions did not occur and the trade was canceled.
The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling prices.
In periods of falling interest rates and rising bond prices, a Fund might sell a
security in its portfolio and purchase the same or a similar security on a when-
issued or forward commitment basis, thereby obtaining the benefit of currently
higher cash yields. However, if Alliance were to forecast incorrectly the
direction of interest rate movements, a Fund might be required to complete such
when-issued or forward transactions at prices inferior to the then current
market values. When-issued securities and forward commitments may be sold prior
to the settlement date, but a Fund enters into when-issued and forward
commitments only with the intention of actually receiving securities or
delivering them, as the case may be. If a Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition or dispose of its
right to deliver or receive against a forward commitment, it may incur a gain or
loss. Any significant commitment of Fund assets to the purchase of securities on
a "when, as and if issued" basis may increase the volatility of the Fund's net
asset value. No forward commitments will be made by New Europe Fund,
International Premier Growth Fund, All-Asia Investment Fund, Greater China '97
Fund, Worldwide Privatization Fund, Real Estate Investment Fund or Utility
Income Fund if, as a result, the Fund's aggregate commitments under such
transactions would be more than 30% of the Fund's total assets. In the event the
other party to a forward commitment transaction were to default, a Fund might
lose the opportunity to invest money at favorable rates or to dispose of
securities at favorable prices.
Standby Commitment Agreements. Standby commitment agreements commit a Fund, for
a stated period of time, to purchase a stated amount of a security that may be
issued and sold to the Fund at the option of the issuer. The price and coupon of
the security are fixed at the time of the commitment. At the time of entering
into the agreement the Fund is paid a commitment fee, regardless of whether the
security ultimately is issued, typically equal to approximately 0.5% of the
aggregate purchase price of the security the Fund has committed to purchase. A
Fund will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
to the Fund and unavailable on a firm commitment basis. No Fund, other than
Internation Premier Growth Fund, will enter into a standby commitment with a
remaining term in excess of 45 days. Investments in standby commitments will be
limited so that the aggregate purchase price of the securities subject to the
commitments will not exceed 25% with respect to New Europe Fund and Real Estate
Investment Fund, 50% with respect to International Premier Growth Fund,
Worldwide Privatization Fund, All-Asia Investment Fund and Greater China '97
Fund and 20% with respect to Utility Income Fund, of the Fund's assets taken at
the time of making the commitment.
There is no guarantee that a security subject to a standby commitment will be
issued and the value of the security, if
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issued, on the delivery date may be more or less than its purchase price. Since
the issuance of the security underlying the commitment is at the option of the
issuer, a Fund will bear the risk of capital loss in the event the value of the
security declines and may not benefit from an appreciation in the value of the
security during the commitment period if the issuer decides not to issue and
sell the security to the Fund.
Currency Swaps. Currency swaps involve the individually negotiated exchange by a
Fund with another party of a series of payments in specified currencies. A
currency swap may involve the delivery at the end of the exchange period of a
substantial amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The net amount of the excess, if any, of a
Fund's obligations over its entitlements with respect to each currency swap will
be accrued on a daily basis. A Fund will not enter into any currency swap unless
the credit quality of the unsecured senior debt or the claims-paying ability of
the other party thereto 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,
such Fund will have contractual remedies pursuant to the agreements related to
the transactions.
Interest Rate Transactions. Each Fund that may enter into interest rate
transactions expects to do so primarily to preserve a return or spread on a
particular investment or portion of its portfolio or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Funds do not intend to use these transactions in a speculative manner.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Interest rate swaps are entered on a net
basis (i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). With
respect to All-Asia Investment Fund, Greater China '97 Fund and Utility Income
Fund, the exchange commitments can involve payments in the same currency or in
different currencies. The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based principal amount
from the party selling such interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on an agreed
principal amount from the party selling the interest rate floor.
A Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each interest rate swap, cap
and floor is accrued daily. A Fund will not enter into an interest rate swap,
cap or floor transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is then rated in the highest rating category
of at least one nationally recognized rating organization. Alliance will monitor
the creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps and floors are more recent innovations for which standardized documentation
has not yet been developed and, accordingly, they are less liquid than swaps.
The use of interest rate transactions is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance were to incorrectly
forecast market values, interest rates and other applicable factors, the
investment performance of a Fund would be adversely affected by the use of these
investment techniques. Moreover, even if Alliance is correct in its forecasts,
there is a risk that the transaction position may correlate imperfectly with the
price of the asset or liability being hedged. There is no limit on the amount of
interest rate transactions that may be entered into by a Fund that is permitted
to enter into such transactions. These transactions do not involve the delivery
of securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to interest rate transactions is limited to the net amount of
interest payments that a Fund is contractually obligated to make. If the other
party to an interest rate transaction defaults, a Fund's risk of loss consists
of the net amount of interest payments that the Fund contractually is entitled
to receive.
Repurchase Agreements. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit a Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. If a vendor defaults on its
repurchase obligation, a Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
a vendor goes bankrupt, a Fund might be delayed in, or prevented from, selling
the collateral for its benefit. Alliance monitors the creditworthiness of the
vendors with which the Fund enters into repurchase agreements. There is no
percentage restriction on a Fund's ability to enter into repurchase agreements,
other than as indicated under "Investment Objectives and Policies."
Short Sales. A short sale is effected by selling a security that a Fund does not
own, or if the Fund does own such security, it is not to be delivered upon
consummation of the sale. A short sale is "against the box" to the extent that a
Fund contemporaneously owns or has the right to obtain securities
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identical to those sold short without payment. Worldwide Privatization Fund,
All-Asia Investment Fund, Greater China '97 Fund and Utility Income Fund each
may make short sales of securities or maintain short positions only for the
purpose of deferring realization of gain or loss for U.S. federal income tax
purposes, provided that at all times when a short position is open the Fund owns
an equal amount of securities of the same issue as, and equal in amount to, the
securities sold short. In addition, each of those Funds may not make a short
sale if as a result more than 10% of the Fund's net assets would be held as
collateral for short sales, except that All-Asia Investment Fund, Greater China
'97 Fund and Real Estate Investment Fund may not make a short sale if as a
result more than 25% of the Fund's net assets would be held as collateral for
short sales. If the price of the security sold short increases between the time
of the short sale and the time a Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund will realize a
capital gain. See "Certain Fundamental Investment Policies." Certain special
federal income tax considerations may apply to short sales entered into by a
Fund. See "Dividends, Distributions and Taxes" in the relevant Fund's Statement
of Additional Information.
Loans of Portfolio Securities. The risk in lending portfolio securities, as with
other extensions of credit, consists of the possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income earned thereon
and the Fund may invest any cash collateral in portfolio securities, thereby
earning additional income, or receive an agreed upon amount of income from a
borrower who has delivered equivalent collateral. Each Fund will have the right
to regain record ownership of loaned securities or equivalent securities in
order to exercise ownership rights such as voting rights, subscription rights
and rights to dividends, interest or distributions. A Fund may pay reasonable
finders', administrative and custodial fees in connection with a loan. A Fund
will not lend its portfolio securities to any officer, director, employee or
affiliate of the Fund or Alliance.
General. The successful use of the foregoing investment practices draws upon
Alliance's special skills and experience with respect to such instruments and
usually depends on Alliance's ability to forecast price movements, interest
rates or currency exchange rate movements correctly. Should interest rates,
prices or exchange rates move unexpectedly, a Fund may not achieve the
anticipated benefits of the transactions or may realize losses and thus be in a
worse position than if such strategies had not been used. Unlike many
exchange-traded futures contracts and options on futures contracts, there are no
daily price fluctuation limits with respect to certain options and forward
contracts, and adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation between movements in
the prices of futures contracts, options and forward contracts and movements in
the prices of the securities and currencies hedged or used for cover will not be
perfect and could produce unanticipated losses.
A Fund's ability to dispose of its position in futures contracts, options and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types of
securities and currencies are relatively new and still developing, and there is
no public market for forward contracts. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options and forward contracts. If a secondary market does not exist with respect
to an option purchased or written by a Fund, it might not be possible to effect
a closing transaction in the option (i.e., dispose of the option), with the
result that (i) an option purchased by the Fund would have to be exercised in
order for the Fund to realize any profit and (ii) the Fund may not be able to
sell currencies or portfolio securities covering an option written by the Fund
until the option expires or it delivers the underlying security, futures
contract or currency upon exercise. Therefore, no assurance can be given that
the Funds will be able to utilize these instruments effectively for the purposes
set forth above. Furthermore, a Fund's ability to engage in options and futures
transactions may be limited by tax considerations and the use of certain hedging
techniques may adversely impact the characterization of income to a Fund for
U.S. federal income tax purposes. See "Dividends, Distributions and Taxes" in
the Statement of Additional Information of each Fund that invests in options and
futures.
Future Developments. A Fund may, following written notice to its shareholders,
take advantage of other investment practices that are not currently contemplated
for use by the Fund or are not available but may yet be developed, to the extent
such investment practices are consistent with the Fund's investment objective
and legally permissible for the Fund. Such investment practices, if they arise,
may involve risks that exceed those involved in the activities described above.
Defensive Position. For temporary defensive purposes, each Fund may reduce its
position in equity securities and invest in without limit certain types of
short-term, liquid, high grade or high quality (depending on the Fund) debt
securities. These securities may include U.S. Government securities, qualifying
bank deposits, money market instruments, prime commercial paper and other types
of short-term debt securities including notes and bonds. For Funds that may
invest in foreign countries, such securities may also include short-term,
foreign-currency denominated securities of the type mentioned above issued by
foreign governmental entities, companies and supranational organizations. For a
complete description of the types of securities each Fund may invest in while in
a temporary defensive position, please see such Fund's Statement of Additional
Information.
Portfolio Turnover. Portfolio turnover rates are set forth under "Financial
Highlights." These portfolio turnover rates are greater than those of most other
investment companies, including those which emphasize capital appreciation as a
basic policy. A high rate of portfolio turnover involves
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correspondingly greater brokerage and other expenses than a lower rate, which
must be borne by the Fund and its shareholders. High portfolio turnover also may
result in the realization of substantial net short-term capital gains. See
"Dividends, Distributions and Taxes" in each Fund's Statement of Additional
Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement of
Additional Information.
Alliance Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government); (ii) acquire more
than 10% of the voting or other securities of any one issuer; or (iii) buy
securities of any company that (including its predecessors) has not been in
business at least three continuous years. Pursuant to investment policies which
are not fundamental, the Fund does not invest (i) in puts or calls (except as
discussed above); (ii) in straddles, spreads, or any combination thereof; (iii)
in oil, gas or other mineral exploration or development programs; or (iv) more
than 5% of its gross assets in securities the disposition of which would be
subject to restrictions under the federal securities laws.
Growth Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government securities and
repurchase agreements relating thereto), although up to 25% of each Fund's total
assets may be invested without regard to this restriction; or (ii) invest 25% or
more of its total assets in the securities of any one industry.
Premier Growth Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest 25% or more of the value of its
total assets in the same industry; (iii) borrow money or issue senior securities
except for temporary or emergency purposes in an amount not exceeding 5% of the
value of its total assets at the time the borrowing is made; (iv) pledge,
mortgage, hypothecate or otherwise encumber any of its assets except in
connection with the writing of call options and except to secure permitted
borrowings; or (v) invest in the securities of any issuer that has a record of
less than three years of continuous operation (including the operation of any
predecessor) if as a result more than 10% of the value of the total assets of
the Fund would be invested in the securities of such issuer or issuers.
Technology Fund may not: (i) with respect to 75% of its total assets, have such
assets represented by other than:(a) cash and cash items, (b) U.S. Government
securities, or (c) securities of any one issuer (other than the U.S. Government
and its agencies or instrumentalities) not greater in value than 5% of the
Fund's total assets, and not more than 10% of the outstanding voting securities
of such issuer; (ii) purchase the securities of any one issuer, other than the
U.S. Government and its agencies or instrumentalities, if as a result (a) the
value of the holdings of the Fund in the securities of such issuer exceeds 25%
of its total assets, or (b) the Fund owns more than 25% of the outstanding
securities of any one class of securities of such issuer; (iii) concentrate its
investments in any one industry, but the Fund has reserved the right to invest
up to 25% of its total assets in a particular industry; and (iv) invest in the
securities of any issuer which has a record of less than three years of
continuous operation (including the operation of any predecessor) if such
purchase would cause 10% or more of its total assets to be invested in the
securities of such issuers.
Quasar Fund may not: (i) purchase the securities of any one issuer, other than
the U.S. Government or any of its agencies or instrumentalities, if as a result
more than 5% of its total assets would be invested in such issuer or the Fund
would own more than 10% of the outstanding voting securities of such issuer,
except that up to 25% of its total assets may be invested without regard to
these 5% and 10% limitations; (ii) invest more than 25% of its total assets in
any particular industry; (iii) borrow money except for temporary or emergency
purposes in an amount not exceeding 5% of its total assets at the time the
borrowing is made; or (iv) invest more than 10% of its assets in restricted
securities.
International Fund may not: (i) invest more than 5% of the value of its total
assets in securities of a single issuer (including repurchase agreements with
any one entity), except U.S. Government securities or foreign government
securities; provided, however, that the Fund may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in securities of any one
foreign government issuer; (ii) own more than 10% of the outstanding securities
of any class of any issuer (for this purpose, all preferred stocks of an issuer
shall be deemed a single class, and all indebtedness of an issuer shall be
deemed a single class), except U.S. Government securities; (iii) invest more
than 25% of the value of its total assets in securities of issuers having their
principal business activities in the same industry; provided, that this
limitation does not apply to U.S. Government securities or foreign government
securities; (iv) invest more than 5% of the value of its total assets in the
securities of any issuer that has a record of less than three years of
continuous operation (including the operation of any predecessor or
unconditional guarantor), except U.S. Government securities or foreign
government securities; (v) invest more than 5% of the value of its total assets
in securities with legal or contractual restrictions on resale, other than
repurchase agreements, or more than 10% of the value of its total assets in
securities that are not readily marketable (including restricted securities and
repurchase agreements not terminable within seven business days); and (vi)
borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then only from banks in amounts not exceeding 5% of its total
assets.
International Premier Growth Fund may not: (i) invest 25% or more of its total
assets in securities of issuers conducting their principal business activities
in the same industry, except
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that this restriction does not apply to U.S. Government Securities; (ii) borrow
money or issue senior securities, except that the Fund may borrow (a) from a
bank if immediately after such borrowing there is asset coverage of at least
300% as defined in the 1940 Act and (b) for temporary purposes in an amount not
exceeding 5% of the value of the total assets of the Fund; or (iii) pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings.
Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets
in securities of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a) U.S.
Government securities, or (b) the purchase of securities of issuers whose
primary business activity is in the national commercial banking industry, so
long as the Fund's Directors determine, on the basis of factors such as
liquidity, availability of investments and anticipated returns, that the Fund's
ability to achieve its investment objective would be adversely affected if the
Fund were not permitted to invest more than 25% of its total assets in those
securities, and so long as the Fund notifies its shareholders of any decision by
the Directors to permit or cease to permit the Fund to invest more than 25% of
its total assets in those securities, such notice to include a discussion of any
increased investment risks to which the Fund may be subjected as a result of the
Directors' determination; (ii) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding borrowings in excess of 5% of the value of the Fund's total
assets will be repaid before any investments are made; or (iii) pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings. The exception contained in clause (i)(b) above is subject
to the operating policy regarding concentration described in this Prospectus.
New Europe Fund may not: (i) purchase more than 10% of the outstanding voting
securities of any one issuer; (ii) invest more than 15% of its total assets in
the securities of any one issuer or 25% or more of its total assets in the same
industry, provided, however, that the foregoing restriction shall not be deemed
to prohibit the Fund from purchasing the securities of any issuer pursuant to
the exercise of rights distributed to the Fund by the issuer, except that no
such purchase may be made if as a result the Fund will fail to meet the
diversification requirements of the Code and any such acquisition in excess of
the foregoing 15% or 25% limits will be sold by the Fund as soon as reasonably
practicable (this restriction does not apply to U.S. Government securities, but
will apply to foreign government securities unless the Commission permits their
exclusion); (iii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the Fund's total assets will be repaid
before any subsequent investments are made; or (iv) purchase a security (unless
the security is acquired pursuant to a plan of reorganization or an offer of
exchange) if, as a result, the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of the Fund's total
assets would be invested in securities of any closed-end investment company, or
more than 10% of such value in closed-end investment companies in general.
All-Asia Investment Fund may not: (i) invest 25% or more of its total assets in
securities of issuers conducting their principal business activities in the same
industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the value of the Fund's total assets
will be repaid before any investments are made; or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.
Greater China '97 Fund may not: (i) invest 25% or more of its total assets on
securities of issuers conducting their principal business activities in the same
industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemption may not exceed 5%,
of the Fund's total assets (including the amount borrowed) less liabilities (not
including the amount borrowed) at the time the borrowing is made; outstanding
borrowings in excess of 5% of the value of the Fund's total assets will be
repaid before any investments are made; or (iii) pledge, hypothecate, mortgage
or otherwise encumber its assets, except to secure permitted borrowings.
Global Small Cap Fund may not: (i) purchase the securities of any one issuer,
other than the U.S. Government or any of its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total assets
would be invested in such issuer or the Fund would own more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the
Fund's total assets may be invested without regard to these 5% and 10%
limitations; (ii) invest 25% or more of its total assets in the same industry;
this restriction does not apply to U.S. Government securities, but will apply to
foreign government securities unless the Commission permits their exclusion;
(iii) borrow money except from banks for emergency or temporary purposes in an
amount not exceeding
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5% of the total assets of the Fund; or (iv) make short sales of securities or
maintain a short position, unless at all times when a short position is open it
owns an equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold short and unless
not more than 5% of the Fund's net assets is held as collateral for such sales
at any one time.
Global Environment Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest more than 15% of the value of
its total assets in the securities of any one issuer or 25% or more of the value
of its total assets in the same industry, except that the Fund will invest more
than 25% of its total assets in Environmental Companies, provided that this
restriction does not apply to U.S. Government securities, but will apply to
foreign government obligations unless the Commission permits their exclusion;
(iii) borrow money or issue senior securities, except that the Fund may borrow
(a) from a bank if immediately after such borrowing there is asset coverage of
at least 300% as defined in the 1940 Act and (b) for temporary purposes in an
amount not exceeding 5% of the value of the total assets of the Fund; (iv)
pledge, hypothecate, mortgage or otherwise encumber its assets, except (a) to
secure permitted borrowings and (b) in connection with initial and variation
margin deposits relating to futures contracts; (v) purchase a security (unless
the security is acquired pursuant to a plan of reorganization or an offer of
exchange) if, as result, the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of the Fund's total
assets would be invested in securities of any closed-end investment company or
more than 10% of such value in closed-end investment companies in the aggregate;
(vi) make short sales of securities or maintain a short position, unless at all
times when a short position is open it owns an equal amount of such securities
or securities convertible into or exchangeable for, without payment of any
further consideration, securities of the same issue as, and equal in amount to,
the securities sold short ("short sales against the box"), and unless not more
than 5% of the Fund's net assets (taken at market value) is held as collateral
for such sales at any one time; or (vii) buy or write (i.e., sell) put or call
options, except (a) the Fund may buy foreign currency options or write covered
foreign currency options and options on foreign currency futures and (b) the
Fund may purchase warrants.
Balanced Shares may not: (i) invest more than 5% of its total assets in the
securities of any one issuer, except U.S. Government securities; or (ii) own
more than 10% of the outstanding voting securities of any one issuer.
Utility Income Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer except the U.S. Government, although with respect
to 25% of its total assets it may invest in any number of issuers; (ii) invest
25% or more of its total assets in the securities of issuers conducting their
principal business activities in any one industry, other than the utilities
industry, except that this restriction does not apply to U.S. Government
securities; (iii) purchase more than 10% of any class of the voting securities
of any one issuer; (iv) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding borrowings in excess of 5% of the Fund's total assets will be
repaid before any subsequent investments are made; or (v) purchase a security
if, as a result (unless the security is acquired pursuant to a plan of
reorganization or an offer of exchange), the Fund would own any securities of an
open-end investment company or more than 3% of the total outstanding voting
stock of any closed-end investment company or more than 5% of the value of the
Fund's net assets would be invested in securities of any one or more closed-end
investment companies.
Growth and Income Fund may not (i) invest more than 5% of its net assets in the
security of any one issuer, except U.S. Government obligations or (ii) own more
than 10% of the outstanding voting securities of any issuer.
Real Estate Investment Fund may not: (i) with respect to 75% of its total
assets, have such assets represented by other than: (a) cash and cash items, (b)
U.S. Government securities, or (c) securities of any one issuer (other than the
U.S. Government and its agencies or instrumentalities) not greater in value than
5% of the Fund's total assets, and not more than 10% of the outstanding voting
securities of such issuer; (ii) purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities, if as a result
(a) the value of the holdings of the Fund in the securities of such issuer
exceeds 25% of its total assets, or (b) the Fund owns more than 25% of the
outstanding securities of any one class of securities of such issuer; (iii)
invest 25% or more of its total assets in the securities of issuers conducting
their principal business activities in any one industry, other than the real
estate industry in which the Fund will invest at least 25% or more of its total
assets, except that this restriction does not apply to U.S. Government
securities; (iv) purchase or sell real estate, except that it may purchase and
sell securities of companies which deal in real estate or interests therein,
including Real Estate Equity Securities; or (v) borrow money except for
temporary or emergency purposes or to meet redemption requests, in an amount not
exceeding 5% of the value of its total assets at the time the borrowing is made.
RISK CONSIDERATIONS
Investment in certain of the Funds involves the special risk considerations
described below. These risks may be heightened when investing in emerging
markets.
Investment in Privatized Enterprises by Worldwide Privatization Fund. In certain
jurisdictions, the ability of foreign entities, such as the Fund, to participate
in privatizations may be limited by local law, or the price or terms on which
the Fund
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may be able to participate may be less advantageous than for local investors.
Moreover, there can be no assurance that governments that have embarked on
privatization programs will continue to divest their ownership of state
enterprises, that proposed privatizations will be successful or that governments
will not re-nationalize enterprises that have been privatized. Furthermore, in
the case of certain of the enterprises in which the Fund may invest, large
blocks of the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those enterprises. The
sale of some portion or all of those blocks could have an adverse effect on the
price of the stock of any such enterprise.
Most state enterprises or former state enterprises go through an internal
reorganization of management prior to conducting an initial equity offering in
an attempt to better enable these enterprises to compete in the private sector.
However, certain reorganizations could result in a management team that does not
function as well as the enterprise's prior management and may have a negative
effect on such enterprise. After making an initial equity offering, enterprises
that may have enjoyed preferential treatment from the respective state or
government that owned or controlled them may no longer receive such preferential
treatment and may become subject to market competition from which they were
previously protected. Some of these enterprises may not be able to effectively
operate in a competitive market and may suffer losses or experience bankruptcy
due to such competition. In addition, the privatization of an enterprise by its
government may occur over a number of years, with the government continuing to
hold a controlling position in the enterprise even after the initial equity
offering for the enterprise.
Currency Considerations. Substantially all of the assets of International Fund,
International Premier Growth Fund, New Europe Fund, All-Asia Investment Fund,
Greater China '97 Fund and Worldwide Privatization Fund and a substantial
portion of the assets of Global Small Cap Fund and Global Environment Fund will
be invested in securities denominated in foreign currencies, and a corresponding
portion of these Funds' revenues will be received in such currencies. Therefore,
the dollar equivalent of their net assets, distributions and income will be
adversely affected by reductions in the value of certain foreign currencies
relative to the U.S. dollar. If the value of the foreign currencies in which a
Fund receives its income falls relative to the U.S. dollar between receipt of
the income and the making of Fund distributions, the Fund may be required to
liquidate securities in order to make distributions if it has insufficient cash
in U.S. dollars to meet distribution requirements that the Fund must satisfy to
qualify as a regulated investment company for federal income tax purposes.
Similarly, if an exchange rate declines between the time a Fund incurs expenses
in U.S. dollars and the time cash expenses are paid, the amount of the currency
required to be converted into U.S. dollars in order to pay expenses in U.S.
dollars could be greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these risks, a Fund may
engage in certain currency hedging transactions, which themselves involve
certain special risks. See "Additional Investment Practices" above.
Foreign Investment. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, a Fund whose investment portfolio includes such
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of U.S.
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States. Securities settlements
may in some instances be subject to delays and related administrative
uncertainties. These problems are particularly severe in India, where settlement
is through physical delivery, and, where, currently, a severe shortage of vault
capacity exists among custodial banks, although efforts are being undertaken to
alleviate the shortage. 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 a Fund. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from certain countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority,
and if a deterioration occurs in a country's balance of payments, the country
could impose temporary restrictions on foreign capital remittances.
A Fund could also be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
to it of other restrictions on investment. Investing in local markets may
require a Fund to adopt special procedures, which may involve additional costs
to a Fund. The liquidity of a Fund's investments in any country in which any of
these factors exists could be affected and Alliance will monitor the effect of
any such factor or factors on a Fund's investments. Furthermore, transaction
costs including brokerage commissions for transactions both on and off the
securities exchanges in many foreign countries are generally higher than in the
United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The reporting, accounting and
auditing standards of foreign countries may differ, in some cases significantly,
from U.S. standards in important respects and less information may be available
to investors in foreign securities than to investors in U.S. securities.
Substantially less information is publicly
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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 or the
Fund's investments in such country. In the event of expropriation,
nationalization or other confiscation, a Fund could lose its entire investment
in the country involved. In addition, laws in foreign countries governing
business organizations, bankruptcy and insolvency may provide less protection to
security holders such as the Fund than that provided by U.S. laws.
Investment in United Kingdom Issuers. Investment in securities of United Kingdom
issuers involves certain considerations not present with investment in
securities of U.S. issuers. As with any investment not denominated in the U.S.
dollar, the U.S. dollar value of the Fund's investment denominated in the
British pound sterling will fluctuate with pound sterling--dollar exchange rate
movements. Between 1972, when the pound sterling was allowed to float against
other currencies, and the end of 1992, the pound sterling generally depreciated
against most major currencies, including the U.S. dollar. Between September and
December 1992, after the United Kingdom's exit from the Exchange Rate Mechanism
of the European Monetary System, the value of the pound sterling fell by almost
20% against the U.S. dollar. The pound sterling has since recovered due to
interest rate cuts throughout Europe and an upturn in the economy of the United
Kingdom. The average exchange rate of the U.S. dollar to the pound sterling was
1.50 in 1993 and 1.64 in 1997. On October 13, 1998 the U.S. dollar-pound
sterling exchange rate was 1.71.
The United Kingdom's largest stock exchange is the London Stock Exchange, which
is the third largest exchange in the world. As measured by the FT-SE 100 index,
the performance of the 100 largest companies in the United Kingdom reached
5,135.5 at the end of 1997, up approximately 25% from the end of 1996. On
October 5, 1998 the FT-SE 100 index closed at 4648.7, the lowest close in the
12-month period prior to that date, after reaching a high of 6179.0 on July 20,
1998. The FT-SE 100 index closed at 4990.1 on October 14, 1998.
In January 1999, the Economic and Monetary Union ("EMU") is scheduled to take
effect. The EMU will establish a common currency for European countries that
meet the eligibility criteria and choose to participate. Although the United
Kingdom meets the eligibility criteria, the government has not taken any action
to join the EMU.
From 1979 until 1997 the Conservative Party controlled Parliament. In the May 1,
1997 general elections, however, the Labour Party, led by Tony Blair, won a
majority in Parliament, holding 418 of 658 seats in the House of Commons. Mr.
Blair, who was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy framework intended to
protect monetary policy from political forces by vesting responsibility for
setting interest rates in a new Monetary Policy Committee headed by the Governor
of the Bank of England, as opposed to the Treasury. Prime Minister Blair has
also undertaken a comprehensive restructuring of the regulation of the financial
services industry. For further information regarding the United Kingdom, see the
Statement of Additional Information of New Europe Fund.
Investment in Japanese Issuers. Investment in securities of Japanese issuers
involves certain considerations not present with investment in securities of
U.S. issuers. As with any investment not denominated in the U.S. dollar, the
U.S. dollar value of each Fund's investments denominated in the Japanese yen
will fluctuate with yen-dollar exchange rate movements. Between 1985 and 1995,
the Japanese yen generally appreciated against the U.S. dollar, but has since
fallen from its post-World War II high (in 1995) against the U.S. dollar.
Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section of
which is reserved for larger, established companies. As measured by the TOPIX, a
capitalization-weighted composite index of all common stocks listed in the First
Section, the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 50% through the end of 1997. On
October 13, 1998 the TOPIX closed at 998.98, down approximately 15% from the end
of 1997. Certain valuation measures, such as price-to-book value and price-to-
cash flow ratios, indicate that the Japanese stock market is near its lowest
level in the last twenty years relative to other world markets.
In recent years, Japan has consistently recorded large current account trade
surpluses with the U.S. that have caused difficulties in the relations between
the two countries. On October 1, 1994, the U.S. and Japan reached an agreement
that may lead to more open Japanese markets with respect to trade in certain
goods and services. In June 1995, the two countries agreed in principle to
increase Japanese imports of American automobiles and automotive parts.
Nevertheless it is expected that the continuing friction between the U.S. and
Japan with respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers will be subject to uncertainty
resulting from the instability of recent Japanese ruling coalitions. From 1955
to 1993, Japan's government was controlled by a single political party. Between
August 1993 and October 1996 Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20, 1996, however,
Japan returned to a single-party government led by Ryutaro Hashimoto, a member
of the Liberal Democratic Party ("LDP"). While the LDP does not control a
majority of the seats in the parliament, it is only three seats short of the 251
seats required to attain a majority in the House of Representatives (down from a
12-seat shortfall just after the
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October 1996 election). The popularity of the LDP declined, however, due to the
dissatisfaction with Mr. Hashimoto's leadership. In the July 1998 House of
Councillors election, the LDP's representation fell to 103 seats from 120 seats.
As a result of the LDP's defeat, Mr. Hashimoto resigned as prime minister and
leader of the LDP. Mr. Hashimoto was replaced by Keizo Obuchi. For the past
several years, Japan's banking industry has been weakened by a significant
amount of problem loans. Japan's banks also have significant exposure to the
current financial turmoil in other Asian markets. Following the insolvency of
one of Japan's largest banks in November 1997, the government proposed several
plans designed to strengthen the weakened banking sector. In October 1998, the
Japanese parliament approved several new laws that will make $508 billion in
public funds available to increase the capital of Japanese banks, to guarantee
depositors' accounts and to nationalize the weakest banks. It is unclear whether
these new laws will achieve their intended effect. For further information
regarding Japan, see the Statements of Additional Information of All-Asia
Investment Fund and International Fund.
Investment in Greater China Issuers. China, in particular, but Hong Kong and
Taiwan, as well, in significant measure because of their existing and increasing
economic, and now in the case of Hong Kong, direct political ties with China,
may be subject to a greater degree of economic, political and social instability
than is the case in the United States.
China's economy is very much in transition. While the government still controls
production and pricing in major economic sectors, significant steps have been
taken toward capitalism and China's economy has become increasingly market
oriented. China's strong economic growth and ability to attract significant
foreign investment in recent years stem from the economic liberalization
initiated by Deng Xiaoping who assumed power in the late 1970s. The economic
growth, however, has not been smooth and has been marked by extremes in many
respects of inordinate growth, which has not been tightly controlled, followed
by rigid measures of austerity.
The rapidity and erratic nature of the growth have resulted in inefficiencies
and dislocations, including at times high rates of inflation.
China's economic development has occurred notwithstanding the continuation of
the power of China's Communist Party and China's authoritarian government
control, not only of centrally planned economic decisions, but of many aspects
of the social structure. While a significant portion of China's population has
benefited from China's economic growth, the conditions of many leave much room
for improvement. Notwithstanding restrictions on freedom of expression and the
absence of a free press, and notwithstanding the extreme manner in which past
unrest has been dealt with, the 1989 Tianamen Square uprising being a recent
reminder, the potential for renewed popular unrest associated with demands for
improved social, political and economic conditions cannot be dismissed.
Following the death of Deng Xiaoping in February 1997, Jiang Zemin became the
leader of China's Communist Party. The transfer of political power has
progressed smoothly and Jiang's popularity and credibility have gradually
increased. Jiang continues to consolidate his power, but as of yet does not
appear to have the same degree of control as did Deng Xiaoping. Jiang has
continued the market-oriented policies of Deng. Currently, China's major
economic challenge centers on reforming or eliminating inefficient state-owned
enterprises without creating an unacceptable level of unemployment. Recent
capitalistic policies have in many respects effectively outdated the Communist
Party and the governmental structure, but both remain entrenched. The Communist
Party still controls access to governmental positions and closely monitors
governmental action. Essentially there exists an inefficient set of parallel
bureaucracies and attendant opportunities for corruption.
In addition to the economic impact of China's internal political uncertainties,
the potential effect of China's actions, not only on China itself, but on Hong
Kong and Taiwan as well, could also be significant.
China is heavily dependent on foreign trade, particularly with Japan, the United
States, South Korea and Germany. Political developments adverse to its trading
partners, as well as political and social repression, could cause the United
States and others to alter their trading policy towards China. For example, in
the United States, the continued extension of most favored nation trading status
to China which is reviewed regularly and was reviewed in 1998 is an issue of
significant controversy. Loss of that status would clearly hurt China's economy
by reducing its exports. With much of China's trading activity being funneled
through Hong Kong and with trade through Taiwan becoming increasingly
significant, any sizable reduction in demand for goods from China would have
negative implications for both countries. China is believed to be the largest
investor in Hong Kong and its markets and an economic downturn in China would be
expected to reverberate through Hong Kong's markets as well.
Although China has committed by treaty to preserve Hong Kong's autonomy and its
economic, political and social freedoms for fifty years from the July 1, 1997
transfer of sovereignty from Great Britain to China. Hong Kong is headed by a
chief executive, appointed by the central government of China, whose power is
checked by both the government of China and a Legislative Council. Although
Hong Kong voters voted overwhelmingly for pro-democracy candidates in the recent
election, it remains possible that China could exert its authority so as to
alter the economic structure, political structure or existing social policy of
Hong Kong. Investor and business confidence in Hong Kong can be significantly
affected by such developments, which in turn can affect markets and business
performance. In this connection, it is noted that a substantial portion of the
companies listed on the Hong Kong Stock Exchange are involved in real estate-
related activities.
The securities markets of China and to a lesser extent Taiwan, are relatively
small, with the majority of market capitalization and
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trading volume concentrated in a limited number of companies representing a
small number of industries. Consequently, Greater China '97 Fund may experience
greater price volatility and significantly lower liquidity than a portfolio
invested solely in equity securities of U.S. companies. These markets may be
subject to greater influence by adverse events generally affecting the market,
and by large investors trading significant blocks of securities, than is usual
in the U.S. Securities settlements may in some instances be subject to delays
and related administrative uncertainties.
Foreign investment in the securities markets of China and Taiwan is restricted
or controlled to varying degrees. These restrictions or controls, which apply to
the Greater China '97 Fund may at times limit or preclude investment in certain
securities and may increase the cost and expenses of the Fund. China and Taiwan
require governmental approval prior to investments by foreign persons or limit
investment by foreign persons to only a specified percentage of an issuer's
outstanding securities or a specific class of securities which may have less
advantageous terms (including price) than securities of the company available
for purchase by nationals. In addition, the repatriation of investment income,
capital or the proceeds of sales of securities from China and Taiwan is
controlled under regulations, including in some cases the need for certain
advance government notification or authority, and if a deterioration occurs in a
country's balance of payments, the country could impose restrictions on foreign
capital remittances.
Greater China '97 Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. The liquidity of the
Fund's investments in any country in which any of these factors exists could be
affected by any such factor or factors on the Fund's investments. The limited
liquidity in certain Greater China markets is a factor to be taken into account
in the Fund's valuation of portfolio securities in this category and may affect
the Fund's ability to dispose of securities in order to meet redemption requests
at the price and time it wishes to do so. It is also anticipated that
transaction costs, including brokerage commissions for transactions both on and
off the securities exchanges in Greater China countries, will be higher than in
the U.S.
Issuers of securities in Greater China countries are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as timely disclosure of information, insider trading rules, restrictions on
market manipulation and shareholder proxy requirements. Reporting, accounting
and auditing standards of Greater China countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in securities of Greater China country issuers
than to investors in securities of U.S. issuers.
Investment in Greater China companies which are in the initial stages of their
development involves greater risk than is customarily associated with securities
of more established companies. The securities of such companies may have
relatively limited marketability and may be subject to more abrupt or erratic
market movements than securities of established companies or broad market
indices.
Investment in Smaller, Emerging Companies. The Funds may invest in smaller,
emerging companies. Global Small Cap Fund and New Europe Fund will emphasize
investment in, and All-Asia Investment Fund, Greater China '97 Fund and Global
Environment Fund may emphasize investment in, smaller, emerging companies.
Investment in such companies involves greater risks than is customarily
associated with securities of more established companies. Companies in the
earlier stages of their development often have products and management personnel
which have not been thoroughly tested by time or the marketplace; their
financial resources may not be as substantial as those of more established
companies. The securities of smaller companies may have relatively limited
marketability and may be subject to more abrupt or erratic market movements than
securities of larger companies or broad market indices. The revenue flow of such
companies may be erratic and their results of operations may fluctuate widely
and may also contribute to stock price volatility.
Extreme Governmental Action; Less Protective Laws. In contrast with investing in
the United States, foreign investment may involve in certain situations greater
risk of nationalization, expropriation, confiscatory taxation, currency blockage
or other extreme governmental action which could adversely impact a Fund's
investments. In the event of certain such actions, a Fund could lose its entire
investment in the country involved. In addition, laws in various foreign
countries, including in certain respects each of the Greater China countries,
governing, among other subjects, business organization and practices, securities
and securities trading, bankruptcy and insolvency may provide less protection to
investors such as the Fund than provided under United States laws.
Investing in Environmental Companies by Global Environment Fund. Governmental
regulations or other action can inhibit an Environmental Company's performance,
and it may take years to translate environmental legislation into sales and
profits. Environmental Companies generally face competition in fields often
characterized by relatively short product cycles and competitive pricing
policies. Losses may result from large product development or expansion costs,
unprotected marketing or distribution systems, erratic revenue flows and low
profit margins. Additional risks that Environmental Companies may face include
difficulty in financing the high cost of technological development,
uncertainties due to changing governmental regulation or rapid technological
advances, potential liabilities associated with hazardous components and
operations, and difficulty in finding experienced employees.
The Real Estate Industry. Although Real Estate Investment Fund does not invest
directly in real estate, it invests primarily in Real Estate Equity Securities
and has a policy of concentration of its investments in the real estate
industry. Therefore, an investment in the Fund is subject to certain risks
associated with the direct ownership of real estate and with the real estate
industry in
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general. These risks include, among others: possible declines in the value of
real estate; risks related to general and local economic conditions; possible
lack of availability of mortgage funds; overbuilding; extended vacancies of
properties; increases in competition, property taxes and operating expenses;
changes in zoning laws; costs resulting from the clean-up of, and liability to
third parties for damages resulting from, environmental problems; casualty or
condemnation losses; uninsured damages from floods, earthquakes or other natural
disasters; limitations on and variations in rents; and changes in interest
rates. To the extent that assets underlying the Fund's investments are
concentrated geographically, by property type or in certain other respects, the
Fund may be subject to certain of the foregoing risks to a greater extent.
In addition, if Real Estate Investment Fund receives rental income or income
from the disposition of real property acquired as a result of a default on
securities the Fund owns, the receipt of such income may adversely affect the
Fund's ability to retain its tax status as a regulated investment company. See
"Dividends, Distributions and Taxes" in the Fund's Statement of Additional
Information. Investments by the Fund in securities of companies providing
mortgage servicing will be subject to the risks associated with refinancings and
their impact on servicing rights.
REITs. Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax free pass-through of income under the Code and failing to
maintain their exemptions from registration under the 1940 Act.
REITs (especially mortgage REITs) are also subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, small
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the S&P Index of 500 Common Stocks.
Mortgage-Backed Securities. As discussed above, investing in Mortgage-Backed
Securities involves certain unique risks in addition to those risks associated
with investment in the real estate industry in general. These risks include the
failure of a counterparty to meet its commitments, adverse interest rate changes
and the effects of prepayments on mortgage cash flows. When interest rates
decline, the value of an investment in fixed rate obligations can be expected to
rise. Conversely, when interest rates rise, the value of an investment in fixed
rate obligations can be expected to decline. In contrast, as interest rates on
adjustable rate mortgage loans are reset periodically, yields on investments in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
Further, the yield characteristics of Mortgage-Backed Securities, such as those
in which Real Estate Investment Fund may invest, differ from those of
traditional fixed-income securities. The major differences typically include
more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Early payment associated
with Mortgage-Backed Securities causes these securities to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. Under certain interest rate and prepayment
rate scenarios, the Fund may fail to recoup fully its investment in
Mortgage-Backed Securities notwithstanding any direct or indirect governmental
or agency guarantee. When the Fund reinvests amounts representing payments and
unscheduled prepayments of principal, it may receive a rate of interest that is
lower than the rate on existing adjustable rate mortgage pass-through
securities. Thus, Mortgage-Backed Securities, and adjustable rate mortgage pass-
through securities in particular, may be less effective than other types of U.S.
Government securities as a means of "locking in" interest rates.
U.S. and Foreign Taxes. A Fund's investment in foreign securities may be subject
to taxes withheld at the source on dividend or interest payments. Foreign taxes
paid by a Fund may be creditable or deductible by U.S. shareholders for U.S.
income tax purposes. No assurance can be given that applicable tax laws and
interpretations will not change in the future. Moreover, non-U.S. investors may
not be able to credit or deduct such foreign taxes. Investors should review
carefully the information discussed under the heading "Dividends, Distributions
and Taxes" and should discuss with their tax advisers the specific tax
consequences of investing in a Fund.
Fixed-Income Securities. The value of each Fund's shares will fluctuate with the
value of its investments. The value of each
47
<PAGE>
Fund's investments in fixed-income securities will change as the general level
of interest rates fluctuates. During periods of falling interest rates, the
values of fixed-income securities generally rise. Conversely, during periods of
rising interest rates, the values of fixed-income securities generally decline.
Under normal market conditions, the average dollar-weighted maturity of a Fund's
portfolio of debt or other fixed-income securities is expected to vary between
five and 30 years in the case of All-Asia Investment Fund, between five and 25
years in the case of Utility Income Fund and between one year or less and 30
years in the case of all other Funds that invest in such securities. In periods
of increasing interest rates, each of the Funds may, to the extent it holds
mortgage-backed securities, be subject to the risk that the average dollar-
weighted maturity of the Fund's portfolio of debt or other fixed-income
securities may be extended as a result of lower than anticipated prepayment
rates. See "Additional Investment Practices--Mortgage-Backed Securities."
Securities Ratings. The ratings of securities by S&P, Moody's, Duff & Phelps and
Fitch are a generally accepted barometer of credit risk. They are, however,
subject to certain limitations from an investor's standpoint. The rating of an
issuer is heavily weighted by past developments and does not necessarily reflect
probable future conditions. There is frequently a lag between the time a rating
is assigned and the time it is updated. In addition, there may be varying
degrees of difference in credit risk of securities within each rating category.
Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are
considered to be of the highest quality; capacity to pay interest and repay
principal is extremely strong. Securities rated Aa by Moody's and AA by S&P,
Duff & Phelps and Fitch are considered to be high quality; capacity to repay
principal is considered very strong, although elements may exist that make risks
appear somewhat larger than exist with securities rated Aaa or AAA. Securities
rated A are considered by Moody's to possess adequate factors giving security to
principal and interest. S&P, Duff & Phelps and Fitch consider such securities to
have a strong capacity to pay interest and repay principal. Such securities are
more susceptible to adverse changes in economic conditions and circumstances
than higher-rated securities.
Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are
considered to have an adequate capacity to pay interest and repay principal.
Such securities are considered to have speculative characteristics and share
some of the same characteristics as lower-rated securities. Sustained periods of
deteriorating economic conditions or of 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. Securities rated Ba by Moody's and
BB by S&P, Duff & Phelps and Fitch are considered to have speculative
characteristics with respect to capacity to pay interest and repay principal
over time; their future cannot be considered as well-assured. Securities rated B
by Moody's, S&P, Duff & Phelps and Fitch are considered to have highly
speculative characteristics with respect to capacity to pay interest and repay
principal. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are of
poor standing and there is a present danger with respect to payment of principal
or interest. Securities rated Ca by Moody's and CC by S&P and Fitch are
minimally protected, and default in payment of principal or interest is
probable. Securities rated C by Moody's, S&P and Fitch are in imminent default
in payment of principal or interest and have extremely poor prospects of ever
attaining any real investment standing. Securities rated D by S&P and Fitch are
in default. The issuer of securities rated DD by Duff & Phelps is under an order
of liquidation.
Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities, i.e.,
those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps or
Fitch, are subject to greater risk of loss of principal and interest than
higher-rated securities. They are also generally considered to be subject to
greater market risk than higher-rated securities, and the capacity of issuers of
lower-rated securities to pay interest and repay principal is more likely to
weaken than is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In addition,
lower-rated securities may be more susceptible to real or perceived adverse
economic conditions than investment grade securities.
The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, a Fund may experience difficulty in
valuing such securities and, in turn, the Fund's assets. In addition, adverse
publicity and investor perceptions about lower-rated securities, whether or not
factual, may tend to impair their market value and liquidity.
Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political conditions.
However, there can be no assurance that losses will not occur. Since the risk of
default is higher for lower-rated securities, Alliance's research and credit
analysis are a correspondingly more important aspect of its program for managing
a Fund's securities than would be the case if a Fund did not invest in lower-
rated securities.
In seeking to achieve a Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization of
capital losses on securities in a Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated securities of
comparable quality may be subject to wider fluctuations in yield and market
values than higher-rated securities under certain market conditions. Such
fluctuations after a security is acquired do not affect the cash income received
from that security but are reflected in the net asset value of a Fund. See the
Statement of
48
<PAGE>
Additional Information for each Fund that invests in lower-rated securities for
a description of the bond ratings of Moody's, S&P, Duff & Phelps and Fitch.
Certain lower-rated securities in which Growth Fund, and Utility Income Fund may
invest may contain call or buy-back features that permit the issuers thereof to
call or repurchase such securities. Such securities may present risks based on
prepayment expectations. If an issuer exercises such a provision, a Fund may
have to replace the called security with a lower yielding security, resulting in
a decreased rate of return to the Fund.
Non-Diversified Status. Each of Worldwide Privatization Fund, New Europe Fund,
All-Asia Investment Fund, Greater China '97 Fund and Global Environment Fund is
a "non-diversified" investment company, which means the Fund is not limited in
the proportion of its assets that may be invested in the securities of a single
issuer. However, each Fund intends to conduct its operations so as to qualify to
be taxed as a "regulated investment company" for purposes of the Code, which
will relieve the Fund of any liability for federal income tax to the extent its
earnings are distributed to shareholders. See "Dividends, Distributions and
Taxes" in each Fund's Statement of Additional Information. To so qualify, among
other requirements, the Fund will limit its investments so that, at the close of
each quarter of the taxable year, (i) not more than 25% of the Fund's total
assets will be invested in the securities of a single issuer, and (ii) with
respect to 50% of its total assets, not more than 5% of its total assets will be
invested in the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer. A Fund's
investments in U.S. Government securities and other regulated investment
companies are not subject to these limitations. Because each of Worldwide
Privatization Fund, New Europe Fund, Greater China '97 Fund and Global
Environment Fund and All-Asia Investment Fund is a non-diversified investment
company, it may invest in a smaller number of individual issuers than a
diversified investment company, and an investment in such Fund may, under
certain circumstances, present greater risk to an investor than an investment in
a diversified investment company.
Foreign government securities are not treated like U.S. Government securities
for purposes of the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the securities of
non-governmental issuers.
Year 2000 and Euro. Many computer systems and applications in use today process
transactions using two-digit date fields for the year of the transaction, rather
than the full four digits. If these systems are not modified or replaced,
transactions occurring after 1999 could be processed as year "1900", which could
result in processing inaccuracies and computer system failures. This is commonly
known as the Year 2000 problem. In addition to the Year 2000 problem, the
European Economic and Monetary Union has established a single currency, the Euro
Currency ("Euro") that will replace the national currency of certain European
countries effective January 1, 1999. Computer systems and applications must be
adapted in order to be able to process Euro sensitive information accurately
beginning in 1999. Should any of the computer systems employed by the Funds'
major service providers fail to process Year 2000 or Euro related information
properly, that could have a significant negative impact on the Funds' operations
and the services that are provided to the Funds' shareholders. In addition, to
the extent that the operations of issuers of securities held by the Funds are
impaired by the Year 2000 problem or the Euro, or prices of securities held by
the Funds decline as a result of real or perceived problems relating to the Year
2000 or the Euro, the value of the Funds' shares may be materially
affected.
With respect to the Year 2000, the Funds have been advised that Alliance, each
Fund's investment adviser, Alliance Fund Distributors, Inc. ("AFD"), each Fund's
principal underwriter, and Alliance Fund Services, Inc. ("AFS"), each Fund's
registrar, transfer agent and dividend disbursing agent (collectively,
"Alliance") began to address the Year 2000 issue several years ago in connection
with the replacement or upgrading of certain computer systems and applications.
During 1997, Alliance began a formal Year 2000 initiative, which established a
structured and coordinated process to deal with the Year 2000 issue. Alliance
reports that it has completed its assessment of the Year 2000 issues on its
domestic and international computer systems and applications. Currently,
management of Alliance expects that the required modifications for the majority
of its significant systems and applications that will be in use on January 1,
2000, will be completed and tested by the end of 1998. Full integration testing
of these systems and testing of interfaces with third-party suppliers will
continue through 1999. At this time, management of Alliance believes that the
costs associated with resolving this issue will not have a material adverse
effect on its operations or on its ability to provide the level of services it
currently provides to the Funds.
With respect to the Euro, the Funds have been advised that Alliance has
established a project team to assess changes that will be required in connection
with the introduction of the Euro. Alliance reports that its project team has
assessed all systems, including those developed or managed internally, as well
as those provided by vendors, in order to determine the modifications that will
be required to process accurately transactions denominated in Euro after 1998.
At this time, management of Alliance expects that the required modifications for
the introduction of the Euro will be completed and tested before the end of
1998. Management of Alliance believes that the costs associated with resolving
this issue will not have a material adverse effect on its operations or on its
ability to provide the level of services it currently provides to the
Funds.
The Funds and Alliance have been advised by the Funds' Custodians that they are
also in the process of reviewing their systems with the same goals. As of the
date of this prospectus, the Funds and Alliance have no reason to believe that
the Custodians will be unable to achieve these goals.
49
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE AND SALE
- --------------------------------------------------------------------------------
OF SHARES
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
You can purchase shares of any of the Funds at a price based on the next
calculation of their net asset value after receipt of a proper purchase order
either through broker-dealers, banks or other financial intermediaries, or
directly through AFD. The minimum initial investment in each Fund is $250. The
minimum for subsequent investments in each Fund is $50. Investments of $25 or
more are allowed under the automatic investment program of each Fund. Share
certificates are issued only upon request. See the Subscription Application and
Statements of Additional Information for more information.
Existing shareholders may make subsequent purchases by electronic funds transfer
if they have completed the appropriate section of the Subscription Application
or the Shareholder Options form obtained from AFS. Telephone purchase orders can
be made by calling 800-221-5672 and may not exceed $500,000.
Each Fund offers three classes of shares through this prospectus, Class A, Class
B and Class C. The Funds may refuse any order to purchase shares. In this
regard, the Funds reserve the right to restrict purchases of shares (including
through exchanges) when they appear to evidence a pattern of frequent purchases
and sales made in response to short-term considerations.
Class A Shares--Initial Sales Charge Alternative
You can purchase Class A shares at net asset value plus an initial sales charge,
as follows:
<TABLE>
<CAPTION>
Initial Sales Charge
as % of Commission to
Net Amount as % of Dealer/Agent as %
Amount Purchased Invested Offering Price of Offering Price
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $100,000 4.44% 4.25% 4.00%
- --------------------------------------------------------------------------------------
$100,000 to
less than $250,000 3.36 3.25 3.00
- --------------------------------------------------------------------------------------
$250,000 to
less than $500,000 2.30 2.25 2.00
- --------------------------------------------------------------------------------------
$500,000 to
less than $1,000,000 1.78 1.75 1.50
- --------------------------------------------------------------------------------------
</TABLE>
On purchases of $1,000,000 or more, you pay no initial sales charge but may pay
a contingent deferred sales charge ("CDSC") equal to 1% of the lesser of net
asset value at the time of redemption or original cost if you redeem within one
year; Alliance may pay the dealer or agent a fee of up to 1% of the dollar
amount purchased. Certain purchases of Class A shares may qualify for reduced or
eliminated sales charges in accordance with a 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 Statements of Additional
Information.
Class B Shares--Deferred Sales Charge Alternative
You can purchase Class B shares at net asset value without an initial sales
charge. A Fund will thus receive the full amount of your purchase. However, you
may pay a CDSC if you redeem shares within four years after purchase. The amount
of the CDSC (expressed as a percentage of the lesser of the current net asset
value or original cost) will vary according to the number of years from the
purchase of Class B shares until the redemption of those shares.
The amount of the CDSC for Class B shares for each Fund is as set forth below.
Class B shares of a Fund purchased prior to the date of this Prospectus may be
subject to a different CDSC schedule, which was disclosed in the Fund's
prospectus in use at the time of purchase and is set forth in the Fund's current
Statement of Additional Information.
<TABLE>
<CAPTION>
Year Since Purchase CDSC
--------------------------------------------
<S> <C>
First ................................ 4.0%
Second ............................... 3.0%
Third ................................ 2.0%
Fourth ............................... 1.0%
Fifth ................................ None
</TABLE>
Class B shares are subject to higher distribution fees than Class A shares for a
period (after which they convert to Class A shares) of eight years. The higher
fees mean a higher expense ratio, so Class B shares pay correspondingly lower
dividends and may have a lower net asset value than Class A shares.
Class C Shares--Asset-Based Sales Charge Alternative
You can purchase Class C shares at net asset value without any initial sales
charge. A Fund will thus receive the full amount of your purchase, and, if you
hold your shares for one year or more, you will receive the entire net asset
value of your shares upon redemption. Class C shares incur higher distribution
fees than Class A shares and do not convert to any other class of shares of the
Fund. The higher fees mean a higher expense ratio, so Class C shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares.
Class C shares redeemed within one year of purchase will be subject to a CDSC
equal to 1% of the lesser of their original cost or net asset value at the time
of redemption.
Application of the CDSC
Shares obtained from dividend or distribution reinvestment are not subject to
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. See the Statements of Additional Information.
How the Funds Value Their Shares
The net asset value of each Class of shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to that Class by the outstanding
shares of that Class. Shares are valued each day the Exchange is open as of the
close of regular trading (currently 4:00 p.m. Eastern time). The securities in a
Fund are valued at their current market value determined on the basis of market
quotations or, if such quotations are not readily
50
<PAGE>
available, such other methods as the Fund's Directors believe accurately
reflects fair market value.
Employee Benefit Plans
Certain employee benefit plans, including employer-sponsored tax-qualified
401(k) plans and other defined contribution retirement plans ("Employee Benefit
Plans"), may establish requirements as to the purchase, sale or exchange of
shares, including maximum and minimum initial investment requirements, that are
different from those described in this Prospectus. Employee Benefit Plans may
also not offer all classes of shares of the Funds. In order to enable
participants investing through Employee Benefit Plans to purchase shares of the
Funds, the maximum and minimum investment amounts may be different for shares
purchased through Employee Benefit Plans from those described in this
Prospectus. In addition, the Class A, Class B and Class C CDSC may be waived for
investments made through Employee Benefit Plans.
General
The decision as to which class of shares is more beneficial to you depends on
the amount and intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might consider Class
A shares. If you are making a smaller investment, you might consider Class B
shares because 100% of your purchase is invested immediately. If you are unsure
of the length of your investment, you might consider Class C shares because
there is no initial sales charge and no CDSC as long as the shares are held for
one year or more. Consult your financial agent. Dealers and agents may receive
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.
Each Fund offers a fourth class of shares, Advisor Class shares, by means of
separate prospectus. Advisor Class shares may be purchased and held solely by
(i) accounts established under a fee-based program sponsored and maintained by a
registered broker-dealer or other financial intermediary and approved by AFD,
(ii) a self-directed defined contribution employee benefit plan (e.g., a 401(k)
plan) that has at least 1,000 participants or $25 million in assets and (iii)
certain other categories of investors described in the prospectus for the
Advisor Class, including investment advisory clients of, and certain other
persons associated with, Alliance and its affiliates or the Funds. Advisor Class
shares are offered without any initial sales charge or CDSC and without an
ongoing distribution fee and are expected, therefore, to have different
performance than Class A, Class B or Class C shares. You can obtain more
information about Advisor Class shares by contacting AFS at 800-221-5672 or by
contacting your financial representative.
A transaction, service, administrative or other similar fee may be charged by
your broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of Class A, Class
B or Class C shares made through such financial representative. Such financial
intermediaries may also impose requirements with respect to the purchase, sale
or exchange of shares that are different from, or in addition to, those imposed
by a Fund, including requirements as to the minimum initial and subsequent
investment amounts.
In addition to the discount or commission paid to dealers or agents, AFD from
time to time pays additional cash or other incentives to dealers or agents in
connection with the sale of shares of the Funds. Such additional amounts may be
utilized, in whole or in part, in some cases together with other revenues of
such dealers or agents, to provide additional compensation to registered
representatives who sell shares of the Funds. On some occasions, such cash or
other incentives will be conditioned upon the sale of a specified minimum dollar
amount of the shares of a Fund and/or other Alliance Mutual Funds during a
specific period of time. Such incentives may take the form of payment for
attendance at seminars, meals, sporting events or theater performances, or
payment for travel, lodging and entertainment incurred in connection with travel
by persons associated with a dealer or agent to urban or resort locations within
or outside the United States. Such dealer or agent may elect to receive cash
incentives of equivalent amount in lieu of such payments.
HOW TO SELL SHARES
You may "redeem"(i.e., sell your shares in a Fund to the Fund) on any day the
Exchange is open, either directly or through your financial intermediary. The
price you will receive is the net asset value (less any applicable CDSC) next
calculated after the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for shares recently
purchased by check or electronic funds transfer, a Fund will not send proceeds
until it is reasonably satisfied that the check or electronic funds transfer has
been collected (which may take up to 15 days).
Selling Shares Through Your Broker
Your broker must receive your request before 4:00 p.m. Eastern time, and your
broker must transmit your request to the Fund by 5:00 p.m. Eastern time, for you
to receive that day's net asset value (less any applicable CDSC). Your broker is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.
Selling Shares Directly To A Fund
Send a signed letter of instruction or stock power form to AFS along with
certificates, if any, that represent the shares you want to sell. For your
protection, signatures must be guaranteed by a bank, a member firm of a national
stock exchange or other eligible guarantor institution. Stock power forms are
available from your financial intermediary, AFS, and many commercial banks.
Additional documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
800-221-5672
51
<PAGE>
Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to 800-221-5672.
Telephone redemption requests must be made by 4:00 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value. A shareholder who
has completed the appropriate section of the Subscription Application, or the
Shareholder Options form obtained from AFS, can elect to have the proceeds of
his or her redemption sent to his or her bank via an electronic funds transfer.
Proceeds of telephone redemptions also may be sent by check to a shareholder's
address of record. Redemption requests by electronic funds transfer may not
exceed $100,000 and redemption requests by check may not exceed $50,000 per day.
Telephone redemption is not available for shares held in nominee or "street
name" accounts or retirement plan accounts or shares held by a shareholder who
has changed his or her address of record within the previous 30 calendar
days.
General
The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, a Fund may suspend redemptions or postpone payment for up
to seven days or longer, as permitted by federal securities law. The Funds
reserve the right to close an account that through redemption has remained below
$200 for 90 days. Shareholders will receive 60 days' written notice to increase
the account value before the account is closed.
During drastic economic or market developments, you might have difficulty
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephonic requests to
purchase, sell or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it fails to do so. Dealers and
agents may charge a commission for handling telephonic requests. The telephone
service may be suspended or terminated at any time without notice.
SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more information about these
services or your account, call AFS's toll-free number, 800-221-5672. Some
services are described in the attached Subscription Application. A shareholder's
manual explaining all available services will be provided upon request. To
request a shareholder manual, call 800-227-4618.
HOW TO EXCHANGE SHARES
You may exchange your shares of any Fund for shares of the same class of other
Alliance Mutual Funds (including AFD Exchange Reserves, a money market fund
managed by Alliance). Exchanges of shares are made at the net asset values next
determined, without sales or service charges. Exchanges may be made by telephone
or written request. Telephone exchange requests must be received by AFS by 4:00
p.m. Eastern time on a Fund business day in order to receive that day's net
asset value.
Shares will continue to age without regard to exchanges for purposes of
determining the CDSC, if any, upon redemption and, in the case of Class B
shares, for the purposes of conversion to Class A shares. After an exchange,
your Class B shares will automatically convert to Class A shares in accordance
with the conversion schedule applicable to the Class B shares of the Alliance
Mutual Fund you originally purchased for cash ("original shares"). When
redemption occurs, the CDSC applicable to the original shares is applied.
Please read carefully the Prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to exchange
uncertificated shares. An exchange is a taxable capital transaction for federal
tax purposes. The exchange service may be changed, suspended or terminated on
60 days' written notice.
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
ADVISER
Alliance, which is a Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been retained under an
advisory agreement (the "Advisory Agreement") to provide investment advice and,
in general, to conduct the management and investment program of each Fund,
subject to the general supervision and control of the Directors of the Fund.
The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time that
each person has been primarily responsible, and each person's principal
occupation during the past five years.
<TABLE>
<CAPTION>
Principal occupation
during the past
Fund Employee; year; title five years
- -------------------------------------------------------------------------------------
<S> <C> <C>
Alliance Fund Alden M. Stewart since 1997-- Associated with
Executive Vice President of Alliance
Alliance Capital Management
Corporation (ACMC*)
Randall E. Haase since 1997-- Associated with
Senior Vice President of ACMC Alliance
Growth Fund Tyler Smith since inception-- Associated with
Senior Vice President of ACMC Alliance
Premier Growth Alfred Harrison since inception-- Associated with
Fund Vice Chairman of ACMC Alliance
Technology Fund Peter Anastos since 1992-- Associated with
Senior Vice President of ACMC Alliance
Gerald T. Malone since 1992-- Associated with
Senior Vice President of ACMC Alliance
Quasar Fund Alden M. Stewart since 1994-- (see above)
(see above)
Randall E. Haase since 1994-- (see above)
(see above)
International Fund Bruce W. Calvert since 1998-- Associated with
Vice Chairman and Chief Alliance
Investment Officer
of ACMC
International Premier Alfred Harrison since 1998-- (see above)
Growth Fund (see above)
Thomas Kamp since 1998-- Associated with
Senior Vice President of ACMC Alliance
Worldwide Privatization Mark H. Breedon since inception Associated with
Fund Senior Vice President of ACMC Alliance
and Director and Vice President
of Alliance Capital Limited **
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Principal occupation
during the past
Fund Employee; year; title five years
- ----------------------------------------------------------------------------------
<S> <C> <C>
New Europe Fund Steven Beinhacker since 1997-- Associated with
Vice President of ACMC Alliance
All-Asia Investment Hiroshi Motoki since 1998-- Associated with
Fund Senior Vice President of ACMC Alliance since
and director of Japanese/Asian 1994; prior
Equity research thereto,
associated with
Ford Motor
Company
Greater China '97 Matthew W. S. Lee since 1997-- Associated with
Fund Vice President of ACMC Alliance since
1997; prior
thereto,
associated
with National
Mutual Funds
Management
(Asia) since 1994
and James Capel
and Co. since
prior to 1994
Global Small Cap Alden M. Stewart since 1994-- (see above)
Fund (see above)
Randall E. Haase since 1994-- (see above)
(see above)
Ronald L. Simcoe since 1993-- Associated with
Vice President of ACMC Alliance
Global Environment Linda Bolton Weiser since 1998-- Associated with
Fund Vice President of ACMC Alliance
Balanced Shares Paul Rissman since 1997-- Associated with
Senior Vice President of ACMC Alliance
Utility Income Fund Paul Rissman since 1996-- (see above)
(See above)
Growth & Income Paul Rissman since 1994-- (see above)
Fund (see above)
Real Estate Daniel G. Pine since 1996-- Associated with
Investment Fund Senior Vice President of ACMC Alliance since
1996; prior
thereto, Senior
Vice President of
Desai Capital
Management
Real Estate David Kruth since 1997-- Associated with
Investment Fund Vice President of ACMC Alliance since
(cont.) 1997; prior
thereto Senior
Vice President of
the Yarmouth
Group
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The sole general partner of Alliance.
** An indirect wholly-owned subsidiary of Alliance.
Alliance is a leading international investment manager supervising client
accounts with assets as of June 30, 1998 totaling more than $262 billion (of
which approximately $107 billion represented the assets of investment
companies). Alliance's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations and
endowment funds. The 58 registered investment companies managed by Alliance
comprising 123 separate investment portfolios currently have over two million
shareholders. As of June 30, 1998, Alliance was an investment manager of
employee benefit plan assets for 32 of the Fortune 100 companies.
ACMC, the sole general partner of, and the owner of a 1% general partnership
interest in, Alliance, is an indirect wholly-owned subsidiary of The Equitable
Life Assurance Society of the United States ("Equitable"), one of the largest
life insurance companies in the United States, which is a wholly-owned
subsidiary of The Equitable Companies Incorporated, a holding company controlled
by AXA-UAP, a French insurance holding company. Certain information concerning
the ownership and control of Equitable by AXA-UAP is set forth in each Fund's
Statement of Additional Information under "Management of the Funds."
Performance of Similarly Managed Portfolios. In addition to managing the assets
of Premier Growth Fund, Mr. Harrison has ultimate responsibility for the
management of discretionary tax-exempt accounts of institutional clients managed
as described below without significant client-imposed restrictions "(Historical
Portfolios"). These accounts have substantially the same investment objectives
and policies and are managed in accordance with essentially the same investment
strategies and techniques as those for Premier Growth Fund, except for the
ability of Premier Growth Fund to use futures and options as hedging tools and
to invest in warrants. The Historical Portfolios are also not subject to certain
limitations, diversification requirements and other restrictions imposed under
the 1940 Act and the Code to which Premier Growth Fund, as a registered
investment company, is subject and which, if applicable to the Historical
Portfolios, may have adversely affected the performance results of the
Historical Portfolios. See "Investment Objective and Policies."
Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the nineteen full calendar years during which
Mr. Harrison has managed the Historical Portfolios as an employee of Alliance
and cumulatively through September 30, 1998. As of September 30, 1998, the
assets in the Historical Portfolios totaled approximately $12.3 billion and the
average size of an institutional account in the Historical Portfolio was $412
million. Each Historical Portfolio has a nearly identical composition of
investment holdings and related percentage weightings.
The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be payable by Premier
Growth Fund, which are higher than the fees imposed on the Historical Portfolio
and will result in a higher expense ratio and lower returns for Premier Growth
Fund. Expenses associated with the distribution of Class A, Class B and Class C
shares of Premier Growth Fund in accordance with the plan adopted by Premier
Growth Fund's Board of Directors pursuant to Rule 12b-1 under the 1940 Act
("distribution fees") are also excluded. See "Expense Information." The
performance data has also not been adjusted for corporate or individual taxes,
if any, payable by the account owners.
53
<PAGE>
Alliance has calculated the investment performance of the Historical Portfolios
on a trade-date basis. Dividends have been accrued at the end of the month and
cash flows weighted daily. Composite investment performance for all portfolios
has been determined on an asset weighted basis. New accounts are included in the
composite investment performance computations at the beginning of the quarter
following the initial contribution. The total returns set forth below are
calculated using a method that links the monthly return amounts for the
disclosed periods, resulting in a time-weighted rate of return.
As reflected below, the Historical Portfolios have over time performed favorably
when compared with the performance of recognized performance indices. The S&P
500 Index is a widely recognized, unmanaged index of market activity based upon
the aggregate performance of a selected portfolio of publicly traded common
stocks, including monthly adjustments to reflect the reinvestment of dividends
and other distributions. The S&P 500 Index reflects the total return of
securities comprising the Index, including changes in market prices as well as
accrued investment income, which is presumed to be reinvested. The Russell 1000
universe of securities is compiled by Frank Russell Company and is segmented
into two style indices, based on the capitalization-weighted median
book-to-price ratio of each of the securities. At each reconstitution, the
Russell 1000 constituents are ranked by their book-to-price ratio. Once so
ranked, the breakpoint for the two styles is determined by the median market
capitalization of the Russell 1000. Thus, those securities falling within the
top fifty percent of the cumulative market capitalization (as ranked by
descending book-to-price) become members of the Russell Price-Driven Indices.
The Russell 1000 Growth Index is, accordingly, designed to include those Russell
1000 securities with a greater-than-average growth orientation. In contrast with
the securities in the Russell Price-Driven Indices, companies in the Growth
Index tend to exhibit higher price-to-book and price-earnings ratios, lower
dividend yield and higher forecasted growth values.
To the extent Premier Growth Fund does not invest in U.S. common stocks or
utilizes investment techniques such as futures or options, the S&P 500 Index and
Russell 1000 Growth Index may not be substantially comparable to Premier Growth
Fund. The S&P 500 Index and Russell 1000 Growth Index are included to illustrate
material economic and market factors that existed during the time period shown.
The S&P 500 Index and Russell 1000 Growth Index do not reflect the deduction of
any fees. If Premier Growth Fund were to purchase a portfolio of securities
substantially identical to the securities comprising the S&P 500 Index or the
Russell 1000 Growth Index, Premier Growth Fund's performance relative to the
index would be reduced by Premier Growth Fund's expenses, including brokerage
commissions, advisory fees, distribution fees, custodial fees, transfer agency
costs and other administrative expenses, as well as by the impact on Premier
Growth Fund's shareholders of sales charges and income taxes.
The Lipper Growth Fund Index is prepared by Lipper Analytical Services, Inc. and
represents a composite index of the investment performance for the 30 largest
growth mutual funds. The composite investment performance of the Lipper Growth
Fund Index reflects investment management and administrative fees and other
operating expenses paid by these mutual funds and reinvested income dividends
and capital gain distributions, but excludes the impact of any income taxes and
sales charges.
The following performance data is provided solely to illustrate Mr. Harrison's
performance in managing the Historical Portfolios and the Premier Growth Fund as
measured against certain broad based market indices and against the composite
performance of other open-end growth mutual funds. Investors should not rely on
the following performance data of the Historical Portfolios as an indication of
future performance of Premier Growth Fund. The composite investment performance
for the periods presented may not be indicative of future rates of return. Other
methods of computing investment performance may produce different results, and
the results for different periods may vary.
Schedule of Composite Investment Performance--Historical Portfolios*
<TABLE>
<CAPTION>
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
Fund Total Return** Total Return Total Return Total Return
---- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1/1/98-
9/30/98*** 9.09% 15.27% 6.04% 9.44% 2.38%
Year ended December:
1997*** 27.05% 34.64% 33.36% 30.49% 25.30%
1996*** 18.84 22.06 22.96 23.12 17.48
1995*** 40.66 39.83 37.58 37.19 32.65
1994 (9.78) (4.82) 1.32 2.66 (1.57)
1993 5.35 10.54 10.08 2.90 11.98
1992 -- 12.18 7.62 5.00 7.63
1991 -- 38.91 30.47 41.16 35.20
1990 -- (1.57) (3.10) (0.26) (5.00)
1989 -- 38.80 31.69 35.92 28.60
1988 -- 10.88 16.61 11.27 15.80
1987 -- 8.49 5.25 5.31 1.00
1986 -- 27.40 18.67 15.36 15.90
1985 -- 37.41 31.73 32.85 30.30
1984 -- (3.31) 6.27 (.95) (2.80)
1983 -- 20.80 22.56 15.98 22.30
1982 -- 28.02 21.55 20.46 20.20
1981 -- (1.09) (4.92) (11.31) (8.40)
1980 -- 50.73 32.50 39.57 37.30
1979 -- 30.76 18.61 23.91 27.40
Cumulative total
return for the
period
January 1,
1979 to
September 30,
1998 -- 3,542% 2,064% 1,852% 1,613%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Total return is a measure of investment performance that is based upon the
change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
distributions. The basis of preparation of this data is described in the
preceding discussion. Total returns for Premier Growth Fund are for Class A
shares, with imposition of the maximum 4.25% sales charge.
** Assumes imposition of the maximum advisory fee charged by Alliance for any
Historical Portfolio for the period involved.
*** During this period, the Historical Portfolios differed from Premier Growth
Fund in that Premier Growth Fund invested a portion of its net assets in
warrants on equity securities in which the Historical Portfolios were
unable, by their investment restrictions, to purchase. In lieu of warrants,
the Historical Portfolios acquired the common stock upon which the warrants
were based.
54
<PAGE>
The average annual total returns presented below are based upon the cumulative
total return as of September 30, 1998 and, for more than one year, assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.
<TABLE>
<CAPTION>
Average Annual Total Returns
-----------------------------------------------------------------------
Premier Russell Lipper
Growth Historical S&P 500 1000 Growth
Fund Portfolios** Index Growth Index Fund Index
---- ---------- ----- ------------ ----------
<S> <C> <C> <C> <C> <C>
One year ................ 6.21% 13.19% 6.08% 11.11% 3.07%
Three years ............. 21.82 24.22 22.60 22.50 16.43
Five years .............. 20.23 20.70 19.91 20.80 15.52
Ten years ............... 19.98+ 19.70 17.29 18.07 15.01
Since January 1,
1979 .................. -- 19.97 16.84 16.23 15.47
- ----------------------------------------------------------------------------------------------------
</TABLE>
+ Since inception on 9/28/92
ADMINISTRATOR TO ALL-ASIA INVESTMENT FUND
Alliance has been retained by All-Asia Investment Fund under an administration
agreement (the "Administration Agreement") to perform administrative services
necessary for the operation of the Fund. For a description of such services, see
the Statement of Additional Information of the Fund.
CONSULTANT TO ALLIANCE WITH RESPECT TO GREATER CHINA COUNTRIES
In connection with its provision of advisory services to Greater China '97 Fund.
Alliance has retained at its expense as a consultant New Alliance, a joint
venture company headquartered in Hong Kong which was formed in 1997 by Alliance
and Sun Hung Kai Properties Limited ("SHKP"). New Alliance provides Alliance
with ongoing, current and comprehensive information and analysis of conditions
and developments in Greater China countries consisting of, but not limited to,
statistical and factual research and assistance with respect to economic,
financial, political, technological and social conditions and trends in Greater
China countries, including information on markets and industries. In addition to
its own staff of professionals, New Alliance has access to the expertise and
personnel of SHKP, one of Hong Kong's preeminent property and business groups.
SHKP is one of the largest enterprises in Hong Kong measured by market
capitalization and has considerable expertise in evaluating business and market
conditions in Hong Kong and the other Greater China countries. Its activities
complementary to property development include insurance and estate management,
and SHKP is diversified as well into telecommunications and infrastructure
projects.
CONSULTANT TO ALLIANCE WITH RESPECT TO INVESTMENT IN REAL ESTATE SECURITIES
Alliance, with respect to investment in real estate securities, has retained as
a consultant CB Commercial Richard Ellis, Inc. ("CBRE"), a publicly held company
and the largest real estate services company in the United States, comprised of
real estate brokerage, property and facilities management, and real estate
finance and investment advisory activities. In 1997, CBRE completed 22,100 sale
and lease transactions, managed over 6,600 client properties, created over $5
billion in mortgage originations, and completed over 3,600 appraisal and
consulting assignments. In addition, they advised and managed for institutions
over $4 billion in real estate investments. CBRE will make available to Alliance
the CBRE's National Real Estate Index, which gathers, analyzes and publishes
targeted research data for the 66 largest U.S. markets, based on a variety of
public-sector and private-sector sources as well as CBRE's proprietary database
of approximately 80,000 property transactions representing over $500 billion of
investment property. This information provides a substantial component of the
research and data used to create the REIToScore model. As a consultant, CBRE
provides to Alliance, at Alliance's expense, such in-depth information regarding
the real estate market, the factors influencing regional valuations and analysts
of recent transactions in office, retail, industrial and multi-family properties
as Alliance shall from time to time request. CBRE will not furnish advice or
make recommendations regarding the purchase or sale of securities by the Fund
nor will it be responsible for making investment decisions involving Fund
assets.
CBRE is one of the three largest fee-based property management firms in the
United States, the largest commercial real estate lease brokerage firm in the
country, the largest investment property brokerage firm in the country, as well
as one of the largest publishers of real estate research, with approximately
8,000 employees worldwide. CBRE will provide Alliance with exclusive access to
its REIT o Score model which ranks approximately 142 REITS based on the relative
attractiveness of the property markets in which they own real estate. This model
scores the approximately 18,000 individual properties owned by these companies.
REIT o Score is in turn based on CBRE's National Real Estate Index which
gathers, analyzes and publishes targeted research for the 66 largest U.S. real
estate markets based on a variety of public- and private-sector sources as well
as CBRE's proprietary database of 80,000 commercial property transactions
representing over $500 billion of investment property and over 2,500 tracked
properties which report rent and expense data quarterly. CBRE has previously
provided access to its REIT o Score model results primarily to the institutional
market through subscriptions. The model is no longer provided to any research
publications and Real Estate Investment Fund is currently the only mutual fund
available to retail investors that has access to CBRE's REIT o Score model.
Distribution Services Agreements
Rule 12b-1 adopted by the Commission under the 1940 Act permits an investment
company to pay expenses associated with the distribution of its shares in
accordance with a duly adopted plan. Each Fund has adopted one or more "Rule
12b-1 plans" (for each Fund, a "Plan") and has entered into a Distribution
Services Agreement (the "Agreement") with AFD. Pursuant to its Plan, a Fund pays
to AFD a Rule 12b-1 distribution services fee, which may not exceed an annual
rate of .30% (.50% with respect to Growth Fund and Premier Growth Fund) of the
Fund's aggregate average daily net assets attributable to the Class A shares,
1.00% of the Fund's aggregate average daily net assets attributable to the Class
B shares and 1.00% of the Fund's aggregate average daily net
55
<PAGE>
assets attributable to the Class C shares, for distribution expenses. The
Directors of Growth Fund currently limit payments with respect to Class A shares
under the Plan to .30% of the Fund's aggregate average daily net assets
attributable to Class A shares. The Directors of Premier Growth Fund currently
limit payments under the Plan with respect to sales of Class A shares made after
November 1993 to .30% of the Fund's aggregate average daily net assets. The
Plans provide that a portion of the distribution services fee in an amount not
to exceed .25% of the aggregate average daily net assets of each Fund
attributable to each of the Class A, Class B and Class C shares constitutes a
service fee used for personal service and/or the maintenance of shareholder
accounts.
The Plans provide that AFD will use the distribution services fee received from
a Fund in its entirety for payments (i) to compensate broker-dealers or other
persons for providing distribution assistance, (ii) to otherwise promote the
sale of shares of the Fund, and (iii) to compensate broker-dealers, depository
institutions and other financial intermediaries for providing administrative,
accounting and other services with respect to the Fund's shareholders. In this
regard, some payments under the Plans are used to compensate financial
intermediaries with trail or maintenance commissions in an amount equal to .25%,
annualized, with respect to Class A shares and Class B shares, and 1.00%,
annualized, with respect to Class C shares, of the assets maintained in a Fund
by their customers. Distribution services fees received from the Funds, except
Growth Fund, with respect to Class A shares will not be used to pay any interest
expenses, carrying charges or other financing costs or allocation of overhead of
AFD. Distribution services fees received from the Funds, with respect to Class B
and Class C shares, may be used for these purposes. The Plans also provide that
Alliance may use its own resources to finance the distribution of each Fund's
shares.
The Funds are not obligated under the Plans to pay any distribution services fee
in excess of the amounts set forth above. Except as noted below for Growth Fund,
with respect to Class A shares of each Fund, distribution expenses accrued by
AFD in one fiscal year may not be paid from distribution services fees received
from the Fund in subsequent fiscal years. Except as noted below for Growth Fund
AFD's compensation with respect to Class B and Class C shares under the Plans of
the other Funds is directly tied to its expenses incurred. Actual distribution
expenses for such Class B and Class C shares for any given year, however, will
probably exceed the distribution services fees payable under the applicable Plan
with respect to the class involved and, in the case of Class B and Class C
shares, payments received from CDSCs. The excess will be carried forward by AFD
and reimbursed from distribution services fees payable under the Plan with
respect to the class involved and, in the case of Class B and Class C shares,
payments subsequently received through CDSCs, so long as the Plan and the
Agreement are in effect. Since AFD's compensation under the Plans of Growth Fund
is not directly tied to the expenses incurred by AFD, the amount of compensation
received by it under the applicable Plan during any year may be more or less
than its actual expenses.
Unreimbursed distribution expenses incurred as of the end of each Fund's most
recently completed fiscal period, and carried over for reimbursement in future
years in respect of the Class B and Class C shares for all Funds were, as of
that time, as follows:
<TABLE>
<CAPTION>
Amount of Unreimbursed Distribution Expenses
(as % of Net Assets of Class)
--------------------------------------------
Class B Class C
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Fund $ 3,782,063 (5.37%) $1,025,156 (5.43%)
Premier Growth Fund $20,874,319 (2.43%) $1,413,557 (0.79%)
Technology Fund $32,259,341 (3.06%) $1,464,569 (0.80%)
Quasar Fund $15,242,262 (3.03%) $1,262,697 (0.90%)
International Fund $ 2,638,659 (3.70%) $ 838,475 (4.10%)
International Premier Growth
Fund $ 325,310 (4.62%) $ 15,653 (1.54%)
Worldwide Privatization Fund $ 6,609,791 (4.23%) $ 537,949 (2.02%)
New Europe Fund $ 4,377,262 (3.19%) $ 741,808 (1.87%)
All-Asia Investment Fund $ 1,690,408 (14.78%) $ 162,319 (8.73%)
Greater China '97 Fund $ 533,473 (34.39%) $ 18,510 (18.19%)
Global Small Cap Fund $ 2,594,264 (6.68%) $ 676,624 (7.14%)
Balanced Shares $ 2,579,772 (5.41%) $ 608,865 (5.61%)
Utility Income Fund $ 1,400,456 (9.47%) $ 456,135 (13.37%)
Growth and Income Fund $11,066,118 (2.42%) $1,326,535 (1.25%)
Real Estate Investment Fund $12,995,878 (4.83%) $ 699,723 (1.01%)
- ------------------------------------------------------------------------------
</TABLE>
The Plans are in compliance with rules of the National Association of Securities
Dealers, Inc. which effectively limit the annual asset-based sales charges and
service fees that a mutual fund may pay on a class of shares to .75% and .25%,
respectively, of the average annual net assets attributable to that class. The
rules also limit the aggregate of all front-end, deferred and asset-based sales
charges imposed with respect to a class of shares by a mutual fund that also
charges a service fee to 6.25% of cumulative gross sales of shares of that
class, plus interest at the prime rate plus 1% per annum.
The Glass-Steagall Act and other applicable laws may limit the ability of a bank
or other depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Funds' management, based on the
advice of counsel, these laws do not prohibit such depository institutions from
providing services for investment companies such as the administrative,
accounting and other services referred to in the Agreements. In the event that a
change in these laws prevented a bank from providing such services, it is
expected that other services arrangements would be made and that shareholders
would not be adversely affected. The State of Texas requires that shares of a
Fund may be sold in that state only by dealers or other financial institutions
that are registered there as broker-dealers.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
- --------------------------------------------------------------------------------
AND TAXES
- --------------------------------------------------------------------------------
Dividends and Distributions
If you receive an income dividend or capital gains distribution in cash you may,
within 120 days following the date of its payment, reinvest the dividend or
distribution in additional shares of that Fund without charge by returning to
Alliance,
56
<PAGE>
with appropriate instructions, the check representing such dividend or
distribution. Thereafter, unless you otherwise specify, you will be deemed to
have elected to reinvest all subsequent dividends and distributions in shares of
that Fund. Each income dividend and capital gains distribution, if any, declared
by a Fund on its outstanding shares will, at the election of each shareholder,
be paid in cash or in additional shares of the same class of shares of that Fund
having an aggregate net asset value as of the close of business on the day
following the declaration date of such dividend or distribution equal to the
cash amount of such income dividend or distribution. Election to receive
dividends and distributions in cash or shares is made at the time shares are
initially purchased and may be changed at any time prior to the record date for
a particular dividend or distribution. Cash dividends can be paid by check or,
if the shareholder so elects, electronically via the ACH network. There is no
sales or other charge in connection with the reinvestment of dividends and
capital gains distributions. Dividends paid by a Fund, if any, with respect to
Class A, Class B and Class C shares will be calculated in the same manner at the
same time on the same day and will be in the same amount, except that the higher
distribution services fees applicable to Class B and C shares, and any
incremental transfer agency costs relating to Class B and Class C shares, will
be borne exclusively by the class to which they relate.
While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by such Fund of income and capital gains
from investments. There is no fixed dividend rate, and there can be no assurance
that a Fund will pay any dividends or realize any capital gains. Since REITs pay
distributions based on cash flow, without regard to depreciation and
amortization, it is likely that a portion of the distributions paid to Real
Estate Investment Fund and subsequently distributed to shareholders may be a
nontaxable return of capital. The final determination of the amount of a Fund's
return of capital distributions for the period will be made after the end of
each calendar year.
If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.
Foreign Income Taxes
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such foreign taxes), but
there can be no assurance that any Fund will be able to do so. Furthermore, a
shareholder's ability to claim a foreign tax credit or deduction in respect of
foreign taxes paid by a Fund may be subject to certain limitations imposed by
the Code, as a result of which a shareholder may not be permitted to claim a
full credit or deduction for the amount of such taxes.
U.S. Federal Income Taxes
Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. Qualification as a regulated investment company relieves that
Fund of federal income taxes on that part of its taxable income, including net
capital gain, which it pays out to its shareholders. Dividends out of net
ordinary income and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of corporate
shareholders, such dividends may be eligible for the dividends-received
deduction, except that the amount eligible for the deduction is limited to the
amount of qualifying dividends received by the Fund. Distributions received from
REITs or from foreign corporations generally do not constitute qualifying
dividends. A corporation's dividends-received deduction generally will be
disallowed unless the corporation holds shares in the Fund at least 46 days
during the 90-day period beginning 45 days before the date on which the
corporation becomes entitled to receive the dividend. Furthermore, the
dividends-received deduction will be disallowed to the extent a corporation's
investment in shares of a Fund is financed with indebtedness.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gain,
regardless of how long a shareholder has held shares in a Fund. Distributions of
net captial gain are not eligible for the dividends-received deduction referred
to above.
Under current federal tax law, the amount of an income dividend or capital
gains distribution declared by a Fund during October, November or December of a
year to shareholders of record as of a specified date in such a month that is
paid during January of the following year is includable in the prior year's
taxable income of shareholders that are calendar year taxpayers.
Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the net asset value of such shares by the amount of
such dividend or distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder, although in effect a
return of capital to that particular shareholder, would be taxable to him or her
as described above. If a shareholder held shares six months or less and during
that period received a distribution of net capital gain, any loss realized on
the sale of such shares during such six-month period would be a long-term
capital loss to the extent of such distribution.
A dividend or capital gains distribution with respect to shares of a Fund held
by a tax-deferred or qualified plan, such as an individual retirement account,
403(b)(7) retirement plan or corporate pension or profit-sharing plan, generally
will not be taxable to the plan. Distributions from such plans will be
57
<PAGE>
taxable to individual participants under applicable tax rules without regard to
the character of the income earned by the qualified plan.
A Fund will be required to withhold 31% of any payments made to a shareholder if
the shareholder has not provided a certified taxpayer identification number to
the Fund, or the Secretary of the Treasury notifies a Fund that a shareholder
has not reported all interest and dividend income required to be shown on the
shareholder's Federal income tax return.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of a Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant) any further returns of capital will be taxable as capital gain. See
"Dividends, Distributions and Taxes" in the Statement of Additional Information.
Shareholders will be advised annually as to the federal tax status of dividends
and capital gains and return of capital distributions made by a Fund for the
preceding year. Shareholders are urged to consult their tax advisers regarding
their own tax situation. Distributions by a Fund may be subject to state and
local taxes.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, a Fund may
consider sales of its shares as a factor in the selection of dealers to enter
into portfolio transactions with the Fund.
ORGANIZATION
Each of the following Funds is a Maryland corporation organized in the year
indicated: The Alliance Fund, Inc. (1938), Alliance Balanced Shares, Inc.
(1932), Alliance Premier Growth Fund, Inc. (1992), Alliance Technology Fund,
Inc. (1980), Alliance Quasar Fund, Inc. (1968), Alliance International Premier
Growth Fund (1997), Alliance Worldwide Privatization Fund, Inc. (1994), Alliance
New Europe Fund, Inc. (1990), Alliance All-Asia Investment Fund, Inc. (1994),
Alliance Greater China '97 Fund (1997), Alliance Global Small Cap Fund, Inc.
(1966), Alliance Global Environment Fund, Inc. (1990), Alliance Utility Income
Fund, Inc. (1993), Alliance Growth and Income Fund, Inc. (1932), and Alliance
Real Estate Investment Fund, Inc. (1996). Each of the following Funds is either
a Massachusetts business trust or a series of a Massachusetts business trust
organized in the year indicated: Alliance Growth Fund (a series of The Alliance
Portfolios) (1987), and Alliance International Fund (1980). Prior to August 2,
1993, The Alliance Portfolios was known as The Equitable Funds and Growth Fund
was known as The Equitable Growth Fund.
It is anticipated that annual shareholder meetings will not be held; shareholder
meetings will be held only when required by federal or state law. Shareholders
have available certain procedures for the removal of Directors.
A shareholder in a Fund will be entitled to share pro rata with other holders of
the same class of shares all dividends and distributions arising from the Fund's
assets and, upon redeeming shares, will receive the then current net asset value
of the Fund represented by the redeemed shares less any applicable CDSC. The
Funds are empowered to establish, without shareholder approval, additional
portfolios, which may have different investment objectives and policies than
those of the Funds, and additional classes of shares within the Funds. If an
additional portfolio or class were established in a Fund, each share of the
portfolio or class would normally be entitled to one vote for all purposes.
Generally, shares of each portfolio and class would vote together as a single
class on matters, such as the election of Directors, that affect each portfolio
and class in substantially the same manner. Class A, B, C and Advisor Class
shares have identical voting, dividend, liquidation and other rights, except
that each class bears its own transfer agency expenses, each of Class A, Class B
and Class C shares of each Fund bears its own distribution expenses and Class B
shares and Advisor Class shares convert to Class A shares under certain
circumstances. Each class of shares of each Fund votes separately with respect
to a Fund's Rule 12b-1 distribution plan and other matters for which separate
class voting is appropriate under applicable law. Shares are freely
transferable, are entitled to dividends as determined by the Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund. Since
this Prospectus sets forth information about all the Funds, it is theoretically
possible that a Fund might be liable for any materially inaccurate or incomplete
disclosure in this Prospectus concerning another Fund. Based on the advice of
counsel, however, the Funds believe that the potential liability of each Fund
with respect to the disclosure in this Prospectus extends only to the disclosure
relating to that Fund. Certain additional matters relating to a Fund's
organization are discussed in its Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent
and dividend-disbursing agent for a fee based upon the number of shareholder
accounts maintained for the Funds. The transfer agency fee with respect to the
Class B shares will be higher than the transfer agency fee with respect to the
Class A shares or Class C shares.
58
<PAGE>
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.
PERFORMANCE INFORMATION
From time to time, the Funds advertise their "total return," which is computed
separately for Class A, Class B and Class C shares. Such advertisements disclose
a Fund's average annual compounded total return for the periods prescribed by
the Commission. A Fund's total return for each such period is computed by
finding, through the use of a formula prescribed by the Commission, the average
annual compounded rate of return over the period that would equate an assumed
initial amount invested to the value of the investment at the end of the period.
For purposes of computing total return, income dividends and capital gains
distributions paid on shares of a Fund are assumed to have been reinvested when
paid and the maximum sales charges applicable to purchases and redemptions of a
Fund's shares are assumed to have been paid.
Balanced Shares, Growth and Income Fund, Real Estate Investment Fund and Utility
Income Fund may also advertise their "yield," which is also computed separately
for Class A, Class B and Class C shares. A Fund's yield for any 30-day (or one-
month) period is computed by dividing the net investment income per share earned
during such period by the maximum public offering price per share on the last
day of the period, and then annualizing such 30-day (or one-month) yield in
accordance with a formula prescribed by the Commission which provides for
compounding on a semi-annual basis.
Real Estate Investment Fund, Balanced Shares, Utility Income Fund and Growth and
Income Fund may also state in sales literature an "actual distribution rate" for
each class which is computed in the same manner as yield except that actual
income dividends declared per share during the period in question are
substituted for net investment income per share. The actual distribution rate is
computed separately for Class A, Class B and Class C shares.
A Fund's advertisements may quote performance rankings or ratings of a Fund by
financial publications or independent organizations such as Lipper Analytical
Services, Inc. and Morningstar, Inc. or compare a Fund's performance to various
indices.
ADDITIONAL INFORMATION
This Prospectus and the Statements of Additional Information, which have been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Funds with the Commission under the
Securities Act. Copies of the Registration Statements may be obtained at a
reasonable charge from the Commission or may be examined, without charge, at the
offices of the Commission in Washington, D.C.
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
This prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this prospectus relating to any
other Fund. See "General Information--Organization."
59
<PAGE>
================================================================================
ALLIANCE STOCK FUNDS
SUBSCRIPTION APPLICATION
================================================================================
The Alliance Fund
Growth Fund
Premier Growth Fund
Technology Fund
Quasar Fund
International Fund
International Premier Growth Fund
Worldwide Privatization Fund
New Europe Fund
All-Asia Investment Fund
Alliance Greater China '97 Fund
Global Small Cap Fund
Global Environment Fund
Balanced Shares
Utility Income Fund
Growth & Income Fund
Real Estate Investment Fund
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:
-- 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.
-- Transfer on Death:
o Ensure that your state participates
-- 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.
-- 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
<PAGE>
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
any of your Alliance Funds in one of three ways. First, by a periodic
withdrawal ($25 minimum) directly from your bank account and invested into an
Alliance Fund. Second, you can direct your distributions (dividends and capital
gains) from one Alliance Fund into another Fund. Or third, you can
automatically exchange monthly ($25 minimum) shares of one Alliance Fund for
shares of another Fund. To elect one of these options, complete the appropriate
portion of Section 4A & 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 one of your fund accounts. 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.
================================================================================
For Literature Call: (800) 227-4618
================================================================================
<PAGE>
The Alliance Stock Funds Subscription Application
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
1. YOUR ACCOUNT REGISTRATION (Please Print in Capital Letters and Mark Check Boxes Where Applicable)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
|_| 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)
|_|_|_|-|_|_|-|_|_|_|_| If Uniform Gift/Transfer
Social Security Number of Owner or Minor (required to open account) to Minor Account:
|_| |_| Minor's State of Residence
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
|_| 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
</TABLE>
Alliance Capital[LOGO](R)
80841GEN-TASFApp=P1
1
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
3. Your Initial Investment The minimum investment is $250 per fund.
The maximum investment in Class B is $250,000; Class C is $1,000,000.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
I hereby subscribe for shares of the following Alliance Stock Fund(s) and elect distribution options as indicated.
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
Broker/Dealer Use Only: Wire Confirm # - -----------------------------
|_|_|_|_|_|_|_|_| 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).
- ------------- ============== ======================== =============================
Indicate three Distributions Options
digit Fund *Check One*
number located Indicate Dollar Amount =============================
below Dividends Captital Gains
Make all ============== ======================== =============================
checks*
payable to: |_|_|_| $ R C D R C D
Alliance
-------- |_|_|_| $ R C D R C D
Funds
----- |_|_|_| $ R C D R C D
- -------------
|_|_|_| $ R C D R C D
==========================
Total Investment $
==========================
*Cash and money orders are not accepted
- --------------------------------------------------------------------------------------------------------------------------
Alliance Stock Fund Names and Numbers
- --------------------------------------------------------------------------------------------------------------------------
============= ============== =================
Contingent
Initial Sales Deferred Sales Asset-Based Sales
Charge Charge Charge
A B C
============= ============== =================
Domestic The Alliance Fund 044 043 344
Growth Fund 031 001 331
Premier Growth Fund 078 079 378
Technology Fund 082 282 382
Quasar Fund 026 029 326
Global International Fund 040 041 340
International Premier Growth 179 279 379
Worldwide Privatization Fund 112 212 312
New Europe Fund 062 058 362
All-Asia Investment Fund 118 218 318
Alliance Greater China '97 Fund 160 260 360
Global Small Cap Fund 045 048 345
Global Environment Fund 181 281 381
Total Return Balanced Shares 096 075 396
Utility Income Fund 009 209 309
Real Estate Investment Fund 110 210 310
Growth & Income Fund 094 074 394
</TABLE>
80841GEN-TASFApp-P2
2
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
4. Your Shareholder Options
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
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
Frequency:
2- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_| M = monthly
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly
A = Annually
3- |_|_|_| |_|_|_|_| |_|_| , |_|_|_| .00 |_|
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
*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 ($25 minimum) 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: o Review the information in the Prospectus about telephone transaction services.
o 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 that the check or electronic funds transfer has been collected, normally 15
calendar days after the purchase date.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<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.
<TABLE>
<S> <C> <C> <C> <C> <C>
1- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_]
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
Frequency:
2- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_] M = monthly
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly
A = annually
3- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_]
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
</TABLE>
Please send my SWP proceeds to:
[_] My Address of Record (via check)
[_] The Payee and address specified in section 4E (via check)(Medallion
Signature Guarantee required)
[_] My checking account-via EFT (complete section 4D) Your bank must be a
member of the National Automated Clearing House Association (NACHA)
in order for you to receive SWP proceeds directly into your bank
account. Otherwise payment will be made by check
D. Bank Information This bank account information will be used for:
[_] Distributions (Section 3) [_] Telephone Transactions
(Section 4B)
[_] Automatic Investments (Section 4A) [_] Withdrawals (Section 4C)
Please Tape a Pre-printed Voided Check Here*
103
J. Smith
123 Main Street
ANYTOWN, USA 12345 ____ 19 __
Pay to the
Order of ________________________________________$ _______________
____________________________________________________________Dollars
YOUR BANK
123 STREET
ANYTOWN, USA 12345 VOID
Note ___________________________ _______________________________
:000000000:103 000000000:765
ABA Routing Number Check Bank Account Number
Number
* 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
80887GEN-TASFApp-Advisor-P4
4
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------
4. YOUR SHAREHOLDER OPTIONS(CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
E. THIRD PARTY PAYMENT DETAILS Your signautre(s) in Section 5 must be Medallion Signature Guaranteed if your account is
not maintained by a dealer/broker. 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 privilieges, 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
</TABLE>
5
<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
Alliance Capital [LOGO]
80841GEN-TASFApp-P6
6
<PAGE>
<PAGE>
The Alliance
- --------------------------------------------------------------------------------
Stock Funds
- --------------------------------------------------------------------------------
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
Advisor Class
November 2, 1998
Domestic Stock Funds Global Stock Funds
- -The Alliance Fund -Alliance International Fund
- -Alliance Growth Fund
- -Alliance Premier Growth Fund -Alliance International
- -Alliance Technology Fund Premier Growth Fund
- -Alliance Quasar Fund -Alliance Worldwide
Privatization Fund
-Alliance New Europe Fund
-Alliance All-Asia Investment
Fund
-Alliance Greater China '97
Fund
-Alliance Global Small Cap
Fund
-Alliance Global
Environment Fund
Total Return Funds
-Alliance Balanced Shares
-Alliance Utility Income Fund
-Alliance Growth and Income Fund
-Alliance Real Estate Investment Fund
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
The Funds at a Glance................................................. 2
Expense Information................................................... 4
Financial Highlights.................................................. 7
Glossary.............................................................. 11
Description of the Funds.............................................. 12
Investment Objectives and Policies............................... 12
Additional Investment Practices.................................. 24
Certain Fundamental Investment Policies.......................... 31
Risk Considerations.............................................. 34
Purchase and Sale of Shares........................................... 41
Management of the Funds............................................... 43
Dividends, Distributions and Taxes.................................... 47
Conversion Feature.................................................... 48
General Information................................................... 48
</TABLE>
Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return. The Domestic Stock Funds
invest mainly in the United States equity markets and the Global Stock Funds
diversify their investments among equity markets around the world, while the
Total Return Funds invest in both equity and fixed-income securities.
Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, call or write Alliance Fund Services, Inc. at the indicated address
or call the "For Literature" telephone number shown above.
This Prospectus offers the Advisor Class shares of each Fund which may be
purchased at net asset value without any initial or contingent deferred sales
charges and without ongoing distribution expenses. Advisor Class shares are
offered solely to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors, Inc., each Fund's
principal underwriter, (ii) participants in self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that meet certain minimum standards
and (iii) certain other categories of investors described in the Prospectus,
including investment advisory clients of, and certain other persons associated
with, Alliance Capital Management L.P. and its affiliates or the Funds. See
"Purchase and Sale of Shares."
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
Investors are advised to read this Prospectus carefully and to retain it for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
ALLIANCE(R)
Investing without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>
The Funds At A Glance
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.
The Funds' Investment Adviser Is . . .
Alliance Capital Management L.P. ("Alliance"), a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including more than 120 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world with over $262
billion in assets under management as of June 30, 1998. Alliance provides
investment management services to employee benefit plans for 32 of the FORTUNE
100 companies.
Domestic Stock Funds
Alliance Fund
Seeks . . . Long-term growth of capital and income primarily through investment
in common stocks.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, have the potential to achieve capital appreciation.
Growth Fund
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities.
Invests Principally in . . . A diversified portfolio of equity securities of
companies with a favorable outlook for earnings and whose rate of growth is
expected to exceed that of the United States economy over time.
Premier Growth Fund
Seeks . . . Long-term growth of capital by investing in the equity securities of
a limited number of large, carefully selected, high-quality American companies
from a relatively small universe of intensively researched companies.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, are likely to achieve superior earnings growth.
Normally, approximately 40-50 companies will be represented in the Fund's
investment portfolio. The Fund's investments in 25 of these companies most
highly regarded at any point in time by Alliance will usually constitute
approximately 70% of the Fund's net assets.
Technology Fund
Seeks . . . Growth of capital through investment in companies expected to
benefit from advances in technology.
Invests Principally in . . . A diversified portfolio of securities of companies
which use technology extensively in the development of new or improved products
or processes.
Quasar Fund
Seeks . . . Growth of capital by pursuing aggressive investment policies.
Invests Principally in . . . A diversified portfolio of equity securities of any
company and industry and in any type of security which is believed to offer
possibilities for capital appreciation.
Global Stock Funds
International Fund
Seeks . . . A total return on its assets from long-term growth of capital and
from income.
Invests Principally in . . . A diversified portfolio of marketable securities of
established non-United States companies, companies participating in foreign
economies with prospects for growth, and foreign government securities.
International Premier Growth Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A diversified portfolio of equity securities of a
limited number of large, carefully selected, high-quality non-U.S. companies
that are judged likely to achieve superior earnings growth.
Worldwide Privatization Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities
issued by enterprises that are undergoing, or have undergone, privatization. The
balance of the Fund's investment portfolio will include securities of companies
that are believed by Alliance to be beneficiaries of the privatization process.
New Europe Fund
Seeks . . . Long-term capital appreciation through investment primarily in the
equity securities of companies based in Europe.
Invests Principally in . . . A non-diversified portfolio of equity securities of
European companies.
All-Asia Investment Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities of
Asian/Pacific companies.
Greater China '97 Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities of
Greater China companies.
Global Small Cap Fund
Seeks . . . Long-term growth of capital.
Invests Principally in . . . A diversified global portfolio of the equity
securities of small capitalization companies.
Global Environment Fund
Seeks . . . Long-term capital appreciation.
2
<PAGE>
Invests Principally in . . . A non-diversified portfolio of equity securities of
companies expected to benefit from advances or improvements in products,
processes or services intended to foster the protection of the environment.
Total Return Funds
Balanced Shares
Seeks . . . A high return through a combination of current income and capital
appreciation.
Invests Principally in . . . A diversified portfolio of equity and fixed-income
securities such as common and preferred stocks, U.S. Government and agency
obligations, bonds and senior debt securities.
Utility Income Fund
Seeks . . . Current income and capital appreciation through investment in the
utilities industry.
Invests Principally in . . . A diversified portfolio of equity securities, such
as common stocks, securities convertible into common stocks and rights and
warrants to subscribe for purchase of common stocks, and in fixed-income
securities such as bonds and preferred stocks.
Growth and Income Fund
Seeks . . . Income and appreciation through investment in dividend-paying common
stocks of quality companies.
Invests Principally in . . . A diversified portfolio of dividend-paying common
stocks of good quality, and, under certain market conditions, other types of
securities, including bonds, convertible bonds and preferred stocks.
Real Estate Investment Fund
Seeks . . . Total return on its assets from long-term growth of capital and from
income.
Invests Principally in . . . A diversified portfolio of equity securities of
issuers that are primarily engaged in or related to the real estate industry.
Distributions . . .
Balanced Shares, Utility Income Fund, Growth and Income Fund and Real Estate
Investment Fund intend to make distributions quarterly to shareholders. These
distributions may include ordinary income and capital gain (each of which is
taxable) and a return of capital (which is generally nontaxable). See
"Dividends, Distributions and Taxes."
A Word About Risk . . .
The price of the shares of the Alliance Stock Funds will fluctuate as the daily
prices of the individual securities in which they invest fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost. With
respect to those Funds permitted to invest in foreign currency denominated
securities, these fluctuations may be magnified by changes in foreign exchange
rates. Investment in the Global Stock Funds involves risks not associated with
funds that invest primarily in securities of U.S. issuers. While the Funds
invest principally in common stocks and other equity securities, in order to
achieve their investment objectives the Funds may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
involve risks different from, and, in certain cases, greater than, the risks
presented by more traditional investments. An investment in the Real Estate
Investment Fund is subject to certain risks associated with the direct ownership
of real estate in general, including possible declines in the value of real
estate, general and local economic conditions, environmental problems and
changes in interest rates. Investments by Greater China '97 Fund in Greater
China companies entail certain risks which are different from, and in certain
cases, greater than, risks associated with investments in other international
markets. These risks are fully discussed in this Prospectus.
Getting Started . . .
Shares of the Funds are available through your financial representative. Each
Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares may be purchased at net asset
value without any initial or contingent deferred sales charges and are not
subject to ongoing distribution expenses. Advisor Class shares may be purchased
and held solely (i) through accounts established under a fee-based program,
sponsored and maintained by a registered broker-dealer or other financial
intermediary and approved by Alliance Fund Distributors, Inc. ("AFD"), each
Fund's principal underwriter, (ii) through a self-directed defined contribution
employee benefit plan (e.g., a 401(k) plan) that has at least 1,000 participants
or $25 million in assets, (iii) by investment advisory clients of, and certain
other persons associated with, Alliance and its affiliates or the Funds, and
(iv) through registered investment advisers or other financial intermediaries
who charge a management, consulting or other fee for their service and who
purchase shares through a broker or agent approved by AFD and clients of such
registered investment advisers or financial intermediaries whose accounts are
linked to the master account of such investment adviser or financial
intermediary on the books of such approved broker or agent. A shareholder's
Advisor Class shares will automatically convert to Class A shares of the same
Fund under certain circumstances. See "Conversion Feature--Conversion to Class A
Shares." Generally, a fee-based program must charge an asset-based or other
similar fee and must invest at least $250,000 in Advisor Class shares of each
Fund in which the program invests in order to be approved by AFD for investment
in Advisor Class shares. For more detailed information about who may purchase
and hold Advisor Class shares see the Statement of Additional Information. Fee-
based and other programs through which Advisor Class shares may be purchased may
impose different requirements with respect to investment in Advisor Class shares
than described above. For detailed information about purchasing and selling
shares, see "Purchase and Sale of Shares."
ALLIANCE(R)
Investing without the Mystery./SM/
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
3
<PAGE>
- --------------------------------------------------------------------------------
Expense Information
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses are one of several factors to consider when you
invest in a Fund. The following table summarizes your maximum transaction costs
from investing in the Advisor Class shares of each Fund and estimated annual
expenses for Advisor Class shares of each Fund. For each Fund, the "Examples" to
the right of the table below show the cumulative expenses attributable to a
hypothetical $1,000 investment in Advisor Class shares for the periods
specified.
Advisor Class Shares
--------------------
Maximum sales charge imposed on purchases.............. None
Sales charge imposed on dividend reinvestments......... None
Deferred sales charge.................................. None
Exchange fee........................................... None
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating Expenses Examples
---------------------------------------- -------------------------------------------
Alliance Fund Advisor Class Advisor Class
-------------- -------------
<S> <C> <C> <C>
Management fees .68% After 1 year $ 8
12b-1 fees None After 3 years $ 26
Other expenses (a) .15% After 5 years $ 46
---- After 10 years $103
Total fund
operating expenses (b) .83%
===
Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees .74% After 1 year $ 10
12b-1 fees None After 3 years $ 31
Other expenses (a) .24% After 5 years $ 54
---- After 10 years $120
Total fund
operating expenses (b) .98%
====
Premier Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 13
12b-1 fees None After 3 years $ 40
Other expenses (a) .25% After 5 years $ 69
---- After 10 years $151
Total fund
operating expenses (b) 1.25%
====
Technology Fund Advisor Class Advisor Class
------------- -------------
Management fees (f) 1.04% After 1 year $ 14
12b-1 fees None After 3 years $ 44
Other expenses (a) .35% After 5 years $ 76
---- After 10 years $167
Total fund
operating expenses (b) 1.39%
====
Quasar Fund Advisor Class Advisor Class
------------- -------------
Management fees (f) 1.16% After 1 year $ 16
12b-1 fees None After 3 years $ 50
Other expenses (a) .42% After 5 years $ 86
----
Total fund
operating expenses (b) 1.58%
====
International Fund Advisor Class Advisor Class
------------- -------------
Management fees
(after waiver) (c)(f) .85% After 1 year $ 15
12b-1 fees None After 3 years $ 46
Other expenses (a) .62% After 5 years $ 80
---- After 10 years $176
Total fund
operating expenses (b) (e) 1.47%
====
International Premier
Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees (g) 1.00% After 1 year $ 22
12b-1 fees None After 3 years $ 69
Other expenses (a) 1.20% After 5 years $118
---- After 10 years $253
Total fund
operating expenses (b)(e) 2.20%
====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes and the discussion following these tables on page
6.
4
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- ---------------------------------------------- -------------------------------------------
Worldwide Privatization Fund Advisor Class Advisor Class
------------- -------------
<S> <C> <C> <C>
Management fees 1.00% After 1 year $ 15
12b-1 fees None After 3 years $ 46
Other expenses (a) .45% After 5 years $ 79
---- After 10 years $174
Total fund
operating expenses (b) 1.45%
====
New Europe Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.02% After 1 year $ 16
12b-1 fees None After 3 years $ 49
Other expenses (a) .52% After 5 years $ 84
---- After 10 years $183
Total fund
operating expenses (b) 1.54%
====
All-Asia Investment Fund Advisor Class Advisor Class
------------- -------------
Management fees
(after waiver) (c) .65% After 1 year $ 18
12b-1 fees None After 3 years $ 56
Other expenses After 5 years $ 96
Administration fees After 10 years $209
(after waiver) (d) .00%
Other operating expenses (a) 1.13%
----
Total fund
operating expenses (b) (e) 1.78%
====
Greater China '97 Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 22
12b-1 fees None After 3 years $ 69
Other expenses (a) 1.20% After 5 years $118
---- After 10 years $253
Total fund
operating expenses (b) (e) 2.20%
====
Global Small Cap Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 19
12b-1 fees None After 3 years $ 58
Other expenses (a) .84% After 5 years $100
---- After 10 years $216
Total fund
operating expenses (b) 1.84%
====
Global Environment Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.10% After 1 year $ 24
12b-1 fees None After 3 years $ 75
Other expenses (a) 1.29% After 5 years $128
---- After 10 years $273
Total fund
operating expenses (b) 2.39%
====
Balanced Shares Advisor Class Advisor Class
------------- -------------
Management fees .63% After 1 year $ 11
12b-1 fees None After 3 years $ 33
Other expenses (a) .42% After 5 years $ 58
---- After 10 years $128
Total fund
operating expenses (b) 1.05%
====
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- ------------------------------------------- --------------------------------------------
Utility Income Fund Advisor Class Advisor Class
------------- -------------
<S> <C> <C> <C>
Management fees
(after waiver) (c) .00% After 1 year $ 12
12b-1 fees None After 3 years $ 38
Other expenses (a) 1.20% After 5 years $ 66
---- After 10 years $145
Total fund
operating expenses (b) (e) 1.20%
====
Growth and Income Fund Advisor Class Advisor Class
------------- -------------
Management fees .49% After 1 year $ 7
12b-1 fees None After 3 years $ 23
Other expenses (a) .22% After 5 years $ 40
---- After 10 years $ 88
Total fund
operating expenses (b) .71%
====
Real Estate Investment Fund Advisor Class Advisor Class
------------- -------------
Management fees .90% After 1 year $ 13
12b-1 fees None After 3 years $ 40
Other expenses (a) .35% After 5 years $ 69
---- After 10 years $151
Total fund
operating expenses (b) 1.25%
====
</TABLE>
- --------------------------------------------------------------------------------
(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance. The expenses shown include the
application of credits that reduce Fund expenses.
(b) The expense information does not reflect any charges or expenses imposed by
your financial representative or your employee benefit plan.
(c) Net of voluntary fee waiver. In the absence of such waiver, management fees
would be 1.00% for All-Asia Investment Fund,.75% for Utility Income Fund and
1.00% for International Fund.
(d) Net of voluntary fee waiver. Absent such fee waiver, administration fees
would have been .15%. Reflects the fees payable by All-Asia Investment Fund
to Alliance pursuant to an administration agreement.
(e) Net of voluntary fee waivers and expense reimbursements. Absent such waivers
and/or reimbursements, total fund operating expenses would have been as
follows:
All-Asia Investment Fund International Premier Growth Fund
Advisor Class 2.28% Advisor Class 8.36%
International Fund Utility Income Fund
Advisor Class 1.62% Advisor Class 3.29%
Greater China '97 Fund
Advisor Class 18.13%
(f) Calculated based on average daily net assets. Maximum contractual rate,
based on quarter-end net assets, is 1.00% for International Fund, Quasar
Fund and Technology Fund.
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly or
indirectly. "Management fees" for All-Asia Investment Fund and "Administration
fees" for All-Asia Investment Fund have been restated to reflect current
voluntary fee waivers. "Other Expenses" for Global Environment Fund and
International Premier Growth Fund are based on estimated amounts for its current
fiscal year. The Examples set forth above assume reinvestment of all dividends
and distributions and utilize a 5% annual rate of return as mandated by
Commission regulations. The Examples should not be considered representative of
future expenses; actual expenses may be greater or less than those shown.
6
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
The tables on the following pages present per share income and capital changes
for an Advisor Class share outstanding throughout each period indicated. Except
as otherwise indicated, information for Alliance Fund, Growth Fund, Premier
Growth Fund, Balanced Shares, Utility Income Fund, Worldwide Privatization Fund,
International Premier Growth Fund and Growth and Income Fund has been audited
by PricewaterhouseCoopers LLP, the independent accountants for each such Fund,
and for All-Asia Investment Fund, Technology Fund, Quasar Fund, International
Fund, New Europe Fund, Greater China '97 Fund, Global Small Cap Fund and Real
Estate Investment Fund by Ernst & Young LLP, the independent auditors for each
such Fund. A report of PricewaterhouseCoopers LLP or Ernst & Young LLP, as the
case may be, on the information with respect to each Fund, appears in the Fund's
Statement of Additional Information. The following information for each Fund
should be read in conjunction with the financial statements and related notes
which are included in the Fund's Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's annual
report to shareholders, which may be obtained without charge by contacting
Alliance Fund Services, Inc. at the address or the "For Literature" telephone
number shown on the cover of this Prospectus.
7
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In
Beginning Of Net Investment Gain (Loss) On Net Asset Value
Fiscal Year or Period Period Income (Loss) Investments From Operations
--------------------- ------------ -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Alliance Fund
Advisor Class
12/1/97 to 5/31/98++ $ 8.69 0.00(b) $ .48 $ .48
Year ended 11/30/97 7.71 (.02)(b) 2.10 2.08
10/2/96+ to 11/30/96 6.99 0.00 .72 .72
Growth Fund
Advisor Class
11/1/97 to 4/30/98++ $ 44.08 $ .12(b) $ 7.50 $ 7.62
Year ended 10/31/97 34.91 (.05)(b) 10.25 10.20
10/2/96+ to 10/31/96 34.14 0.00(b) .77 .77
Premier Growth Fund
Advisor Class
12/1/97 to- 5/31/98++ $ 22.10 $ (.02)(b) $ 4.74 $ 4.72
Year ended 11/30/97 17.99 (.06)(b) 5.25 5.19
10/2/96+ to 11/30/96 15.94 (.01)(b) 2.06 2.05
Technology Fund
Advisor Class
12/1/97 to 5/31/98++ $ 54.63 $ (.21)(b) $ 6.92 $ 6.71
Year ended 11/30/97 51.17 (.45)(b) 4.33 3.88
10/2/96+ to 11/30/96 47.32 (.05)(b) 3.90 3.85
Quasar Fund
Advisor Class
10/1/97 to 3/31/98++ $ 30.42 $ (.06)(b) $ 2.37 $ 2.31
10/2/96+ to 9/30/97 27.82 (.17)(b) 6.88 6.71
International Fund
Advisor Class
Year ended 6/30/98 $ 18.67 $ .02(b)(c) $ 1.13 $ 1.15
10/2/96+ to 6/30/97 17.96 .16(b) 1.78 1.94
International Premier Growth Fund
Advisor Class
3/31/98+ to 5/31/98++ $ 10.00 $ .06(b)(c) $ .29 $ .35
Worldwide Privatization Fund
Advisor Class
Year ended 6/30/98 $ 13.23 $ .19(b) $ .80 $ .99
10/2/96+ to 6/30/97 12.14 .18(b) 2.52 2.70
New Europe Fund
Advisor Class
Year ended 7/31/98 $ 18.57 $ .08(b) $ 5.28 $ 5.36
10/2/96+ to 7/31/97 16.25 .11(b) 3.76 3.87
All-Asia Investment Fund
Advisor Class
11/1/97 to 4/30/98++ $ 7.56 $ (.06)(b)(c) $ (.25) $ (.31)
Year ended 10/31/97 11.04 (.15)(b)(c) (2.99) (3.14)
10/2/96+ to 10/31/96 11.65 0.00(c) (.61) (.61)
Greater China '97 Fund
Advisor Class
9/3/97+ to 7/31/98 $ 10.00 $ .10(b)(c) $ (5.18) $ (5.08)
Global Small Cap Fund
Advisor Class
Year ended 7/31/98 $ 12.89 $ (.07)(b) $ .37 $ .30
10/2/96+ to 7/31/97 12.56 (.08)(b) 1.97 1.89
Global Environment
12/29/97+ to 4/30/98 $ 9.15 $ (.10)(b) $ 1.83 $ 1.73
Balanced Shares
Advisor Class
Year ended 7/31/98 $ 16.17 $ .37(b) $ 1.87 $ 2.24
10/2/96+ to 7/31/97 14.79 .23 3.22 3.45
Utility Income Fund
Advisor Class
12/1/97 to 5/31/98++ $ 12.49 $ .17(b)(c) $ 1.40 $ 1.57
Year ended 11/30/97 10.59 .36(b)(c) 2.04 2.40
10/2/96+ to 11/30/96 9.95 .03(b)(c) .61 .64
Growth and Income Fund
Advisor Class
11/1/97 to 4/30/98++ $ 3.48 $ .02(b) $ .59 $ .61
Year ended 10/31/97 3.00 .05(b) .87 .92
10/2/96+ to 10/31/96 2.97 0.00 .03 .03
Real Estate Investment Fund
Advisor Class
Year ended 8/31/98 $ 12.82 $ .55(b) $ (2.34) $ (1.79)
10/1/96+ to 8/31/97 10.00 .35(b) 2.88 3.23
</TABLE>
<TABLE>
<CAPTION>
Distributions
Dividends From In Excess Of
Net Investment Net Investment
Fiscal Year or Period Income Income
--------------------- --------------- --------------
<S> <C> <C>
Alliance Fund
Advisor Class
12/1/97 to 5/31/98++ $ 0.00 $ 0.00
Year ended 11/30/97 (.04) 0.00
10/2/96+ to 11/30/96 0.00 0.00
Growth Fund
Advisor Class
11/1/97 to 4/30/98++ $ 0.00 $ 0.00
Year ended 10/31/97 0.00 0.00
10/2/96+ to 10/31/96 0.00 0.00
Premier Growth Fund
Advisor Class
12/1/97 to- 5/31/98++ $ 0.00 $ 0.00
Year ended 11/30/97 0.00 0.00
10/2/96+ to 11/30/96 0.00 0.00
Technology Fund
Advisor Class
12/1/97 to 5/31/98++ $ 0.00 $ 0.00
Year ended 11/30/97 0.00 0.00
10/2/96+ to 11/30/96 0.00 0.00
Quasar Fund
Advisor Class
10/1/97 to 3/31/98++ $ 0.00 $ 0.00
10/2/96+ to 9/30/97 0.00 0.00
International Fund
Advisor Class
Year ended 6/30/98 $ (.07) $ 0.00
10/2/96+ to 6/30/97 (.15) 0.00
International Premier Growth Fund
Advisor Class
3/31/98+ to 5/31/98++ $ 0.00 $ 0.00
Worldwide Privatization Fund
Advisor Class
Year ended 6/30/98 $ (.23) $ 0.00
10/2/96+ to 6/30/97 (.19) 0.00
New Europe Fund
Advisor Class
Year ended 7/31/98 $ 0.00 $ (.09)
10/2/96+ to 7/31/97 (.09) (.14)
All-Asia Investment Fund
Advisor Class
11/1/97 to 4/30/98++ $ 0.00 $ 0.00
Year ended 10/31/97 0.00 0.00
10/2/96+ to 10/31/96 0.00 0.00
Greater China '97 Fund
Advisor Class
9/3/97+ to 7/31/98 $ (.07) $ 0.00
Global Small Cap Fund
Advisor Class
Year ended 7/31/98 $ 0.00 $ 0.00
10/2/96+ to 7/31/97 0.00 0.00
Global Environment
12/29/97+ to 4/30/98 $ 0.00 $ 0.00
Balanced Shares
Advisor Class
Year ended 7/31/98 $ (.36) $ 0.00
10/2/96+ to 7/31/97 (.27) 0.00
Utility Income Fund
Advisor Class
12/1/97 to 5/31/98++ $ (.18) $ 0.00
Year ended 11/30/97 (.37) 0.00
10/2/96+ to 11/30/96 0.00 0.00
Growth and Income Fund
Advisor Class
11/1/97 to 4/30/98++ $ (.03) $ 0.00
Year ended 10/31/97 (0.06) 0.00
10/2/96+ to 10/31/96 0.00 0.00
Real Estate Investment Fund
Advisor Class
Year ended 8/31/98 $ (.54) $ 0.00
10/1/96+ to 8/31/97 (.41)(f) 0.00
</TABLE>
Please refer to the footnotes on page 10.
8
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets Ratio Of Net
Total Net Asset Investment At End of Ratio Of Investment
Distributions Dividends Value Return Based Period Expenses Income (Loss)
From Net And End Of on Net Asset (000's To Average To Average Portfolio
Realized Gains Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
--------------- ------------- ----------- ------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(2.17) $(2.17) $7.00 7.47 % $ 13,947 .79%* (.09)%* 53%
(1.06) (1.10) $8.69 32.00 10,275 .83 (.21) 158
0.00 0.00 $7.71 10.30 1,083 .89* 0.38* 80
$(2.91) $(2.91) $48.79 18.12 % $141,589 .87%* .55%* 27%
(1.03) (1.03) $44.08 29.92 101,205 .98(e) (.12) 48
0.00 0.00 $34.91 2.26 946 1.26* .50* 46
$(1.44) $(1.44) $25.38 22.92 % $201,873 1.19%* (.15)%* 30%
(1.08) (1.08) $22.10 30.98 53,459 1.25 (.28) 76
0.00 0.00 $17.99 12.86 1,922 1.50* (.48)* 95
$ (.58) $ (.58) $60.76 12.41 % $169,504 1.33%* (.74)%* 31%
(.42) (.42) $54.63 7.65 167,120 1.39(e) (.81) 51
0.00 0.00 $51.17 8.14 566 1.75* (1.21)* 30
$(1.23) $(1.23) $31.50 8.09 % $192,181 1.35%* (.42)%* 63%
(4.11) (4.11) $30.42 28.47 62,455 1.58 (.74) 135
$(1.21) $(1.28) $18.54 6.98 % $ 47,154 1.47%(d) .13% 121%
(1.08) (1.23) $18.67 11.57 8,697 1.69(d)* 1.47* 94
$ 0.00 $ 0.00 $10.35 3.50 % $ 1,612 2.20%*(d) 2.31%* 26%
$(1.36) $(1.59) $12.63 9.48 % $ 1,716 1.45% 1.48% 53%
(1.42) (1.61) $13.23 25.24 374 1.96* 2.97* 48
$(2.05) $(2.14) $21.79 32.55 % $ 3,143 1.56%(e) .39% 99%
(1.32) (1.55) $18.57 25.76 4,130 1.71(d)* .77* 89
$ 0.00 $ 0.00 $7.25 (4.10) % $ 1,494 3.53%* (1.66)%* 87%
(.34) (.34) $7.56 (29.42) 1,338 3.21(d) (1.51) 70
0.00 0.00 $11.04 (5.24) 27 4.97*(d) 1.63* 66
$ 0.00 $ (.07) $4.85 (51.06)% $ 60 2.22%(d)(e)* 1.51% 58%
$ (.99) $ (.99) $12.20 2.82 % $ 392 1.87%(e) (.57)% 113%
(1.56) (1.56) $12.89 17.08 333 2.05*(e) (.84)* 129
$ 0.00 $ 0.00 $10.88 18.91 % $ 6 2.54%* (2.04)%* 199%
$(2.07) $(2.43) $15.98 15.32 % $ 2,079 1.06%(e) 2.33% 145%
$(1.80) $(2.07) $16.17 25.96 1,565 1.30*(e) 2.15* 207
$ (.47) $ (.65) $13.41 12.88 % $ 52 1.21%*(e) 2.59%* 9%
(.13) (.50) $12.49 23.57 42 1.20 3.29 37
0.00 0.00 $10.59 6.33 33 1.20*(d) 4.02* 98
$ (.46) $ (.49) $3.60 19.45 % $ 4,357 .66%* 1.16%* 41%
(.38) (.44) $3.48 33.61 3,207 .71(e) 1.42 88
0.00 0.00 $3.00 1.01 87 0.37* 3.40* 88
$ (.01) $ (.55) $10.48 (14.74) $ 2,899 1.25% 4.08% 23%
0.00 (.41) $12.82 32.72 2,313 1.45*(d)(e) 3.07* 20
---------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
________________
+ Commencement of distribution.
++ Unaudited.
* Annualized.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and
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 are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waiver and expense reimbursement.
(d) Net of expenses assumed and/or waived/reimbursed. If the following Funds
had borne all expenses in their most recent fiscal year, their expense
ratios, without giving effect to the expense offset arrangements described
in (e) below, would have been as follows:
<TABLE>
<CAPTION>
1996 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C> <C>
All-Asia Investment Fund International Fund
Advisor Class 5.54%* 3.43 -- Advisor Class -- 1.62%
Utility Income Fund Greater China '97 Fund
Advisor Class 3.48%* 3.29 -- Advisor Class -- 18.13%*
Real Estate Investment Fund
Advisor Class -- 1.47%* --
</TABLE>
(e) Amounts do not reflect the impact of expense offset arrangements with the
transfer agent. Taking into account such expense offset arrangements, the
rate of expenses to average net assets assuming the assumption and/or
waived reimbursement of expenses described in note (d) above would have
been as follows:
<TABLE>
<CAPTION>
1997 1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
International Fund Balanced Shares Growth Fund
Advisor Class 1.69%* -- Advisor Class 1.29%* 1.05% Advisor Class .96% --
Global Small Cap Fund Real Estate Investment Fund Technology Fund
Advisor Class 2.04%* 1.84% Advisor Class 1.44%* -- Advisor Class 1.38%
New Europe Fund Growth and Income Fund Greater China '97 Fund
Advisor Class 1.71%* 1.54% Advisor Class .70% -- Advisor Class -- 2.20%*
</TABLE>
___________________________
(f) Distributions from net investment income include a tax return of capital of
$.03.
10
<PAGE>
--------------------------------
Glossary
--------------------------------
The following terms are frequently used in this Prospectus.
Equity securities, except as noted otherwise, are (i) common stocks, partnership
interests, business trust shares and other equity or ownership interests in
business enterprises, and (ii) securities convertible into, and rights and
warrants to subscribe for the purchase of, such stocks, shares and interests.
Debt securities are bonds, debentures, notes, bills, repurchase agreements,
loans, other direct debt instruments and other fixed, floating and variable rate
debt obligations, but do not include convertible securities.
Fixed-income securities are debt securities and dividend-paying preferred stocks
and include floating rate and variable rate instruments.
Convertible securities are fixed-income securities that are convertible into
common stock.
U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.
Foreign government securities are securities issued or guaranteed, as to payment
of principal and interest, by governments, quasi-governmental entities,
governmental agencies or other governmental entities.
Asian company is an entity that (i) is organized under the laws of an Asian
country and conducts business in an Asian country, (ii) derives 50% or more of
its total revenues from business in Asian countries, or (iii) issues equity or
debt securities that are traded principally on a stock exchange in an Asian
country.
Asian countries are Australia, the Democratic Socialist Republic of Sri Lanka,
the Hong Kong Special Administrative Region of the People's Republic of China
(Hong Kong), the Islamic Republic of Pakistan, Japan, the Kingdom of Thailand,
Malaysia, Negara Brunei Darussalam (Brunei), New Zealand, the People's Republic
of China, the People's Republic of Kampuchea (Cambodia), the Republic of China
(Taiwan), the Republic of India, the Republic of Indonesia, the Republic of
Korea (South Korea), the Republic of the Philippines, the Republic of Singapore,
the Socialist Republic of Vietnam and the Union of Myanmar.
Greater China company is an entity that (i) is organized under the laws of a
Greater China country and conducts business in a Greater China country, (ii)
derives 50% or more of its total revenues from business in Greater China
countries, or (iii) issues equity or debt securities that are traded principally
on a stock exchange in a Greater China country. A company of a particular
Greater China country is a company that meets any of these criteria with respect
to that country.
Greater China countries are the People's Republic of China ("China"), the Hong
Kong Special Administrative Region of the People's Republic of China ("Hong
Kong") and the Republic of China ("Taiwan").
Non-U.S. company is an entity that (i) is organized under the laws of a
foreign country and conducts business in a foreign country, (ii) derives 50% or
more of its total revenues from business in foreign countries, or (iii) issues
equity or debt securities that are traded principally on a stock exchange in a
foreign country.
Eligible Companies are companies expected to benefit from advances or
improvements in products, processes or services intended to foster the
protection of the environment.
Environmental Companies are Eligible Companies that have a principal business
involving the sale of systems or services intended to foster environmental
protection, such as waste treatment and disposal, remediation, air pollution
control and recycling.
Beneficiary Companies are Eligible Companies whose principal businesses lie
outside the environmental sector but nevertheless anticipate environmental
regulations or consumer preferences through the development of new products,
processes or services that are intended to contribute to a cleaner and healthier
environment, such as companies that anticipate the demand for plastic
substitutes, aerosol substitutes, alternative fuels and processes that generate
less hazardous waste.
Moody's is Moody's Investors Service, Inc.
S&P is Standard & Poor's Ratings Services.
Duff & Phelps is Duff & Phelps Credit Rating Co.
Fitch is Fitch IBCA, Inc.
Investment grade securities are fixed-income securities rated Baa and above by
Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by
Alliance to be of equivalent quality.
Lower-rated securities are fixed-income securities rated Ba or below by Moody's
or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be
of equivalent quality, and are commonly referred to as "junk bonds."
Prime commercial paper is commercial paper rated Prime 1 by Moody's or A-1 or
higher by S&P or, if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
Qualifying bank deposits are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than $1
billion and which are members of the Federal Deposit Insurance Corporation.
Rule 144A securities are securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act").
Depositary receipts include American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts.
Commission is the Securities and Exchange Commission.
1940 Act is the Investment Company Act of 1940, as amended.
Code is the Internal Revenue Code of 1986, as amended.
Exchange is the New York Stock Exchange.
11
<PAGE>
--------------------------------
Description Of The Funds
--------------------------------
Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder vote.
No Fund will change a non-fundamental objective or policy without notifying its
shareholders. There is no guarantee that any Fund will achieve its investment
objective.
INVESTMENT OBJECTIVES AND POLICIES
DOMESTIC STOCK FUNDS
The Domestic Stock Funds have been designed to offer investors seeking capital
appreciation a range of alternative approaches to investing in the U.S. equity
markets.
The Alliance Fund
The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company
that seeks long-term growth of capital and income primarily through investment
in common stocks. The Fund normally invests substantially all of its assets in
common stocks that Alliance believes will appreciate in value, but it may invest
in other types of securities such as convertible securities, high grade
instruments, U.S. Government securities and high quality, short-term obligations
such as repurchase agreements, bankers' acceptances and domestic certificates of
deposit, and may invest without limit in foreign securities. While the
diversification and generally high quality of the Fund's investments cannot
prevent fluctuations in market values, they tend to limit investment risk and
contribute to achieving the Fund's objective. The Fund generally does not effect
portfolio transactions in order to realize short-term trading profits or
exercise control.
The Fund may also: (i) make secured loans of its portfolio securities equal in
value up to 25% of its total assets to brokers, dealers and financial
institutions; (ii) enter into repurchase agreements of up to one week in
duration with commercial banks, but only if those agreements together with any
restricted securities and any securities which do not have readily available
market quotations do not exceed 10% of its net assets; and (iii) write exchange-
traded covered call options with respect to up to 25% of its total assets. For
additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
Alliance Growth Fund
Alliance Growth Fund ("Growth Fund") is a diversified investment company that
seeks long-term growth of capital. Current income is only an incidental
consideration. The Fund seeks to achieve its objective by investing primarily in
equity securities of companies with favorable earnings outlooks and whose long-
term growth rates are expected to exceed that of the U.S. economy over time. The
Fund's investment objective is not fundamental.
The Fund may also invest up to 25% of its total assets in lower-rated fixed-
income and convertible securities. See "Risk Considerations--Securities Ratings"
and "--Investment in Lower-Rated Fixed-Income Securities." The Fund generally
will not invest in securities rated at the time of purchase below Caa- by
Moody's and CCC- by S&P, Duff & Phelps or Fitch or in securities judged by
Alliance to be of comparable investment quality. However, from time to time, the
Fund may invest in securities rated in the lowest grades (i.e., C by Moody's or
D or equivalent by S&P, Duff & Phelps or Fitch), or securities Alliance judges
to be of comparable investment quality, if there are prospects for an upgrade or
a favorable conversion into equity securities. If the credit rating of a
security held by the Fund falls below its rating at the time of purchase (or
Alliance determines that the quality of such security has so deteriorated), the
Fund may continue to hold the security if such investment is considered
appropriate under the circumstances.
The Fund may also: (i) invest in "zero-coupon" bonds and "payment-in-kind"
bonds; (ii) invest in foreign securities, although the Fund will not generally
invest more than 15% of its total assets in foreign securities; (iii) invest in
securities that are not publicly traded, including Rule 144A securities; (iv)
buy or sell foreign currencies, options on foreign currencies, foreign currency
futures contracts (and related options) and deal in forward foreign exchange
contracts; (v) lend portfolio securities amounting to not more than 25% of its
total assets; (vi) enter into repurchase agreements of up to 25% of its total
assets and purchase and sell securities on a forward commitment basis; (vii) buy
and sell stock index futures contracts and buy and sell options on those
contracts and on stock indices; (viii) purchase and sell futures contracts,
options thereon and options with respect to U.S. Treasury securities; (ix) write
covered call and put options on securities it owns or in which it may invest;
and (x) purchase and sell put and call options. For additional information on
the use, risks and costs of these policies and practices see "Additional
Investment Practices."
Alliance Premier Growth Fund
Alliance Premier Growth Fund, Inc. ("Premier Growth Fund") is a diversified
investment company that seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth. Normally, about 40-50 companies will be represented in the
Fund's portfolio, with the 25 most highly regarded of these companies usually
constituting approximately 70% of the Fund's net assets. The Fund is thus
atypical from most equity mutual funds in its focus on a relatively small number
of intensively researched companies and is designed for those seeking to
accumulate capital over time with less volatility than that associated with
investment in smaller companies.
As a matter of fundamental policy, the Fund normally invests at least 85% of its
total assets in the equity securities of U.S. companies. These are companies (i)
organized under U.S. law that have their principal office in the U.S., and (ii)
the equity
12
<PAGE>
securities of which are traded principally in the U.S. Alliance's investment
strategy for the Fund emphasizes stock selection and investment in the
securities of a limited number of issuers. Alliance relies heavily upon the
fundamental analysis and research of its large internal research staff, which
generally follows a primary research universe of more than 600 companies that
have strong management, superior industry positions, excellent balance sheets
and superior earnings growth prospects. An emphasis is placed on identifying
companies whose substantially above average prospective earnings growth is not
fully reflected in current market valuations.
In managing the Fund, Alliance seeks to utilize market volatility judiciously
(assuming no change in company fundamentals), striving to capitalize on
apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. The Fund
normally remains nearly fully invested and does not take significant cash
positions for market timing purposes. During market declines, while adding to
positions in favored stocks, the Fund becomes somewhat more aggressive,
gradually reducing the number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund becomes somewhat more conservative, gradually increasing the
number of companies represented in its portfolio. Alliance thus seeks to gain
positive returns in good markets while providing some measure of protection in
poor markets.
Alliance expects the average market capitalization of companies represented in
the Fund's portfolio normally to be in the range, or in excess, of the average
market capitalization of companies comprising the "S&P 500" (the Standard &
Poor's 500 Composite Stock Price Index, a widely recognized unmanaged index of
market activity).
The Fund may also: (i) invest up to 20% of its net assets in convertible
securities of companies whose common stocks are eligible for purchase by it;
(ii) invest up to 5% of its net assets in rights or warrants; (iii) invest up to
15% of its total assets in securities of foreign issuers whose common stocks are
eligible for purchase by it; (iv) purchase and sell exchange-traded index
options and stock index futures contracts; and (v) write covered exchange-traded
call options on common stocks, unless as a result, the amount of its securities
subject to call options would exceed 15% of its total assets, and purchase and
sell exchange-traded call and put options on common stocks written by others,
but the total cost of all options held by the Fund (including exchange-traded
index options) may not exceed 10% of its total assets. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices." The Fund will not write put options.
Alliance Technology Fund
Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment
company that emphasizes growth of capital and invests for capital appreciation,
and only incidentally for current income. The Fund may seek income by writing
listed call options. The Fund invests primarily in securities of companies
expected to benefit from technological advances and improvements (i.e.,
companies that use technology extensively in the development of new or improved
products or processes). The Fund will normally have at least 80% of its assets
invested in the securities of these companies. The Fund normally will have
substantially all its assets invested in equity securities, but it also invests
in debt securities offering an opportunity for price appreciation. The Fund will
invest in listed and unlisted securities and U.S. and foreign securities, but it
will not purchase a foreign security if as a result 10% or more of the Fund's
total assets would be invested in foreign securities.
The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies.
The Fund may also: (i) write and purchase exchange-listed call options and
purchase listed put options, including exchange-traded index put options; (ii)
invest up to 10% of its total assets in warrants; (iii) invest in restricted
securities and in other assets having no ready market if as a result no more
than 10% of the Fund's net assets are invested in such securities and assets;
(iv) lend portfolio securities equal in value to not more than 30% of the Fund's
total assets; and (v) invest up to 10% of its total assets in foreign
securities. For additional information on the use, risks and costs of the
policies and practices see "Additional Investment Practices."
Alliance Quasar Fund
Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment company
that seeks growth of capital by pursuing aggressive investment policies. It
invests for capital appreciation and only incidentally for current income. The
selection of securities based on the possibility of appreciation cannot prevent
loss in value. Moreover, because the Fund's investment policies are aggressive,
an investment in the Fund is risky and investors who want assured income or
preservation of capital should not invest in the Fund.
The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities for the
Fund, Alliance considers the economic and political outlook, the values of
specific securities relative to other investments, trends in the determinants of
corporate profits and management capability and practices.
The Fund invests principally in equity securities, but it also invests to a
limited degree in non-convertible bonds and preferred stocks. The Fund invests
in listed and unlisted U.S. and foreign securities. The Fund periodically
invests in special situations, which occur when the securities of a company are
expected to appreciate due to a development particularly or uniquely applicable
to that company and regardless of general business conditions or movements of
the market as a whole.
The Fund may also: (i) invest in restricted securities and in other assets
having no ready market, but not more than 10%
13
<PAGE>
of its total assets may be invested in such securities or assets; (ii) make
short sales of securities "against the box," but not more than 15% of its net
assets may be deposited on short sales; and (iii) write call options and
purchase and sell put and call options written by others. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
GLOBAL STOCK FUNDS
The Global Stock Funds have been designed to enable investors to participate in
the potential for long-term capital appreciation available from investment in
foreign securities.
Alliance International Fund
Alliance International Fund ("International Fund") is a diversified investment
company that seeks a total return on its assets from long-term growth of capital
and from income primarily through a broad portfolio of marketable securities of
established non-U.S. companies, companies participating in foreign economies
with prospects for growth, including U.S. companies having their principal
activities and interests outside the U.S. and foreign government securities.
Normally, more than 80% of the Fund's assets will be invested in such issuers.
The Fund expects to invest primarily in common stocks of established non-U.S.
companies that Alliance believes have potential for capital appreciation or
income or both, but the Fund is not required to invest exclusively in common
stocks or other equity securities, and it may invest in any other type of
investment grade security, including convertible securities, as well as in
warrants, or obligations of the U.S. or foreign governments and their political
subdivisions.
The Fund intends to diversify its investments broadly among countries and
normally invests in at least three foreign countries, although it may invest a
substantial portion of its assets in one or more of such countries. In this
regard, at June 30, 1998, approximately 15% of the Fund's assets were invested
in securities of Japanese issuers. The Fund may invest in companies, wherever
organized, that Alliance judges have their principal activities and interests
outside the U.S. These companies may be located in developing countries, which
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability,
than those of developed countries. The Fund currently does not intend to invest
more than 10% of its total assets in companies in, or governments of, developing
countries.
The Fund may also: (i) purchase or sell forward foreign currency exchange
contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put and
call options, including exchange-traded index options; (iii) enter into
financial futures contracts, including contracts for the purchase or sale for
future delivery of foreign currencies and stock index futures, and purchase and
write put and call options on futures contracts traded on U.S. or foreign
exchanges or over-the-counter; (iv) purchase and write put options on foreign
currencies traded on securities exchanges or boards of trade or over-the-
counter; (v) lend portfolio securities equal in value to not more than 30% of
its total assets; and (vi) enter into repurchase agreements of up to seven days'
duration, provided that not more than 10% of the Fund's total assets would be so
invested. For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices."
Alliance International Premier Growth Fund, Inc.
Alliance International Premier Growth Fund, Inc. ("International Premier Growth
Fund") is a diversified investment company that seeks long term capital
appreciation by investing predominantly in the equity securities of a limited
number of carefully selected non-U.S. companies that are judged likely to
achieve superior earnings growth. Investments will be made based upon their
potential for capital appreciation. Current income is incidental to that
objective.
In the main, the Fund's investments will be in comparatively large, high-quality
companies. Normally, about 60 companies will be represented in the Fund's
portfolio, and the 30 most highly regarded of these companies usually will
constitute approximately 70% of the Fund's net assets. The Fund thus differs
from more typical international equity mutual funds by focusing on a relatively
small number of intensively researched companies. The Fund is designed for
investors seeking to accumulate capital over time. Because of the market risks
inherent in any investment, the selection of securities on the basis of their
appreciation possibilities cannot ensure against possible loss in value, and
there is, of course, no assurance that the Fund's investment objective will be
met.
Alliance expects the average weighted market capitalization of the companies
represented in the Fund's portfolio (i.e., the number of a company's outstanding
shares multiplied by the price per share) normally will be in the range of, or
in excess of, that of the companies comprising the Morgan Stanley Capital
International Europe, Australasia and Far East ("EAFE") Index. As of December
31, 1997, the average weighted market capitalization of those companies was
approximately $2.6 billion.
Within the investment framework described herein, Alliance's Large Cap Growth
Group, headed by Alfred Harrison, Alliance's Vice Chairman, has responsibility
for managing the Fund's portfolio. As discussed below, in selecting the Fund's
portfolio investments Alliance's Large Cap Growth Group will follow a
structured, disciplined research and investment process which is essentially
similar to that which it employs in managing Premier Growth Fund.
In managing the Fund's assets, Alliance's investment strategy will emphasize
stock selection and investment in the securities of a limited number of issuers.
Alliance depends heavily upon the fundamental analysis and research of its large
global equity research team situated in numerous locations around the world. Its
global equity analysts follow a research universe of approximately 900
companies. As one of the largest multinational investment management firms,
Alliance has access to considerable information concerning the companies
14
<PAGE>
in its research universe, an in-depth understanding of the products, services,
markets and competition of these companies and a good knowledge of their
managements. Research emphasis is placed on the identification of companies
whose superior prospective earnings growth is not fully reflected in current
market valuations.
Companies are constantly added to and deleted from this universe as fundamentals
and valuations change. Alliance's global equity analysts rate companies in three
categories. The performance of each analyst's ratings is an important
determinant of his or her incentive compensation. The equity securities of "one-
rated" companies are expected to significantly outperform the local market in
local currency terms. All equity securities purchased for the Fund's portfolio
will be selected from the universe of approximately 100 "one-rated" companies.
As noted above, approximately 70% of the Fund's net assets will usually be
invested in the approximately 30 most highly regarded such companies. The Fund
will not concentrate more than 25% of its total assets in any one industry.
Within this limit, portfolio emphasis upon particular industries or sectors will
be a by-product of the stock selection process rather than the result of
assigned targets or ranges.
The Fund's investments will be diversified among at least four, and usually
considerably more, countries. No more than 15% of the Fund's total assets will
be invested in issuers in any one foreign country, except that the Fund may
invest up to 25% of its total assets in issuers in each of Canada, France,
Germany, Italy, Japan, The Netherlands, Switzerland and the United Kingdom.
Within these limits, geographic distribution of the Fund's investments among
countries or regions will also be a product of the stock selection process
rather than predetermined allocation. To the extent that the Fund's assets will
be concentrated within any one region, the Fund may be subject to any special
risks that may be associated with that region. While the Fund may engage in
currency hedging programs in periods in which Alliance perceives extreme
exchange rate risk, the Fund will not normally make significant use of currency
hedging strategies.
In the management of the Fund's investment portfolio, Alliance will seek to
utilize market volatility judiciously (assuming no change in company
fundamentals) to adjust the Fund's portfolio positions. To the extent consistent
with local market liquidity considerations, the Fund will strive to capitalize
on apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. Under normal
circumstances, the Fund will remain substantially fully invested in equity
securities and will not take significant cash positions for market timing
purposes. Rather, through "buying into declines" and "selling into strength,"
Alliance seeks superior relative returns over time.
As a matter of fundamental policy, which may not be changed without shareholder
approval, the Fund will invest under normal circumstances at least 85% of the
value of its total assets in equity securities. The Fund's other investment
policies are not fundamental and, therefore, may be changed by the Board of
Directors of the Fund without shareholder approval. For temporary defensive
purposes, the Fund may vary from its investment policies during periods in which
Alliance believes that business or financial conditions warrants, and may then
invest in high-grade short-term fixed-income securities, including U.S.
Government securities, or hold its assets in cash.
The Fund may invest up to 20% of its total assets in convertible securities of
issuers whose common stocks are eligible for purchase by the Fund. The Fund may
also: (i) invest up to 20% of its total assets in rights or warrants; (ii) write
covered put and call options and purchase put and call options on securities of
the types in which it is permitted to invest and on exchange-traded index
options and may also write uncovered options for cross hedging purposes; (iii)
enter into contracts for the purchase or sale for future delivery of fixed-
income securities or foreign currencies, or contracts based on financial
indices, including any index of U.S. Government securities, foreign government
securities, or common stock and may purchase and write options on such futures
contract: (iv) purchase and write put and call options on foreign currencies for
hedging purposes; (v) purchase or sell forward contracts; (vi) enter into
forward commitments for the purchase or sale of securities; (vii) enter into
standby commitment agreements; (viii) enter into currency swaps for hedging
purposes; (ix) enter into repurchase agreements pertaining to U.S. Government
securities with member banks of the Federal Reserve System or primary dealers in
such securities; (x) make short sales of securities or maintain short positions,
provided that the Fund may not make a short sale if as a result more than 5% of
its net assets would be held as collateral for short sales; and (xi) make
secured loans of its portfolio securities not in excess of 30% of its total
assets to entities with which it is permitted to enter into repurchase
agreements. For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices."
Alliance Worldwide Privatization Fund
Alliance Worldwide Privatization Fund, Inc. ("Worldwide Privatization Fund") is
a non-diversified investment company that seeks long-term capital appreciation.
As a fundamental policy, the Fund invests at least 65% of its total assets in
equity securities issued by enterprises that are undergoing, or have undergone,
privatization (as described below), although normally significantly more of its
assets will be invested in such securities. The balance of its investments will
include securities of companies believed by Alliance to be beneficiaries of
privatizations. The Fund is designed for investors desiring to take advantage of
investment opportunities, historically inaccessible to U.S. individual
investors, that are created by privatizations of state enterprises in both
established and developing economies, including those in Western Europe and
Scandinavia, Australia, New Zealand, Latin America, Asia and Eastern and Central
Europe and, to a lesser degree, Canada and the United States.
The Fund's investments in enterprises undergoing privatization may comprise
three distinct situations. First, the Fund may invest in the initial offering of
publicly traded equity securities (an "initial equity offering") of a
government- or state-owned or controlled company or enterprise (a "state
enterprise").
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Secondly, the Fund may purchase securities of a current or former state
enterprise following its initial equity offering. Finally, the Fund may make
privately negotiated purchases of stock or other equity interests in a state
enterprise that has not yet conducted an initial equity offering. Alliance
believes that substantial potential for capital appreciation exists as
privatizing enterprises rationalize their management structures, operations and
business strategies in order to compete efficiently in a market economy, and the
Fund will thus emphasize investments in such enterprises.
The Fund diversifies its investments among a number of countries and normally
invests in issuers based in at least four, and usually considerably more,
countries. No more than 15% of the Fund's total assets, however, will be
invested in issuers in any one foreign country, except that the Fund may invest
up to 30% of its total assets in issuers in any one of France, Germany, Great
Britain, Italy and Japan. The Fund may invest all of its assets within a single
region of the world. To the extent that the Fund's assets are invested within
any one region, the Fund may be subject to any special risks that may be
associated with that region.
Privatization is a process through which the ownership and control of companies
or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all or
a portion of its interest in a state enterprise to some form of private
ownership. Governments and states with established economies, including France,
Great Britain, Germany and Italy, and those with developing economies, including
Argentina, Mexico, Chile, Indonesia, Malaysia, Poland and Hungary, are engaged
in privatizations. The Fund will invest in any country believed to present
attractive investment opportunities.
A major premise of the Fund's approach is that the equity securities of
privatized companies offer opportunities for significant capital appreciation.
In particular, because privatizations are integral to a country's economic
restructuring, securities sold in initial equity offerings often are priced
attractively so as to secure the issuer's successful transition to private
sector ownership. Additionally, these enterprises often dominate their local
markets and typically have the potential for significant managerial and
operational efficiency gains.
Although the Fund anticipates that it will not concentrate its investments in
any industry, it is permitted to invest more than 25% of its total assets in
issuers whose primary business activity is that of national commercial banking.
Prior to so concentrating, however, the Fund's Directors must determine that its
ability to achieve its investment objective would be adversely affected if it
were not permitted to concentrate. The staff of the Commission is of the view
that registered investment companies may not, absent shareholder approval,
change between concentration and non-concentration in a single industry. The
Fund disagrees with the staff's position but has undertaken that it will not
concentrate in the securities of national commercial banks until, if ever, the
issue is resolved. If the Fund were to invest more than 25% of its total assets
in national commercial banks, the Fund's performance could be significantly
influenced by events or conditions affecting this industry, which is subject to,
among other things, increases in interest rates and deteriorations in general
economic conditions, and the Fund's investments may be subject to greater risk
and market fluctuation than if its portfolio represented a broader range of
investments.
The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities of issuers whose common stocks are eligible for
purchase by the Fund. The Fund may maintain not more than 5% of its net assets
in lower-rated securities. See "Risk Considerations--Securities Ratings" and "--
Investment in Lower-Rated Fixed-Income Securities." The Fund will not retain a
non-convertible security that is downgraded below C or determined by Alliance to
have undergone similar credit quality deterioration following purchase.
The Fund may also: (i) invest up to 20% of its total assets in rights or
warrants; (ii) write covered put and call options and purchase put and call
options on securities of the types in which it is permitted to invest and on
exchange-traded index options; (iii) enter into contracts for the purchase or
sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of U.S. Government
securities, foreign government securities, or common stock and may purchase and
write options on future contracts; (iv) purchase and write put and call options
on foreign currencies for hedging purposes; (v) purchase or sell forward
contracts; (vi) enter into forward commitments for the purchase or sale of
securities; (vii) enter into standby commitment agreements; (viii) enter into
currency swaps for hedging purposes; (ix) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (x) make short sales of
securities or maintain a short position; and (xi) make secured loans of its
portfolio securities not in excess of 30% of its total assets to entities with
which it can enter into repurchase agreements. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices."
Alliance New Europe Fund
Alliance New Europe Fund, Inc. ("New Europe Fund") is a non-diversified
investment company that seeks long-term capital appreciation through investment
primarily in the equity securities of companies based in Europe. The Fund
intends to invest substantially all of its assets in the equity securities of
European companies and has a fundamental policy of normally investing at least
65% of its total assets in such securities. Up to 35% of its total assets may be
invested in high quality U.S. dollar or foreign currency denominated fixed-
income securities issued or guaranteed by European governmental entities, or by
European or multinational companies or supranational organizations.
Alliance believes that the quickening pace of economic integration and political
change in Europe creates the potential for many European companies to experience
rapid growth and that the emergence of new market economies in Europe and the
broadening and strengthening of other European
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economies may significantly accelerate economic development. The Fund will
invest in companies that Alliance believes possess rapid growth potential. Thus,
the Fund will emphasize investments in larger, established companies, but will
also invest in smaller, emerging companies.
In recent years, economic ties between the former "east bloc" countries of
Eastern Europe and certain other European countries have been strengthened.
Alliance believes that as this strengthening continues, some Western European
financial institutions and other companies will have special opportunities to
facilitate East-West transactions. The Fund will seek investment opportunities
among such companies and, as such become available, within the former "east
bloc," although the Fund will not invest more than 20% of its total assets in
issuers based therein, or more than 10% of its total assets in issuers based in
any one such country.
The Fund diversifies its investments among a number of European countries and,
under normal circumstances, will invest in companies based in at least three
such countries. Subject to the foregoing and to the limitation on investment in
any one former "east bloc" country, the Fund may invest without limit in a
single European country. While the Fund does not intend to concentrate its
investments in a single country, at times 25% or more of its assets may be
invested in issuers located in a single country. During such times, the Fund
would be subject to a correspondingly greater risk of loss due to adverse
political or regulatory developments, or an economic downturn, within that
country. In this regard, at July 31, 1998, approximately 20% of the Fund's
assets were invested in securities of issuers in the United Kingdom.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants and rights to purchase equity securities of European companies; (iii)
invest in depositary receipts or other securities convertible into securities of
companies based in European countries, debt securities of supranational entities
denominated in the currency of any European country, debt securities denominated
in European Currency Units of an issuer in a European country (including
supranational issuers) and "semi-governmental securities"; (iv) purchase and
sell forward contracts; (v) write, sell and purchase exchange-traded put and
call options, including exchange-traded index options; (vi) enter into financial
futures contracts, including contracts for the purchase or sale for future
delivery of foreign currencies and futures contracts based on stock indices, and
purchase and write options on futures contracts; (vii) purchase and write put
options on foreign currencies traded on securities exchanges or boards of trade
or over-the-counter; (viii) make secured loans of portfolio securities not in
excess of 30% of its total assets to brokers, dealers and financial
institutions; (ix) enter into forward commitments for the purchase or sale of
securities; and (x) enter into standby commitment agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Alliance All-Asia Investment Fund
Alliance All-Asia Investment Fund, Inc. ("All-Asia Investment Fund") is a non-
diversified investment company whose investment objective is to seek long-term
capital appreciation. In seeking to achieve its investment objective, the Fund
will invest at least 65% of its total assets in equity securities (for the
purposes of this investment policy, rights, warrants and options to purchase
common stocks are not deemed to be equity securities), preferred stocks and
equity-linked debt securities issued by Asian companies. The Fund may invest up
to 35% of its total assets in debt securities issued or guaranteed by Asian
companies or by Asian governments, their agencies or instrumentalities. The Fund
may also invest in securities issued by non-Asian issuers, provided that the
Fund will invest at least 80% of its total assets in securities issued by Asian
companies and the Asian debt securities referred to above. The Fund expects to
invest, from time to time, a significant portion, which may be in excess of 50%,
of its assets in equity securities of Japanese companies.
In the past decade, Asian countries generally have experienced a high level of
real economic growth due to political and economic changes, including foreign
investment and reduced government intervention in the economy. Alliance believes
that certain conditions exist in Asian countries which create the potential for
continued rapid economic growth. These conditions include favorable demographics
and competitive wage rates, increasing levels of foreign direct investment,
rising per capita incomes and consumer demand, a high savings rate and numerous
privatization programs. Asian countries are also becoming more industrialized
and are increasing their intra-Asian exports while reducing their dependence on
Western export demand. Alliance believes that these conditions are important to
the long-term economic growth of Asian countries.
As the economies of many Asian countries move through the "emerging market"
stage, thus increasing the supply of goods, services and capital available to
less developed Asian markets and helping to spur economic growth in those
markets, the potential is created for many Asian companies to experience rapid
growth. In addition, many Asian companies the securities of which are listed on
exchanges in more developed Asian countries will be participants in the rapid
economic growth of the lesser developed countries. These companies generally
offer the advantages of more experienced management and more developed market
regulation.
As their economies have grown, the securities markets in Asian countries have
also expanded. New exchanges have been created and the number of listed
companies, annual trading volume and overall market capitalization have
increased significantly. Additionally, new markets continue to open to foreign
investments. For example, South Korea and India have recently relaxed investment
restrictions and Vietnamese direct investments have recently become available to
U.S. investors. The Fund also offers investors the opportunity to access
relatively restricted markets. Alliance believes that investment opportunities
in Asian countries will continue to expand.
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The Fund will invest in companies believed to possess rapid growth potential.
Thus, the Fund will invest in smaller, emerging companies, but will also invest
in larger, more established companies in such growing economic sectors as
capital goods, telecommunications and consumer services.
The Fund will invest in investment grade debt securities, except that the Fund
may maintain not more than 5% of its net assets in lower-rated securities and
lower-rated loans and other lower-rated direct debt instruments. See "Risk
Considerations--Securities Ratings," "--Investment in Lower-Rated Fixed-Income
Securities" and Appendix C in the Fund's Statement of Additional Information for
a description of such ratings. The Fund will not retain a security that is
downgraded below C or determined by Alliance to have undergone similar credit
quality deterioration following purchase.
The Fund may also: (i) invest up to 25% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii)
invest in depositary receipts, instruments of supranational entities denominated
in the currency of any country, securities of multinational companies and "semi-
governmental securities;" (iv) invest up to 25% of its net assets in equity-
linked debt securities with the objective of realizing capital appreciation; (v)
invest up to 25% of its net assets in loans and other direct debt instruments;
(vi) write covered put and call options on securities of the types in which it
is permitted to invest and on exchange-traded index options; (vii) enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices,
including any index of U.S. Government securities, securities issued by foreign
government entities, or common stock and may purchase and write options on
future contracts; (viii) purchase and write put and call options on foreign
currencies for hedging purposes; (ix) purchase or sell forward contracts; (x)
enter into interest rate swaps and purchase or sell interest rate caps and
floors; (xi) enter into forward commitments for the purchase or sale of
securities; (xii) enter into standby commitment agreements; (xiii) enter into
currency swaps for hedging purposes; (xiv) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (xv) make short sales of
securities or maintain a short position, in each case only if "against the box;"
and (xvi) make secured loans of its portfolio securities not in excess of 30% of
its total assets to entities with which it can enter into repurchase agreements.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
Alliance Greater China '97 Fund, Inc.
Alliance Greater China '97 Fund, Inc. ("Greater China '97 Fund") is a non-
diversified investment company that seeks long-term capital appreciation through
investment of at least 80% of its total assets in equity securities issued by
Greater China companies. In furtherance of its investment objective, the Fund
expects to invest a significant portion, which may be greater than 50%, of its
assets in equity securities of Hong Kong companies and may invest, from time to
time, all of its assets in Hong Kong companies or companies of either of the
other Greater China countries.
In recent years, China, Hong Kong and Taiwan have each experienced a high level
of real economic growth, although growth is expected to slow in 1998. This
growth has resulted from advantageous economic conditions, including favorable
demographics, competitive wage rates, and rising per capita income and consumer
demand. Significantly, the growth has also been fueled by an easing by both
China and Taiwan of government restrictions and an increased receptivity to
foreign investment. This expanded, if not yet complete, openness to foreign
investment extends as well to the securities markets of both countries. Hong
Kong's free market economy has historically included securities markets
completely open to foreign investments. All three countries have regulated stock
exchanges upon which shares of an increasing number of Greater China companies
are traded.
With its population estimated at more than 1.2 billion as a driving force, and
notwithstanding its continuing political rigidity, China's economic growth has
been coupled with significantly reduced government economic intervention and
basic economic structural change. Recent years have seen large increases in
industrial production with a significant decline in the state sector share of
industrial output, and increased involvement of local governmental units and the
private sector in establishing new business enterprises.
With China's growth has come an increasing direct and indirect economic
involvement of all three Greater China countries. For some time, Hong Kong, a
world financial and trade center in its own right, with a large stock exchange
and offices of many of the world's multinational companies, has been the
gateway to trade with and foreign investment in China. With the long-awaited
transfer on July 1, 1997 of the sovereignty of Hong Kong from Great Britain to
China, not only the political but the economic ties between China and Hong Kong
are expected to continue to intensify, albeit with the continuation of Hong
Kong's economic system as provided for in the law governing its sovereignty.
Notwithstanding the, at times considerable, political tension between the two
countries, it is generally recognized that substantially increased trade and
investment with China has been generated from Taiwan, in many cases through Hong
Kong. Along with this increased interaction with China, Taiwan is becoming a
regional technological and telecommunication center, while continuing the
process of opening its economy up to foreign investment. Although geographically
limited, Taiwan boasts an economy among the world's twenty largest and its
foreign exchange reserves are third largest in the world measured in U.S.
dollars. As China's economy continues to expand, it is expected that Taiwan's
economic interaction with China will likewise increase.
Alliance believes that over the long term conditions are favorable for
continuing and expanding economic growth in all three Greater China countries.
It is this potential which the
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Fund hopes to take advantage of by investing both in established and new and
emerging companies.
Set forth below under "Certain Considerations and Risks" and in Appendix A to
the Fund's Statement of Additional Information is additional information
concerning the Greater China countries.
In addition to investing in equity securities of Greater China companies, the
Fund may invest up to 20% of its total assets in (i) debt securities issued or
guaranteed by Greater China companies or by Greater China governments, their
agencies or instrumentalities, and (ii) equity or debt securities issued by
issuers other than Greater China companies. The Fund will not invest in debt
securities other than investment grade securities. Should a debt security in
which the Fund is invested be downgraded below investment grade or be determined
by Alliance to have undergone a similar credit quality deterioration, the Fund
will dispose of that security.
The Fund may also: (i) invest up to 25% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii)
invest in depositary receipts, instruments of supranational entities denominated
in the currency of any country, securities of multinational companies and "semi-
governmental securities;" (iv) invest up to 25% of its net assets in equity-
linked debt securities with the objective of realizing capital appreciation; (v)
invest up to 20% of its net assets in loans and other direct debt securities;
(vi) write covered put and call options on securities of the types in which it
is permitted to invest and on exchange-traded index options; (vii) enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices,
including any index of U.S. Government securities, securities issued by foreign
government entities, or common stock, and may purchase and write options on
future contracts; (viii) purchase and write put and call options on foreign
currencies for hedging purposes; (ix) purchase or sell forward contracts; (x)
enter into interest rate swaps and purchase or sell interest rate caps and
floors; (xi) enter into forward commitments for the purchase or sale of
securities; (xii) enter into standby commitment agreements; (xiii) enter into
currency swaps for hedging purposes; (xiv) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (xv) make short sales of
securities or maintain a short position, in each case only if "against the box;"
and (xvi) make secured loans of its portfolio securities not in excess of 30% of
its total assets to entities with which it can enter into repurchase agreements.
All or some of the policies and practices listed above may not be available to
the Fund in the Greater China countries, and the Fund will utilize these
policies only to the extent permissible. For additional information on the use,
risks and costs of these policies and practices see "Additional Investment
Practices."
Alliance Global Small Cap Fund
Alliance Global Small Cap Fund, Inc. ("Global Small Cap Fund") is a diversified
investment company that seeks long-term growth of capital through investment in
a global portfolio of the equity securities of selected companies with
relatively small market capitalization. The Fund's portfolio emphasizes
companies with market capitalizations that would have placed them (when
purchased) in about the smallest 20% by market capitalization of actively traded
U.S. companies, or market capitalizations of up to about $1.5 billion. Because
the Fund applies the U.S. size standard on a global basis, its foreign
investments might rank above the lowest 20%, and, in fact, might in some
countries rank among the largest, by market capitalization in local markets.
Normally, the Fund invests at least 65% of its assets in equity securities of
these smaller capitalization issuers, and these issuers are located in at least
three countries, one of which may be the U.S. Up to 35% of the Fund's total
assets may be invested in securities of companies whose market capitalizations
exceed the Fund's size standard. The Fund's portfolio securities may be listed
on a U.S. or foreign exchange or traded over-the-counter.
Alliance believes that smaller capitalization issuers often have sales and
earnings growth rates exceeding those of larger companies, and that these growth
rates tend to cause more rapid share price appreciation. Investing in smaller
capitalization stocks, however, involves greater risk than is associated with
larger, more established companies. For example, smaller capitalization
companies often have limited product lines, markets, or financial resources.
They may be dependent for management on one or a few key persons, and can be
more susceptible to losses and risks of bankruptcy. Their securities may be
thinly traded (and therefore have to be sold at a discount from current market
prices or sold in small lots over an extended period of time), may be followed
by fewer investment research analysts and may be subject to wider price swings
and thus may create a greater chance of loss than when investing in securities
of larger capitalization companies. Transaction costs in small capitalization
stocks may be higher than in those of larger capitalization companies.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants to purchase equity securities; (iii) invest in depositary receipts or
other securities representing securities of companies based in countries other
than the U.S.; (iv) purchase or sell forward foreign currency contracts; (v)
write and purchase exchange-traded call options and purchase exchange-traded put
options, including put options on market indices; and (vi) make secured loans of
portfolio securities not in excess of 30% of its total assets to brokers,
dealers and financial institutions. For additional information on the use, risks
and costs of these policies and practices see "Additional Investment Practices."
Alliance Global Environment Fund
Alliance Global Environment Fund, Inc. ("Global Environment Fund") is a non-
diversified investment company that seeks long-term capital appreciation through
investment in equity securities of Eligible Companies. For purposes of the
Fund's investment objective and investment policies, "equity securities" are
common stocks (but not preferred stocks), rights or warrants to subscribe for or
purchase common
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stocks, and preferred stocks or debt securities that are convertible into common
stocks without the payment of any further consideration. Until October 3, 1997,
the Fund operated as a closed-end investment company, and its common stock
(which then comprised a single class) was listed on the Exchange.
The Fund invests in two categories of Eligible Companies--"Environmental
Companies" and "Beneficiary Companies." Environmental Companies are those that
have a principal business involving the sale of systems or services intended to
foster environmental protection, such as waste treatment and disposal,
remediation, air pollution control and recycling. Under normal circumstances,
the Fund invests at least 65% of its total assets in equity securities of
Environmental Companies. Beneficiary Companies are those whose principal
businesses lie outside the environmental sector but nevertheless anticipate
environmental regulations or consumer preferences through the development of new
products, processes or services that are intended to contribute to a cleaner and
healthier environment. Examples of such companies could be companies that
anticipate the demand for plastic substitutes, aerosol substitutes, alternative
fuels and processes that generate less hazardous waste. In this regard, the Fund
may invest in an issuer with a broadly diversified business only a part of which
provides such products, processes or services, when Alliance believes that these
products, processes or services will yield a competitive advantage that
significantly enhances the issuer's growth prospects. As a matter of fundamental
policy, the Fund will, under normal circumstances, invest substantially all of
its total assets in equity securities of Eligible Companies.
A major premise of the Fund's investment approach is that environmental concerns
will be a significant source of future growth opportunities, and that
Environmental Companies will see an increased demand for their systems and
services. Environmental Companies operate in the areas of pollution control,
clean energy, solid waste management, hazardous waste treatment and disposal,
pulp and paper recycling, waste-to-energy alternatives, biodegradable cartons,
packages, plastics and other products, remedial projects and emergency cleanup
efforts, manufacture of environmental supplies and equipment, the achievement of
purer air, groundwater and foods and the detection, evaluation and treatment of
both existing and potential environmental problems including, among others, air
pollution and acid rain.
The environmental services industry is generally positively affected by
increasing governmental action intended to foster environmental protection. As
environmental regulations are developed and enforced, Environmental Companies
providing the means of compliance with such regulations are afforded substantial
opportunities for growth. Beneficiary Companies may also derive an advantage to
the extent that they have anticipated environmental regulation and are therefore
at a competitive advantage.
In the view of Alliance, increasing public and political awareness of
environmental concerns and resultant environmental regulations are long-term
phenomena that are driven by an emerging global consensus that environmental
protection is a vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other economically
developed countries will have increasing opportunities for earnings growth
resulting not only from an increased demand for their existing products or
services but also from innovative responses to changing regulations and
priorities and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also within many
economically developing countries, such as those of Eastern Europe and the
Pacific Rim. These countries lag well behind developed countries in the
conservation and efficient use of natural resources and in their implementation
of policies which protect the environment.
Alliance believes that global investing offers opportunities for superior
investment returns. The Fund spreads investment risk among the capital markets
of a number of countries and invests in equity securities of companies based in
at least three, and normally considerably more, such countries. The percentage
of the Fund's assets invested in securities of companies in a particular country
or denominated in a particular currency will vary in accordance with Alliance's
assessment of the appreciation potential of such securities and the strength of
that currency. As of August 31, 1998, approximately 82% of the Fund's net assets
were invested in equity securities of U.S. companies.
The Fund may also: (i) invest up to 20% of its total assets in warrants to
purchase equity securities to the extent consistent with its investment
objective; (ii) invest in depositary receipts; (iii) purchase and write put and
call options on foreign currencies for hedging purposes; (iv) enter into forward
foreign currency transactions for hedging purposes; (v) invest in currency
futures and options on such futures for hedging purposes; and (vi) make secured
loans of its portfolio securities not in excess of 30% of its total assets. For
additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
TOTAL RETURN FUNDS
The Total Return Funds have been designed to provide a range of investment
alternatives to investors seeking both growth of capital and current income.
Alliance Balanced Shares
Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment
company that seeks a high return through a combination of current income and
capital appreciation. Although the Fund's investment objective is not
fundamental, the Fund is a "balanced fund" as a matter of fundamental policy.
The Fund will not purchase a security if as a result less than 25% of its total
assets will be in fixed-income senior securities (including short- and long-term
debt securities, preferred stocks, and convertible debt securities and
convertible preferred stocks to the extent that their values are attributable to
their fixed-income characteristics). Subject to these restrictions, the
percentage of the Fund's assets invested in each type of security will vary. The
Fund's assets are invested in U.S. Government securities, bonds,
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senior debt securities and preferred and common stocks in such proportions and
of such type as are deemed best adapted to the current economic and market
outlooks. The Fund may invest up to 15% of the value of its total assets in
foreign equity and fixed-income securities eligible for purchase by the Fund
under its investment policies described above. See "Risk Considerations--Foreign
Investment."
The Fund may also: (i) enter into contracts for the purchase or sale for future
delivery of foreign currencies; and (ii) purchase and write put and call options
on foreign currencies and enter into forward foreign currency exchange contracts
for hedging purposes. Subject to market conditions, the Fund may also seek to
realize income by writing covered call options listed on a domestic exchange.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."
Alliance Utility Income Fund
Alliance Utility Income Fund, Inc. ("Utility Income Fund") is a diversified
investment company that seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. The Fund may invest in securities of both U.S. and foreign
issuers, although no more than 15% of the Fund's total assets will be invested
in issuers in any one foreign country. The utilities industry consists of
companies engaged in (i) the manufacture, production, generation, provision,
transmission, sale and distribution of gas and electric energy, and
communications equipment and services, including telephone, telegraph,
satellite, microwave and other companies providing communication facilities for
the public, or (ii) the provision of other utility or utility-related goods and
services, including, but not limited to, entities engaged in water provision,
cogeneration, waste disposal system provision, solid waste electric generation,
independent power producers and non-utility generators. The Fund is designed to
take advantage of the characteristics and historical performance of securities
of utility companies, many of which pay regular dividends and increase their
common stock dividends over time. As a fundamental policy, the Fund normally
invests at least 65% of its total assets in securities of companies in the
utilities industry. The Fund considers a company to be in the utilities industry
if, during the most recent twelve-month period, at least 50% of the company's
gross revenues, on a consolidated basis, were derived from its utilities
activities.
At least 65% of the Fund's total assets are invested in income-producing
securities, but there is otherwise no limit on the allocation of the Fund's
investments between equity securities and fixed-income securities. The Fund may
maintain up to 35% of its net assets in lower-rated securities. See "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-
Income Securities." The Fund will not retain a security that is downgraded below
B or determined by Alliance to have undergone similar credit quality
deterioration following purchase.
The United States utilities industry has experienced significant changes in
recent years. Electric utility companies in general have been favorably affected
by lower fuel costs, the full or near completion of major construction programs
and lower financing costs. In addition, many utility companies have generated
cash flows in excess of current operating expenses and construction
expenditures, permitting some degree of diversification into unregulated
businesses. Regulatory changes with respect to nuclear and conventionally fueled
generating facilities, however, could increase costs or impair the ability of
such electric utilities to operate such facilities, thus reducing their ability
to service dividend payments with respect to the securities they issue.
Furthermore, rates of return of utility companies generally are subject to
review and limitation by state public utilities commissions and tend to
fluctuate with marginal financing costs. Rate changes, however, ordinarily lag
behind the changes in financing costs, and thus can favorably or unfavorably
affect the earnings or dividend pay-outs on utilities stocks depending upon
whether such rates and costs are declining or rising.
Gas transmission companies, gas distribution companies and telecommunications
companies are also undergoing significant changes. Gas utilities have been
adversely affected by declines in the prices of alternative fuels, and have also
been affected by oversupply conditions and competition. Telephone utilities are
still experiencing the effects of the break-up of American Telephone & Telegraph
Company, including increased competition and rapidly developing technologies
with which traditional telephone companies now compete. Although there can be no
assurance that increased competition and other structural changes will not
adversely affect the profitability of such utilities, or that other negative
factors will not develop in the future, in Alliance's opinion, increased
competition and change may provide better positioned utility companies with
opportunities for enhanced profitability.
Utility companies historically have been subject to the risks of increases in
fuel and other operating costs, high interest costs, costs associated with
compliance with environmental and nuclear safety regulations, service
interruptions, economic slowdowns, surplus capacity, competition and regulatory
changes. There can also be no assurance that regulatory policies or accounting
standards changes will not negatively affect utility companies' earnings or
dividends. Utility companies are subject to regulation by various authorities
and may be affected by the imposition of special tariffs and changes in tax
laws. To the extent that rates are established or reviewed by governmental
authorities, utility companies are subject to the risk that such authorities
will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more susceptible
than most other mutual funds to economic, political or regulatory occurrences
affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although such regulations may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their respective governments than utility companies located in the
U.S. and, as in the U.S., generally are required to seek government
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approval for rate increases. In addition, because many foreign utility companies
use fuels that cause more pollution than those used in the U.S., such utilities
may yet be required to invest in pollution control equipment. Foreign utility
regulatory systems vary from country to country and may evolve in ways different
from regulation in the U.S. The percentage of the Fund's assets invested in
issuers of particular countries will vary. See "Risk Considerations--Foreign
Investment."
The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other than
utility companies, including U.S. Government securities and repurchase
agreements pertaining thereto, foreign government securities, corporate fixed-
income securities of domestic issuers, corporate fixed-income securities of
foreign issuers denominated in foreign currencies or in U.S. dollars (in each
case including fixed-income securities of an issuer in one country denominated
in the currency of another country), qualifying bank deposits and prime
commercial paper.
The Fund may also: (i) invest up to 30% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest
in depositary receipts, securities of supranational entities denominated in the
currency of any country, securities denominated in European Currency Units and
"semi-governmental securities;" (iv) write covered put and call options and
purchase put and call options on securities of the types in which it is
permitted to invest that are exchange-traded and over-the-counter; (v) purchase
and sell exchange-traded options on any securities index composed of the types
of securities in which it may invest; (vi) enter into contracts for the purchase
or sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including an index of U.S. Government
securities, foreign government securities, corporate fixed-income securities, or
common stock, and may purchase and write options on futures contracts; (vii)
purchase and write put and call options on foreign currencies traded on U.S. and
foreign exchanges or over-the-counter for hedging purposes; (viii) purchase or
sell forward contracts; (ix) enter into interest rate swaps and purchase or sell
interest rate caps and floors; (x) enter into forward commitments for the
purchase or sale of securities; (xi) enter into standby commitment agreements;
(xii) enter into repurchase agreements pertaining to U.S. Government securities
with member banks of the Federal Reserve System or primary dealers in such
securities; (xiii) make short sales of securities or maintain a short position
as described below under "Additional Investment Practices--Short Sales;" and
(xiv) make secured loans of its portfolio securities not in excess of 20% of its
total assets to brokers, dealers and financial institutions. For additional
information on the use, risks and costs of these policies and practices, see
"Additional Investment Practices."
Alliance Growth and Income Fund
Alliance Growth and Income Fund, Inc. ("Growth and Income Fund") is a
diversified investment company that seeks appreciation through investments
primarily in dividend-paying common stocks of good quality, although it is
permitted to invest in fixed-income securities and convertible securities.
The Fund may also try to realize income by writing covered call options listed
on domestic securities exchanges. The Fund also invests in foreign securities.
Since the purchase of foreign securities entails certain political and economic
risks, the Fund has restricted its investments in securities in this category to
issues of high quality. The Fund may also purchase and sell financial forward
and futures contracts and options thereon for hedging purposes. For additional
information on the use, risks and costs of these policies and practice see
"Additional Investment Practices."
Alliance Real Estate Investment Fund
Alliance Real Estate Investment Fund, Inc. ("Real Estate Investment Fund") is a
diversified investment company that seeks a total return on its assets from
long-term growth of capital and from income principally through investing in a
portfolio of equity securities of issuers that are primarily engaged in or
related to the real estate industry.
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in equity securities of real estate investment trusts ("REITs") and
other real estate industry companies. A "real estate industry company" is a
company that derives at least 50% of its gross revenues or net profits from the
ownership, development, construction, financing, management or sale of
commercial, industrial or residential real estate or interests therein. The
equity securities in which the Fund will invest for this purpose consist of
common stock, shares of beneficial interest of REITs and securities with common
stock characteristics, such as preferred stock or convertible securities ("Real
Estate Equity Securities").
The Fund may invest up to 35% of its total assets in (a) securities that
directly or indirectly represent participations in, or are collateralized by and
payable from, mortgage loans secured by real property ("Mortgage-Backed
Securities"), such as mortgage pass-through certificates, real estate mortgage
investment conduit ("REMIC") certificates and collateralized mortgage
obligations ("CMOs") and (b) short-term investments. These instruments are
described below. The risks associated with the Fund's transactions in REMICs,
CMOs and other types of mortgage-backed securities, which are considered to be
derivative securities, may include some or all of the following: market risk,
leverage and volatility risk, correlation risk, credit risk and liquidity and
valuation risk. See "Risk Considerations" for a description of these and other
risks.
As to any investment in Real Estate Equity Securities, Alliance's analysis will
focus on determining the degree to which the company involved can achieve
sustainable growth in cash flow and dividend paying capability. Alliance
believes that the primary determinant of this capability is the economic
viability of property markets in which the company operates and that the
secondary determinant of this capability is the ability of management to add
value through strategic focus and operating expertise. The Fund will
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purchase Real Estate Equity Securities when, in the judgment of Alliance, their
market price does not adequately reflect this potential. In making this
determination, Alliance will take into account fundamental trends in underlying
property markets as determined by proprietary models, site visits conducted by
individuals knowledgeable in local real estate markets, price-earnings ratios
(as defined for real estate companies), cash flow growth and stability, the
relationship between asset value and market price of the securities, dividend
payment history, and such other factors which Alliance may determine from time
to time to be relevant. Alliance will attempt to purchase for the Fund Real
Estate Equity Securities of companies whose underlying portfolios are
diversified geographically and by property type.
The Fund may invest without limitation in shares of REITs. REITs are pooled
investment vehicles which invest primarily in income producing real estate or
real estate related loans or interests. REITs are generally classified as equity
REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity
REITs invest the majority of their assets directly in real property and derive
income primarily from the collection of rents. Equity REITs can also realize
capital gains by selling properties that have appreciated in value. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
income from the collection of interest payments. Similar to investment companies
such as the Fund, REITs are not taxed on income distributed to shareholders
provided they comply with several requirements of the Code. The Fund will
indirectly bear its proportionate share of expenses incurred by REITs in which
the Fund invests in addition to the expenses incurred directly by the Fund.
Investment Process for Real Estate Equity Securities. The Fund's investment
strategy with respect to Real Estate Equity Securities is based on the premise
that property market fundamentals are the primary determinant of growth
underlying the performance of Real Estate Equity Securities. Value added
management further distinguishes the most attractive Real Estate Equity
Securities. The Fund's research and investment process is designed to identify
those companies with strong property fundamentals and strong management teams.
This process is comprised of real estate market research, specific property
inspection and securities analysis. Alliance believes that this process will
result in a portfolio that will consist of Real Estate Equity Securities of
companies that own assets in the most desirable markets across the country,
diversified geographically and by property type.
In implementing the Fund's research and investment process, Alliance will avail
itself of the consulting services of CB Richard Ellis, Inc. ("CBRE"), a publicly
held company and the largest real estate services company in the United States,
comprised of real estate brokerage, property and facilities management, and real
estate finance and investment advisory activities. In 1997, CBRE completed
22,100 sale and lease transactions, managed over 6,600 client properties,
created over $5 billion in mortgage originations, and completed over 3,600
appraisal and consulting assignments. In addition, it advised and managed for
institutions over $4 billion in real estate investments. As consultant to
Alliance, CBRE provides access to its proprietary model, REIT.Score, that
analyzes the approximately 18,000 properties owned by these 142 companies. Using
proprietary databases and algorithms, CBRE analyzes local market rent, expense,
and occupancy trends, market specific transaction pricing, demographic and
economic trends, and leading indicators of real estate supply such as building
permits. Over 1,000 asset-type specific geographic markets are analyzed and
ranked on a relative scale by CBRE in compiling its REIT.Score database. The
relative attractiveness of these real estate industry companies is similarly
ranked based on the composite rankings of the properties they own. See
"Management of the Funds--Consultant to Alliance with Respect to Investment in
Real Estate Securities" for more information about CBRE.
The universe of property-owning real estate industry firms consists of
approximately 142 companies of sufficient size and quality to merit
consideration for investment by the Fund. Once the universe of real estate
industry companies has been distilled through the market research process,
CBRE's local market presence provides the capability to perform site specific
inspections of key properties. This analysis examines specific location,
condition, and sub-market trends. CBRE's use of locally based real estate
professionals provides Alliance with a window on the operations of the portfolio
companies as information can immediately be put in the context of local market
events. Only those companies whose specific property portfolios reflect the
promise of their general markets will be considered for initial and continued
investment by the Fund.
Alliance further screens the universe of real estate industry companies by using
rigorous financial models and by engaging in regular contact with management of
targeted companies. Each management's strategic plan and ability to execute the
plan are determined and analyzed. Alliance will make extensive use of CBRE's
network of industry analysts in order to assess trends in tenant industries.
This information is then used to further interpret management's strategic plans.
Financial ratio analysis is used to isolate those companies with the ability to
make value-added acquisitions. This information is combined with property market
trends and used to project future earnings potential.
The short-term investments in which Real Estate Investment Fund may invest are:
corporate commercial paper and other short-term commercial obligations, in each
case rated or issued by companies with similar securities outstanding that are
rated Prime-1, Aa or better by Moody's or A-1, AA or better by S&P; obligations
(including certificates of deposit, time deposits, demand deposits and bankers'
acceptances) of banks with securities outstanding that are rated Prime-1, Aa or
better by Moody's or A-1, AA or better by S&P; and obligations issued or
guaranteed by the U.S. Government or its agencies or instrumentalities with
remaining maturities not exceeding 18 months.
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The Fund may invest in debt securities rated BBB or higher by S&P or Baa or
higher by Moody's or, if not so rated, of equivalent credit quality as
determined by Alliance. The Fund expects that it will not retain a debt security
which is downgraded below BBB or Baa or, if unrated, determined by Alliance to
have undergone similar credit quality deterioration, subsequent to purchase by
the Fund.
The Fund may also engage in the following investment practices to the extent
indicated: (i) invest up to 10% of its net assets in rights or warrants; (ii)
invest up to 15% of its net assets in the convertible securities of companies
whose common stocks are eligible for purchase by the Fund; (iii) lend portfolio
securities equal in value to not more than 25% of total assets; (iv) enter into
repurchase agreements of up to seven days' duration; (v) enter into forward
commitments transactions as long as the Fund's aggregate commitments under such
transactions are not more than 30% of the Fund's total assets; (vi) enter into
standby commitment agreements; (vii) make short sales of securities or maintain
a short position but only if at all times when a short position is open not more
than 25% of the Fund's net assets (taken at market value) is held as collateral
for such sales; and (viii) invest in illiquid securities unless, as a result,
more than 15% of its net assets would be so invested.
ADDITIONAL INVESTMENT PRACTICES
Some or all of the Funds may engage in the following investment practices to the
extent described above.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which generally
provide a stable stream of income with yields that are generally higher than
those of equity securities of the same or similar issuers. The price of a
convertible security will normally vary with changes in the price of the
underlying equity security, although the higher yield tends to make the
convertible security less volatile than the underlying equity security. As with
debt securities, the market value of convertible securities tends to decrease as
interest rates rise and increase as interest rates decline. While convertible
securities generally offer lower interest or dividend yields than non-
convertible debt securities of similar quality, they offer investors the
potential to benefit from increases in the market price of the underlying common
stock. Convertible debt securities that are rated Baa or lower by Moody's or BBB
or lower by S&P, Duff & Phelps or Fitch and comparable unrated securities as
determined by Alliance may share some or all of the risks of non-convertible
debt securities with those ratings. For a description of these risks, see "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated Fixed-
Income Securities."
Rights and Warrants. A 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 security, although the value of a right or
warrant may decline because of a decrease in the value of the underlying
security, the passage of time or a change in perception as to the potential of
the underlying security, or any combination thereof. If the market price of the
underlying security is below the exercise price set forth in the warrant on the
expiration date, the warrant will expire worthless. Moreover, a right or warrant
ceases to have value if it is not exercised prior to the expiration date.
Depositary Receipts and Securities of Supranational Entities. Depositary
receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the issuers
of the stock of unsponsored depositary receipts are not obligated to disclose
material information in the United States and, therefore, there may not be a
correlation between such information and the market value of the depositary
receipts. ADRs are depositary receipts typically issued by a U.S. bank or trust
company that evidence ownership of underlying securities issued by a foreign
corporation. GDRs and other types of depositary receipts are typically issued by
foreign banks or trust companies and evidence ownership of underlying securities
issued by either a foreign or a U.S. company. Generally, depositary receipts in
registered form are designed for use in the U.S. securities markets, and
depositary receipts in bearer form are designed for use in foreign securities
markets. For purposes of determining the country of issuance, investments in
depositary receipts of either type are deemed to be investments in the
underlying securities except with respect to Growth Fund, where investments in
ADRs are deemed to be investments in securities issued by U.S. issuers and those
in GDRs and other types of depositary receipts are deemed to be investments in
the underlying securities.
A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include, among others, the World
Bank (International Bank for Reconstruction and Development) and the European
Investment Bank. A European Currency Unit is a basket of specified amounts of
the currencies of the member states of the European Economic Community. "Semi-
governmental securities" are securities issued by entities owned by either a
national, state or equivalent government or are obligations of one of such
government jurisdictions which are not backed by its full faith and credit and
general taxing powers.
Mortgage-Backed Securities. Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed securities are passed
through to the holders of the securities. As a result of the pass-through of
prepayments of principal on the underlying securities, mortgage-backed
securities are often subject to more rapid prepayment of principal than their
stated maturity would
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indicate. Prepayments occur when the mortgagor on a mortgage prepays the
remaining principal before the mortgage's scheduled maturity date. Because the
prepayment characteristics of the underlying mortgages vary, it is impossible to
predict accurately the realized yield or average life of a particular issue of
pass-through certificates. Prepayments are important because of their effect on
the yield and price of the mortgage-backed securities. During periods of
declining interest rates, prepayments can be expected to accelerate and a Fund
investing in such securities would be required to reinvest the proceeds at the
lower interest rates then available. Conversely, during periods of rising
interest rates, a reduction in prepayments may increase the effective maturity
of the securities, subjecting them to a greater risk of decline in market value
in response to rising interest rates. In addition, prepayments of mortgages
underlying securities purchased at a premium could result in capital losses.
Adjustable Rate Securities. Adjustable rate securities have interest rates that
are reset at periodic intervals, usually by reference to some interest rate
index or market interest rate. Some adjustable rate securities are backed by
pools of mortgage loans. Although the rate-adjustment feature may reduce sharp
changes in the value of adjustable rate securities, these securities can change
in value based on changes in market interest rates or the issuer's
creditworthiness. Changes in the interest rate on adjustable rate securities may
lag behind changes in prevailing market interest rates. Also, some adjustable
rate securities (or the underlying mortgages) are subject to caps or floors that
limit the maximum change in interest rate.
Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables and other payment obligations, both secured
and unsecured. These assets are generally held by a trust and payments of
principal and interest or interest only are passed through monthly or quarterly
to certificate holders and may be guaranteed up to certain amounts by letters of
credit issued by a financial institution affiliated or unaffiliated with the
trustee or originator of the trust.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the trust because
of unanticipated legal or administrative costs of enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors.
Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both zero-coupon
and payment-in-kind bonds allow an issuer to avoid the need to generate cash to
meet current interest payments. Accordingly, such bonds may involve greater
credit risks than bonds paying interest currently. Even though such bonds do not
pay current interest in cash, a Fund is nonetheless required to accrue interest
income on such investments and to distribute such amounts at least annually to
shareholders. Thus, a Fund could be required at times to liquidate other
investments in order to satisfy its dividend requirements.
Equity-Linked Debt Securities. Equity-linked debt securities are securities with
respect to which the amount of interest and/or principal that the issuer thereof
is obligated to pay is linked to the performance of a specified index of equity
securities. Such amount may be significantly greater or less than payment
obligations in respect of other types of debt securities. Adverse changes in
equity securities indices and other adverse changes in the securities markets
may reduce payments made under, and/or the principal of, equity-linked debt
securities held by a Fund. Furthermore, as with any debt securities, the values
of equity-linked debt securities will generally vary inversely with changes in
interest rates. A Fund's ability to dispose of equity-linked debt securities
will depend on the availability of liquid markets for such securities.
Investment in equity-linked debt securities may be considered to be speculative.
As with other securities, a Fund could lose its entire investment in equity-
linked debt securities.
Loans and Other Direct Debt Instruments. Loans and other direct debt instruments
are interests in amounts owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or services (trade claims
or other receivables), or to other creditors. Direct debt instruments involve
the risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to a Fund in the event of fraud or misrepresentation
than debt securities. In addition, loan participations involve a risk of
insolvency of the lending bank or other financial intermediary. Direct debt
instruments may also include standby financing commitments that obligate a
Fund to supply additional cash to the borrower on demand. Loans and other direct
debt instruments are generally illiquid and may be transferred only through
individually negotiated private transactions.
Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If a Fund does not receive scheduled interest or principal payments on
such indebtedness, the Fund's share price and yield could be adversely affected.
Loans that are fully secured offer a Fund more protection than unsecured loans
in the event of non-payment of scheduled interest or principal. However, there
is no assurance that the liquidation of collateral from a
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secured loan would satisfy the borrower's obligation, or that the collateral can
be liquidated. Making loans to borrowers whose creditworthiness is poor may
involve substantial risks, and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of Asian countries and Greater China countries will also involve a
risk that the governmental entities responsible for the repayment of the debt
may be unable, or unwilling, to pay interest and repay principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, a Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. Direct debt instruments may also involve a risk of
insolvency of the lending bank or other intermediary.
A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified on the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be
subject to the claims of the agent's general creditors, the Fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.
Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
a Fund to pay additional cash on demand. These commitments may have the effect
of requiring a Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. Greater China '97 Fund will not
invest in lower-rated loans and other lower-rated direct debt instruments.
Mortgage-Backed Securities and Associated Risks. Mortgage-Backed Securities
include mortgage pass-through certificates and multiple-class pass-through
securities, such as REMIC pass-through certificates, CMOs and stripped mortgage-
backed securities ("SMBS"), and other types of Mortgage-Backed Securities that
may be available in the future.
Guaranteed Mortgage Pass-Through Securities. Real Estate Investment Fund may
invest in guaranteed mortgage pass-through securities which represent
participation interests in pools of residential mortgage loans and are issued by
U.S. governmental or private lenders and guaranteed by the U.S. Government or
one of its agencies or instrumentalities, including but not limited to the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full
faith and credit of the United States Government for timely payment of principal
and interest on the certificates. Fannie Mae certificates are guaranteed by
Fannie Mae, a federally chartered and privately-owned corporation for full and
timely payment of principal and interest on the certificates. Freddie Mac
certificates are guaranteed by Freddie Mac, a corporate instrumentality of the
United States Government, for timely payment of interest and the ultimate
collection of all principal of the related mortgage loans.
Multiple-Class Pass-Through Securities and Collateralized Mortgage Obligations.
Mortgage-Backed Securities also include CMOs and REMIC pass-through or
participation certificates, which may be issued by, among others, U.S.
Government agencies and instrumentalities as well as private lenders. CMOs and
REMIC certificates are issued in multiple classes and the principal of and
interest on the mortgage assets may be allocated among the several classes of
CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Generally, interest is paid or accrues on all classes
of CMOs or REMIC certificates on a monthly basis. Real Estate Investment Fund
will not invest in the lowest tranche of CMOs and REMIC certificates.
Typically, CMOs are collateralized by Ginnie Mae or Freddie Mac certificates but
also may be collateralized by other mortgage assets such as whole loans or
private mortgage pass-through securities. Debt service on CMOs is provided from
payments of principal and interest on collateral of mortgaged assets and any
reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax treatment under the Code and
invests in certain mortgages primarily secured by interests in real property and
other permitted investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts although Real Estate
Investment Fund does not intend to invest in residual interests.
Risks. Investing in Mortgage-Backed Securities involves certain unique risks in
addition to those generally associated with investing in the real estate
industry in general. These unique risks include the failure of a counterparty to
meet its commitments, adverse interest rate changes and the effects of
prepayments on mortgage cash flows. See "Risk Considerations--Mortgage-Backed
Securities" for a more complete description of the characteristics of Mortgage-
Backed Securities and associated risks.
Illiquid Securities. Subject to any more restrictive applicable fundamental
investment policy, none of the Funds will maintain more than 15% of its net
assets in illiquid securities. 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
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negotiated currency swaps and any assets used to cover currency swaps and most
privately negotiated investments in state enterprises that have not yet
conducted an initial equity offering, (ii) over-the-counter options and assets
used to cover over-the-counter options, and (iii) repurchase agreements not
terminable within seven days.
Because of the absence of a trading market for illiquid securities, a Fund may
not be able to realize their full value upon sale. With respect to each Fund
that may invest in such securities, Alliance will monitor their illiquidity
under the supervision of the Directors of the Fund. To the extent permitted by
applicable law, Rule 144A securities will not be treated as "illiquid" for
purposes of the foregoing restriction so long as such securities meet liquidity
guidelines established by a Fund's Directors. Investment in non-publicly traded
securities by Growth Fund is restricted to 5% of its total assets (not including
for these purposes Rule 144A securities, to the extent permitted by applicable
law) and is also subject to the 15% restriction on investment in illiquid
securities described above.
A Fund that invests in securities for which there is no ready market may
therefore not be able to readily sell such securities. Such securities are
unlike securities which are traded in the open market and which can be expected
to be sold immediately if the market is adequate. The sale price of illiquid
securities may be lower or higher than Alliance's most recent estimate of their
fair value. Generally, less public information is available with respect to the
issuers of such securities than with respect to companies whose securities are
traded on an exchange. To the extent that these securities are foreign
securities, there is no law in many of the countries in which a Fund may invest
similar to the Securities Act requiring an issuer to register the sale of
securities with a governmental agency or imposing legal restrictions on resales
of securities, either as to length of time the securities may be held or manner
of resale. However, there may be contractual restrictions on resales of
securities.
Options on Securities. An option gives the purchaser of the option, upon payment
of a premium, the right to deliver to (in the case of a put) or receive from (in
the case of a call) the writer a specified amount of a security on or before a
fixed date at a predetermined price. A call option written by a Fund is
"covered" if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or exchange of another
security it holds, or holds a call option on the underlying security with an
exercise price equal to or less than that of the call option it has written. A
put option written by a Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than that of
the put option it has written.
A call option is for cross-hedging purposes if a Fund does not own the
underlying security, and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire.
Worldwide Privatization Fund, All-Asia Investment Fund, Greater China '97 Fund,
International Premier Growth Fund and Utility Income Fund each may write call
options for cross-hedging purposes. A Fund would write a call option for cross-
hedging purposes, instead of writing a covered call option, when the premium to
be received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option, while at the same time achieving
the desired hedge.
In purchasing an option, a Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess of
the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then be purchased or
sold by the Fund at a disadvantageous price. These risks could be reduced by
entering into a closing transaction (i.e., by disposing of the option prior to
its exercise). A Fund retains the premium received from writing a put or call
option whether or not the option is exercised. The writing of covered call
options could result in increases in a Fund's portfolio turnover rate,
especially during periods when market prices of the underlying securities
appreciate.
Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global
Small Cap Fund will not write uncovered call options. Technology Fund and Global
Small Cap Fund will not write a call option if the premium to be received by the
Fund in doing so would not produce an annualized return of at least 15% of the
then current market value of the securities subject to the option (without
giving effect to commissions, stock transfer taxes and other expenses that are
deducted from premium receipts). Technology Fund, Quasar Fund and Global Small
Cap Fund will not write a call option if, as a result, the aggregate of the
Fund's portfolio securities subject to outstanding call options (valued at the
lower of the option price or market value of such securities) would exceed 15%
of the Fund's total assets or more than 10% of the Fund's assets would be
committed to call options that at the time of sale have a remaining term of more
than 100 days. The aggregate cost of all outstanding options purchased and held
by each of Premier Growth Fund, Technology Fund, Quasar Fund and Global Small
Cap Fund will at no time exceed 10% of the Fund's total assets. Neither
International Fund nor New Europe Fund will write uncovered put options.
A Fund that purchases or writes options on securities in privately negotiated
(i.e., over-the-counter) transactions will effect such transactions only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan institutions) deemed creditworthy by Alliance, and Alliance has
adopted procedures for monitoring the creditworthiness of such entities. Options
purchased or written by a Fund in negotiated transactions are illiquid and it
may not be possible for the Fund to effect a closing transaction at an
advantageous time. See "Illiquid Securities."
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Options on Securities Indices. An option on a securities index is similar to an
option on a security except that, rather than the right to take or make delivery
of a security at a specified price, an option on a securities index gives the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing level of the chosen index is greater than (in the case of a call) or
less than (in the case of a put) the exercise price of the option.
Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the contract
at a specified price on a specified date. A "purchase" of a futures contract
means the incurring of an obligation to acquire the securities, foreign
currencies or other commodity called for by the contract at a specified price on
a specified date. The purchaser of a futures contract on an index agrees to take
or make delivery of an amount of cash equal to the difference between a
specified dollar multiple of the value of the index on the expiration date of
the contract ("current contract value") and the price at which the contract was
originally struck. No physical delivery of the securities underlying the index
is made.
Options on futures contracts written or purchased by a Fund will be traded on
U.S. or foreign exchanges or over-the-counter. These investment techniques will
be used only to hedge against anticipated future changes in market conditions
and interest or exchange rates which otherwise might either adversely affect the
value of the Fund's portfolio securities or adversely affect the prices of
securities which the Fund intends to purchase at a later date.
No Fund will enter into any futures contracts or options on futures contracts if
immediately thereafter the market values of the outstanding futures contracts of
the Fund and the currencies and futures contracts subject to outstanding options
written by the Fund would exceed 50% of its total assets, or in the case of
International Premier Growth Fund 100% of its total assets. Premier Growth Fund
and Growth and Income Fund may not purchase or sell a stock index future if
immediately thereafter more than 30% of its total assets would be hedged by
stock index futures. Premier Growth Fund and Growth and Income Fund may not
purchase or sell a stock index future if, immediately thereafter, the sum of the
amount of margin deposits on the Fund's existing futures positions would exceed
5% of the market value of the Fund's total assets.
Options on Foreign Currencies. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and a Fund could be required to purchase
or sell foreign currencies at disadvantageous exchange rates, 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 a Fund's position, it may forfeit the entire amount of
the premium plus related transaction costs. See the Statement of Additional
Information of each Fund that may invest in options on foreign currencies for
further discussion of the use, risks and costs of options on foreign currencies.
Forward Foreign Currency Exchange Contracts. A Fund purchases or sells forward
foreign currency exchange contracts to minimize the risk to it from adverse
changes in the relationship between the U.S. dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific currency for an
agreed price at a future date, and is individually negotiated and privately
traded.
A Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security
("transaction hedge"). A Fund will not engage in transaction hedges with respect
to the currency of a particular country to an extent greater than the aggregate
amount of the Fund's transactions in that currency. When a Fund believes that a
foreign currency may suffer a substantial decline against the U.S. dollar, it
may enter into a forward sale contract to sell an amount of that foreign
currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency, or when the Fund believes that
the U.S. dollar may suffer a substantial decline against a foreign currency, it
may enter into a forward purchase contract to buy that foreign currency for a
fixed dollar amount ("position hedge"). A Fund will not position hedge with
respect to a particular currency to an extent greater than the aggregate market
value (at the time of making such sale) of the securities held in its portfolio
denominated or quoted in that currency. Instead of entering into a position
hedge, a Fund may, in the alternative, enter into a forward contract to sell a
different foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the U.S. dollar value
of the currency in which portfolio securities of the Fund are denominated
("cross-hedge"). Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into such forward
contracts.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. International Fund, New
Europe Fund and Global Small Cap Fund will not enter into a forward contract
with a term of more than one year or if, as a result, more than 50% of its total
assets would be committed to such contracts. The dealings of International Fund,
New Europe Fund and Global Small Cap Fund in forward contracts will be limited
to hedging involving either specific transactions or portfolio positions. Growth
Fund may also purchase and sell foreign currency on a spot basis.
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"
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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 settlements beyond two months may be negotiated.
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. At the time a Fund intends to enter into a forward commitment,
it records the transaction and thereafter reflects the value of the security
purchased or, if a sale, the proceeds to be received, in determining its net
asset value. Any unrealized appreciation or depreciation reflected in such
valuation of a "when, as and if issued" security would be canceled in the event
that the required conditions did not occur and the trade was canceled.
The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling prices.
In periods of falling interest rates and rising bond prices, a Fund might sell a
security in its portfolio and purchase the same or a similar security on a when-
issued or forward commitment basis, thereby obtaining the benefit of currently
higher cash yields. However, if Alliance were to forecast incorrectly the
direction of interest rate movements, a Fund might be required to complete such
when-issued or forward transactions at prices inferior to the then current
market values. When-issued securities and forward commitments may be sold prior
to the settlement date, but a Fund enters into when-issued and forward
commitments only with the intention of actually receiving securities or
delivering them, as the case may be. If a Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition or dispose of its
right to deliver or receive against a forward commitment, it may incur a gain or
loss. Any significant commitment of Fund assets to the purchase of securities on
a "when, as and if issued" basis may increase the volatility of the Fund's net
asset value. No forward commitments will be made by New Europe Fund,
International Premier Growth Fund, All-Asia Investment Fund, Greater China '97
Fund, Worldwide Privatization Fund, Utility Income Fund or Real Estate
Investment Fund if, as a result, the Fund's aggregate commitments under such
transactions would be more than 30% of the Fund's total assets. In the event the
other party to a forward commitment transaction were to default, a Fund might
lose the opportunity to invest money at favorable rates or to dispose of
securities at favorable prices.
Standby Commitment Agreements. Standby commitment agreements commit a Fund, for
a stated period of time, to purchase a stated amount of a security that may be
issued and sold to the Fund at the option of the issuer. The price and coupon of
the security are fixed at the time of the commitment. At the time of entering
into the agreement the Fund is paid a commitment fee, regardless of whether the
security ultimately is issued, typically equal to approximately 0.5% of the
aggregate purchase price of the security the Fund has committed to purchase. A
Fund will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
to the Fund and unavailable on a firm commitment basis. No Fund, other than
International Premier Growth Fund, will enter into a standby commitment with a
remaining term in excess of 45 days. Investments in standby commitments will be
limited so that the aggregate purchase price of the securities subject to the
commitments will not exceed 25% with respect to New Europe Fund and Real Estate
Investment Fund, 50% with respect to International Premier Growth Fund,
Worldwide Privatization Fund, All-Asia Investment Fund and Greater China '97
Fund and 20% with respect to Utility Income Fund, of the Fund's assets taken at
the time of making the commitment.
There is no guarantee that a security subject to a standby commitment will be
issued and the value of the security, if issued, on the delivery date may be
more or less than its purchase price. Since the issuance of the security
underlying the commitment is at the option of the issuer, a Fund will bear the
risk of capital loss in the event the value of the security declines and may not
benefit from an appreciation in the value of the security during the commitment
period if the issuer decides not to issue and sell the security to the Fund.
Currency Swaps. Currency swaps involve the individually negotiated exchange by a
Fund with another party of a series of payments in specified currencies. A
currency swap may involve the delivery at the end of the exchange period of a
substantial amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a currency swap is
subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The net amount of the excess, if any, of a
Fund's obligations over its entitlements with respect to each currency swap will
be accrued on a daily basis. A Fund will not enter into any currency swap unless
the credit quality of the unsecured senior debt or the claims-paying ability of
the other party thereto 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,
such Fund will have contractual remedies pursuant to the agreements related to
the transactions.
Interest Rate Transactions. Each Fund that may enter into interest rate
transactions expects to do so primarily to preserve a return or spread on a
particular investment or portion of its portfolio or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
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date. The Funds do not intend to use these transactions in a speculative manner.
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Interest rate swaps are entered on a net
basis (i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). With
respect to All-Asia Investment Fund, Greater China '97 Fund and Utility Income
Fund, the exchange commitments can involve payments in the same currency or in
different currencies. The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based principal amount
from the party selling such interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on an agreed
principal amount from the party selling the interest rate floor.
A Fund may enter into interest rate swaps, caps and floors on either an asset-
based or liability-based basis, depending upon whether it is hedging its assets
or liabilities. The net amount of the excess, if any, of a Fund's obligations
over its entitlements with respect to each interest rate swap, cap and floor is
accrued daily. A Fund will not enter into an interest rate swap, cap or floor
transaction unless the unsecured senior debt or the claims-paying ability of the
other party thereto is then rated in the highest rating category of at least one
nationally recognized rating organization. Alliance will monitor the
creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps and floors are more recent innovations for which standardized documentation
has not yet been developed and, accordingly, they are less liquid than swaps.
The use of interest rate transactions is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance were to incorrectly
forecast market values, interest rates and other applicable factors, the
investment performance of a Fund would be adversely affected by the use of these
investment techniques. Moreover, even if Alliance is correct in its forecasts,
there is a risk that the transaction position may correlate imperfectly with the
price of the asset or liability being hedged. There is no limit on the amount of
interest rate transactions that may be entered into by a Fund that is permitted
to enter into such transactions. These transactions do not involve the delivery
of securities or other underlying assets or principal. Accordingly, the risk of
loss with respect to interest rate transactions is limited to the net amount of
interest payments that a Fund is contractually obligated to make. If the other
party to an interest rate transaction defaults, a Fund's risk of loss consists
of the net amount of interest payments that the Fund contractually is entitled
to receive.
Repurchase Agreements. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an agreed-upon
future date, normally a day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon interest rate for the period
the buyer's money is invested in the security. Such agreements permit a Fund to
keep all of its assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. If a vendor defaults on its
repurchase obligation, a Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
a vendor goes bankrupt, a Fund might be delayed in, or prevented from, selling
the collateral for its benefit. Alliance monitors the creditworthiness of the
vendors with which the Fund enters into repurchase agreements. There is no
percentage restriction on a Fund's ability to enter into repurchase agreements,
other than as indicated under "Investment Objectives and Policies."
Short Sales. A short sale is effected by selling a security that a Fund does not
own, or if the Fund does own such security, it is not to be delivered upon
consummation of the sale. A short sale is "against the box" to the extent that a
Fund contemporaneously owns or has the right to obtain securities identical to
those sold short without payment. Worldwide Privatization Fund, All-Asia
Investment Fund, Greater China '97 Fund and Utility Income Fund each may make
short sales of securities or maintain short positions only for the purpose of
deferring realization of gain or loss for U.S. federal income tax purposes,
provided that at all times when a short position is open the Fund owns an equal
amount of securities of the same issue as, and equal in amount to, the
securities sold short. In addition, each of those Funds may not make a short
sale if as a result more than 10% of the Fund's net assets would be held as
collateral for short sales, except that All-Asia Investment Fund, Greater China
'97 Fund and Real Estate Investment Fund may not make a short sale if as a
result more than 25% of the Fund's net assets would be held as collateral for
short sales. If the price of the security sold short increases between the time
of the short sale and the time a Fund replaces the borrowed security, the Fund
will incur a loss; conversely, if the price declines, the Fund will realize a
capital gain. See "Certain Fundamental Investment Policies." Certain special
federal income tax considerations may apply to short sales entered into by a
Fund. See "Dividends, Distributions and Taxes" in the relevant Fund's Statement
of Additional Information.
Loans of Portfolio Securities. The risk in lending portfolio securities, as with
other extensions of credit, consists of the possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund
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any income earned thereon and the Fund may invest any cash collateral in
portfolio securities, thereby earning additional income, or receive an agreed
upon amount of income from a borrower who has delivered equivalent collateral.
Each Fund will have the right to regain record ownership of loaned securities or
equivalent securities in order to exercise ownership rights such as voting
rights, subscription rights and rights to dividends, interest or distributions.
A Fund may pay reasonable finders', administrative and custodial fees in
connection with a loan. A Fund will not lend its portfolio securities to any
officer, director, employee or affiliate of the Fund or Alliance.
General. The successful use of the foregoing investment practices draws upon
Alliance's special skills and experience with respect to such instruments and
usually depends on Alliance's ability to forecast price movements, interest
rates or currency exchange rate movements correctly. Should interest rates,
prices or exchange rates move unexpectedly, a Fund may not achieve the
anticipated benefits of the transactions or may realize losses and thus be in a
worse position than if such strategies had not been used. Unlike many exchange-
traded futures contracts and options on futures contracts, there are no daily
price fluctuation limits with respect to certain options and forward contracts,
and adverse market movements could therefore continue to an unlimited extent
over a period of time. In addition, the correlation between movements in the
prices of futures contracts, options and forward contracts and movements in the
prices of the securities and currencies hedged or used for cover will not be
perfect and could produce unanticipated losses.
A Fund's ability to dispose of its position in futures contracts, options and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types of
securities and currencies are relatively new and still developing, and there is
no public market for forward contracts. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options and forward contracts. If a secondary market does not exist with respect
to an option purchased or written by a Fund, it might not be possible to effect
a closing transaction in the option (i.e., dispose of the option), with the
result that (i) an option purchased by the Fund would have to be exercised in
order for the Fund to realize any profit and (ii) the Fund may not be able to
sell currencies or portfolio securities covering an option written by the Fund
until the option expires or it delivers the underlying security, futures
contract or currency upon exercise. Therefore, no assurance can be given that
the Funds will be able to utilize these instruments effectively for the purposes
set forth above. Furthermore, a Fund's ability to engage in options and futures
transactions may be limited by tax considerations and the use of certain hedging
techniques may adversely impact the characterization of income to a Fund for
U.S. federal income tax purposes. See "Dividends, Distributions and Taxes" in
the Statement of Additional Information of each Fund that invests in options and
futures.
Future Developments. A Fund may, following written notice to its shareholders,
take advantage of other investment practices that are not currently contemplated
for use by the Fund or are not available but may yet be developed, to the extent
such investment practices are consistent with the Fund's investment objective
and legally permissible for the Fund. Such investment practices, if they arise,
may involve risks that exceed those involved in the activities described above.
Defensive Position. For temporary defensive purposes, each Fund may reduce its
position in equity securities and invest without limit in certain types of
short-term, liquid, high grade or high quality (depending on the Fund) debt
securities. These securities may include U.S. Government securities, qualifying
bank deposits, money market instruments, prime commercial paper and other types
of short-term debt securities including notes and bonds. For Funds that may
invest in foreign countries, such securities may also include short-term,
foreign-currency denominated securities of the type mentioned above issued by
foreign governmental entities, companies and supranational organizations. For a
complete description of the types of securities each Fund may invest in while in
a temporary defensive position, please see such Fund's Statement of Additional
Information.
Portfolio Turnover. Portfolio turnover rates for the existing classes of shares
of the Fund are set forth in the tables that begin on page 8. These portfolio
turnover rates are greater than those of most other investment companies,
including those which emphasize capital appreciation as a basic policy. A high
rate of portfolio turnover involves correspondingly greater brokerage and other
expenses than a lower rate, which must be borne by the Fund and its
shareholders. High portfolio turnover also may result in the realization of
substantial net short-term capital gains. See "Dividends, Distributions and
Taxes" in each Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement of
Additional Information.
Alliance Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government); (ii) acquire more
than 10% of the voting or other securities of any one issuer; or (iii) buy
securities of any company that (including its predecessors) has not been in
business at least three continuous years. Pursuant to investment policies which
are not fundamental, the Fund does not invest (i) in puts or calls (except as
discussed above); (ii) in straddles, spreads, or any combination thereof; (iii)
in oil, gas or other mineral exploration or development programs; or (iv) more
than 5% of its gross assets in securities the disposition of which would be
subject to restrictions under the federal securities laws.
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Growth Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government securities and
repurchase agreements relating thereto), although up to 25% of each Fund's total
assets may be invested without regard to this restriction; or (ii) invest 25% or
more of its total assets in the securities of any one industry.
Premier Growth Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest 25% or more of the value of its
total assets in the same industry; (iii) borrow money or issue senior securities
except for temporary or emergency purposes in an amount not exceeding 5% of the
value of its total assets at the time the borrowing is made; (iv) pledge,
mortgage, hypothecate or otherwise encumber any of its assets except in
connection with the writing of call options and except to secure permitted
borrowings; or (v) invest in the securities of any issuer that has a record of
less than three years of continuous operation (including the operation of any
predecessor) if as a result more than 10% of the value of the total assets of
the Fund would be invested in the securities of such issuer or issuers.
Technology Fund may not: (i) with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b) U.S. Government
securities, or (c) securities of any one issuer (other than the U.S. Government
and its agencies or instrumentalities) not greater in value than 5% of the
Fund's total assets, and not more than 10% of the outstanding voting securities
of such issuer; (ii) purchase the securities of any one issuer, other than the
U.S. Government and its agencies or instrumentalities, if as a result (a) the
value of the holdings of the Fund in the securities of such issuer exceeds 25%
of its total assets, or (b) the Fund owns more than 25% of the outstanding
securities of any one class of securities of such issuer; (iii) concentrate its
investments in any one industry, but the Fund has reserved the right to invest
up to 25% of its total assets in a particular industry; and (iv) invest in the
securities of any issuer which has a record of less than three years of
continuous operation (including the operation of any predecessor) if such
purchase would cause 10% or more of its total assets to be invested in the
securities of such issuers.
Quasar Fund may not: (i) purchase the securities of any one issuer, other than
the U.S. Government or any of its agencies or instrumentalities, if as a result
more than 5% of its total assets would be invested in such issuer or the Fund
would own more than 10% of the outstanding voting securities of such issuer,
except that up to 25% of its total assets may be invested without regard to
these 5% and 10% limitations; (ii) invest more than 25% of its total assets in
any particular industry; (iii) borrow money except for temporary or emergency
purposes in an amount not exceeding 5% of its total assets at the time the
borrowing is made; or (iv) invest more than 10% of its assets in restricted
securities.
International Fund may not: (i) invest more than 5% of the value of its total
assets in securities of a single issuer (including repurchase agreements with
any one entity), except U.S. Government securities or foreign government
securities; provided, however, that the Fund may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in securities of any one
foreign government issuer; (ii) own more than 10% of the outstanding securities
of any class of any issuer (for this purpose, all preferred stocks of an issuer
shall be deemed a single class, and all indebtedness of an issuer shall be
deemed a single class), except U.S. Government securities; (iii) invest more
than 25% of the value of its total assets in securities of issuers having their
principal business activities in the same industry; provided, that this
limitation does not apply to U.S. Government securities or foreign government
securities; (iv) invest more than 5% of the value of its total assets in the
securities of any issuer that has a record of less than three years of
continuous operation (including the operation of any predecessor or
unconditional guarantor), except U.S. Government securities or foreign
government securities; (v) invest more than 5% of the value of its total assets
in securities with legal or contractual restrictions on resale, other than
repurchase agreements, or more than 10% of the value of its total assets in
securities that are not readily marketable (including restricted securities and
repurchase agreements not terminable within seven business days); and (vi)
borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then only from banks in amounts not exceeding 5% of its total
assets.
International Premier Growth Fund may not: (i) invest 25% or more of its total
assets in securities of issuers conducting their principal business activities
in the same industry, except that this restriction does not apply to U.S.
Government securities; (ii) borrow money or issue senior securities, except that
the Fund may borrow (a) from a bank if immediately after such borrowing there is
asset coverage of at least 300% as defined in the 1940 Act and (b) for temporary
purposes in an amount not exceeding 5% of the value of the total assets of the
Fund; or (iii) pledge, hypothecate, mortgage or otherwise encumber its assets,
except to secure permitted borrowings.
Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets
in securities of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a) U.S.
Government securities, or (b) the purchase of securities of issuers whose
primary business activity is in the national commercial banking industry, so
long as the Fund's Directors determine, on the basis of factors such as
liquidity, availability of investments and anticipated returns, that the Fund's
ability to achieve its investment objective would be adversely affected if the
Fund were not permitted to invest more than 25% of its total assets in those
securities, and so long as the Fund notifies its shareholders of any decision by
the Directors to permit or cease to permit the Fund to invest more than 25% of
its total assets in those securities, such notice to include a discussion of any
increased investment risks to which the Fund may be subjected as a result of the
Directors' determination; (ii) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the
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Fund's total assets (including the amount borrowed) less liabilities (not
including the amount borrowed) at the time the borrowing is made; outstanding
borrowings in excess of 5% of the value of the Fund's total assets will be
repaid before any investments are made; or (iii) pledge, hypothecate, mortgage
or otherwise encumber its assets, except to secure permitted borrowings. The
exception contained in clause (i)(b) above is subject to the operating policy
regarding concentration described in this Prospectus.
New Europe Fund may not: (i) purchase more than 10% of the outstanding voting
securities of any one issuer; (ii) invest more than 15% of its total assets in
the securities of any one issuer or 25% or more of its total assets in the same
industry, provided, however, that the foregoing restriction shall not be deemed
to prohibit the Fund from purchasing the securities of any issuer pursuant to
the exercise of rights distributed to the Fund by the issuer, except that no
such purchase may be made if as a result the Fund will fail to meet the
diversification requirements of the Code and any such acquisition in excess of
the foregoing 15% or 25% limits will be sold by the Fund as soon as reasonably
practicable (this restriction does not apply to U.S. Government securities, but
will apply to foreign government securities unless the Commission permits their
exclusion); (iii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the Fund's total assets will be repaid
before any subsequent investments are made; or (iv) purchase a security (unless
the security is acquired pursuant to a plan of reorganization or an offer of
exchange) if, as a result, the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of the Fund's total
assets would be invested in securities of any closed-end investment company, or
more than 10% of such value in closed-end investment companies in general.
All-Asia Investment Fund may not: (i) invest 25% or more of its total assets in
securities of issuers conducting their principal business activities in the same
industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the value of the Fund's total assets
will be repaid before any investments are made; or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.
Greater China '97 Fund may not: (i) invest 25% or more of its assets in
securities of issuers conducting their principal business activities in the same
industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the value of the Fund's total assets
will be repaid before any investments are made; or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.
Global Small Cap Fund may not: (i) purchase the securities of any one issuer,
other than the U.S. Government or any of its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total assets
would be invested in such issuer or the Fund would own more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the
Fund's total assets may be invested without regard to these 5% and 10%
limitations; (ii) invest 25% or more of its total assets in the same industry;
this restriction does not apply to U.S. Government securities, but will apply to
foreign government securities unless the Commission permits their exclusion;
(iii) borrow money except from banks for emergency or temporary purposes in an
amount not exceeding 5% of the total assets of the Fund; or (iv) make short
sales of securities or maintain a short position, unless at all times when a
short position is open it owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in amount to, the
securities sold short and unless not more than 5% of the Fund's net assets is
held as collateral for such sales at any one time.
Global Environment Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest more than 15% of the value of
its total assets in the securities of any one issuer or 25% or more of the value
of its total assets in the same industry, except that the Fund will invest more
than 25% of its total assets in Environmental Companies, provided that this
restriction does not apply to U.S. Government securities, but will apply to
foreign government obligations unless the Commission permits their exclusion;
(iii) borrow money or issue senior securities, except that the Fund may borrow
(a) from a bank if immediately after such borrowing there is asset coverage of
at least 300% as defined in the 1940 Act and (b) for temporary purposes in an
amount not exceeding 5% of the value of the total assets of the Fund; (iv)
pledge, hypothecate, mortgage or otherwise encumber its assets, except (a) to
secure permitted borrowings and (b) in connection with initial and variation
margin deposits relating to futures contracts; (v) purchase a security (unless
the security is acquired pursuant to a plan of reorganization or an offer of
exchange) if, as a result, the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of any
closed-end investment company,
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or more than 5% of the value of the Fund's total assets would be invested in
securities of any closed-end investment company or more than 10% of such value
in closed-end investment companies in the aggregate; (vi) make short sales of
securities or maintain a short position, unless at all times when a short
position is open it owns an equal amount of such securities or securities
convertible into or exchangeable for, without payment of any further
consideration, securities of the same issue as, and equal in amount to, the
securities sold short ("short sales against the box"), and unless not more than
5% of the Fund's net assets (taken at market value) is held as collateral for
such sales at any onetime; or (vii) buy or write (i.e., sell) put or call
options, except (a) the Fund may buy foreign currency options or write covered
foreign currency options and options on foreign currency futures and (b) the
Fund may purchase warrants.
Balanced Shares may not: (i) invest more than 5% of its total assets in the
securities of any one issuer, except U.S. Government securities; or (ii) own
more than 10% of the outstanding voting securities of any one issuer.
Utility Income Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer except the U.S. Government, although with respect
to 25% of its total assets it may invest in any number of issuers; (ii) invest
25% or more of its total assets in the securities of issuers conducting their
principal business activities in any one industry, other than the utilities
industry, except that this restriction does not apply to U.S. Government
securities; (iii) purchase more than 10% of any class of the voting securities
of any one issuer; (iv) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding borrowings in excess of 5% of the Fund's total assets will be
repaid before any subsequent investments are made; or (v) purchase a security
if, as a result (unless the security is acquired pursuant to a plan of
reorganization or an offer of exchange), the Fund would own any securities of an
open-end investment company or more than 3% of the total outstanding voting
stock of any closed-end investment company or more than 5% of the value of the
Fund's net assets would be invested in securities of any one or more closed-end
investment companies.
Growth and Income Fund may not (i) invest more than 5% of its net assets in the
security of any one issuer, except U.S. Government obligations or (ii) own more
than 10% of the outstanding voting securities of any issuer.
Real Estate Investment Fund may not: (i) with respect to 75% of its total
assets, have such assets represented by other than: (a) cash and cash items, (b)
U.S. Government securities, or (c) securities of any one issuer (other than the
U.S. Government and its agencies or instrumentalities) not greater in value than
5% of the Fund's total assets, and not more than 10% of the outstanding voting
securities of such issuer; (ii) purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities, if as a result
(a) the value of the holdings of the Fund in the securities of such issuer
exceeds 25% of its total assets, or (b) the Fund owns more than 25% of the
outstanding securities of any one class of securities of such issuer; (iii)
invest 25% or more of its total assets in the securities of issuers conducting
their principal business activities in any one industry, other than the real
estate industry in which the Fund will invest at least 25% or more of its total
assets, except that this restriction does not apply to U.S. Government
securities; (iv) purchase or sell real estate, except that it may purchase and
sell securities of companies which deal in real estate or interests therein,
including Real Estate Equity Securities; or (v) borrow money except for
temporary or emergency purposes or to meet redemption requests, in an amount not
exceeding 5% of the value of its total assets at the time the borrowing is made.
RISK CONSIDERATIONS
Investment in certain of the Funds involves the special risk considerations
described below. These risks may be heightened when investing in emerging
markets.
Investment in Privatized Enterprises by Worldwide Privatization Fund. In certain
jurisdictions, the ability of foreign entities, such as the Fund, to participate
in privatizations may be limited by local law, or the price or terms on which
the Fund may be able to participate may be less advantageous than for local
investors. Moreover, there can be no assurance that governments that have
embarked on privatization programs will continue to divest their ownership of
state enterprises, that proposed privatizations will be successful or that
governments will not re-nationalize enterprises that have been privatized.
Furthermore, in the case of certain of the enterprises in which the Fund may
invest, large blocks of the stock of those enterprises may be held by a small
group of stockholders, even after the initial equity offerings by those
enterprises. The sale of some portion or all of those blocks could have an
adverse effect on the price of the stock of any such enterprise.
Most state enterprises or former state enterprises go through an internal
reorganization of management prior to conducting an initial equity offering in
an attempt to better enable these enterprises to compete in the private sector.
However, certain reorganizations could result in a management team that does not
function as well as the enterprise's prior management and may have a negative
effect on such enterprise. After making an initial equity offering, enterprises
that may have enjoyed preferential treatment from the respective state or
government that owned or controlled them may no longer receive such preferential
treatment and may become subject to market competition from which they were
previously protected. Some of these enterprises may not be able to effectively
operate in a competitive market and may suffer losses or experience bankruptcy
due to such competition. In addition, the privatization of an enterprise by its
government may occur over
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a number of years, with the government continuing to hold a controlling position
in the enterprise even after the initial equity offering for the enterprise.
Currency Considerations. Substantially all of the assets of International Fund,
International Premier Growth Fund, New Europe Fund, All-Asia Investment Fund,
Greater China '97 Fund and Worldwide Privatization Fund and a substantial
portion of the assets of Global Small Cap Fund and Global Environment Fund will
be invested in securities denominated in foreign currencies, and a corresponding
portion of these Funds' revenues will be received in such currencies. Therefore,
the dollar equivalent of their net assets, distributions and income will be
adversely affected by reductions in the value of certain foreign currencies
relative to the U.S. dollar. If the value of the foreign currencies in which a
Fund receives its income falls relative to the U.S. dollar between receipt of
the income and the making of Fund distributions, the Fund may be required to
liquidate securities in order to make distributions if it has insufficient cash
in U.S. dollars to meet distribution requirements that the Fund must satisfy to
qualify as a regulated investment company for federal income tax purposes.
Similarly, if an exchange rate declines between the time a Fund incurs expenses
in U.S. dollars and the time cash expenses are paid, the amount of the currency
required to be converted into U.S. dollars in order to pay expenses in U.S.
dollars could be greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these risks, a Fund may
engage in certain currency hedging transactions, which themselves involve
certain special risks. See "Additional Investment Practices" above.
Foreign Investment. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, a Fund whose investment portfolio includes such
securities may experience greater price volatility and significantly lower
liquidity than a portfolio invested solely in equity securities of U.S.
companies. These markets may be subject to greater influence by adverse events
generally affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States. Securities settlements
may in some instances be subject to delays and related administrative
uncertainties. These problems are particularly severe in India, where settlement
is through physical delivery, and, where, currently, a severe shortage of vault
capacity exists among custodial banks, although efforts are being undertaken to
alleviate the shortage. 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 a Fund. In addition, the
repatriation of investment income, capital or the proceeds of sales of
securities from certain countries is controlled under regulations, including in
some cases the need for certain advance government notification or authority,
and if a deterioration occurs in a country's balance of payments, the country
could impose temporary restrictions on foreign capital remittances.
A Fund could also be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
to it of other restrictions on investment. Investing in local markets may
require a Fund to adopt special procedures, which may involve additional costs
to a Fund. The liquidity of a Fund's investments in any country in which any of
these factors exists could be affected and Alliance will monitor the effect of
any such factor or factors on a Fund's investments. Furthermore, transaction
costs including brokerage commissions for transactions both on and off the
securities exchanges in many foreign countries are generally higher than in the
United States.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The reporting, accounting and
auditing standards of foreign countries may differ, in some cases significantly,
from U.S. standards in important respects and less information may be available
to investors in foreign securities than to investors in U.S. securities.
Substantially less information is publicly available about certain non-U.S.
issuers than is available about U.S. issuers.
The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product or gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes,
government regulation, political or social instability or diplomatic
developments could affect adversely the economy of a foreign country or the
Fund's investments in such country. In the event of expropriation,
nationalization or other confiscation, a Fund could lose its entire investment
in the country involved. In addition, laws in foreign countries governing
business organizations, bankruptcy and insolvency may provide less protection to
security holders such as the Fund than that provided by U.S. laws.
Investment in United Kingdom Issuers. Investment in securities of United Kingdom
issuers involves certain considerations not present with investment in
securities of U.S. issuers. As with any investment not denominated in the U.S.
dollar, the U.S. dollar value of the Fund's investment denominated in the
British pound sterling will fluctuate with pound sterling--dollar exchange rate
movements. Between 1972, when the pound sterling was allowed to float against
other currencies, and the end of 1992, the pound sterling generally depreciated
against most major currencies, including the U.S. dollar. Between September and
December 1992, after the United Kingdom's exit
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from the Exchange Rate Mechanism of the European Monetary System, the value of
the pound sterling fell by almost 20% against the U.S. dollar. The pound
sterling has since recovered due to interest rate cuts throughout Europe and an
upturn in the economy of the United Kingdom. The average exchange rate of the
U.S. dollar to the pound sterling was 1.50 in 1993 and 1.64 in 1997. On October
13, 1998 the U.S. dollar-pound sterling exchange rate was 1.71.
The United Kingdom's largest stock exchange is the London Stock Exchange, which
is the third largest exchange in the world. As measured by the FT-SE 100 index,
the performance of the 100 largest companies in the United Kingdom reached
5,135.5 at the end of 1997, up approximately 25% from the end of 1996. On
October 5, 1998, the FT-SE 100 index closed at 4648.7, the lowest close in the
12-month period prior to that date, after reaching a high of 6179.0 on July 20,
1998. The FT-SE 100 index closed at 4990.1 on October 14, 1998.
In January 1999, the Economic and Monetary Union ("EMU") is scheduled to take
effect. The EMU will establish a common currency for European countries that
meet the eligibility criteria and choose to participate. Although the United
Kingdom meets the eligibility criteria, the government has not taken any action
to join the EMU.
From 1979 until 1997 the Conservative Party controlled Parliament. In the May 1,
1997 general elections, however, the Labour Party, led by Tony Blair, won a
majority in Parliament, holding 418 of 658 seats in the House of Commons. Mr.
Blair, who was appointed Prime Minister, has launched a number of reform
initiatives, including an overhaul of the monetary policy framework intended to
protect monetary policy from political forces by vesting responsibility for
setting interest rates in a new Monetary Policy Committee headed by the Governor
of the Bank of England, as opposed to the Treasury. Prime Minister Blair has
also undertaken a comprehensive restructuring of the regulation of the financial
services industry. For further information regarding the United Kingdom, see the
Statement of Additional Information of New Europe Fund.
Investment in Japanese Issuers. Investment in securities of Japanese issuers
involves certain considerations not present with investment in securities of
U.S. issuers. As with any investment not denominated in the U.S. dollar, the
U.S. dollar value of each Fund's investments denominated in the Japanese yen
will fluctuate with yen-dollar exchange rate movements. Between 1985 and 1995,
the Japanese yen generally appreciated against the U.S. dollar, but has since
fallen from its post-World War II high (in 1995) against the U.S. dollar.
Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section of
which is reserved for larger, established companies. As measured by the TOPIX, a
capitalization-weighted composite index of all common stocks listed in the First
Section, the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 50% through the end of 1997. On
October 13, 1998, the TOPIX closed at 998.98, down approximately 15% from the
end of 1997. Certain valuation measures, such as price-to-book value and price-
to-cash flow ratios, indicate that the Japanese stock market is near its lowest
level in the last twenty years relative to other world markets.
In recent years, Japan has consistently recorded large current account trade
surpluses with the U.S. that have caused difficulties in the relations between
the two countries. On October 1, 1994, the U.S. and Japan reached an agreement
that may lead to more open Japanese markets with respect to trade in certain
goods and services. In June 1995, the two countries agreed in principle to
increase Japanese imports of American automobiles and automotive parts.
Nevertheless it is expected that the continuing friction between the U.S. and
Japan with respect to trade issues will continue for the foreseeable future.
Each Fund's investments in Japanese issuers will be subject to uncertainty
resulting from the instability of recent Japanese ruling coalitions. From 1955
to 1993, Japan's government was controlled by a single political party. Between
August 1993 and October 1996 Japan was ruled by a series of four coalition
governments. As the result of a general election on October 20, 1996, however,
Japan returned to a single-party government led by Ryutaro Hashimoto, a member
of the Liberal Democratic Party ("LDP"). While the LDP does not control a
majority of the seats in the parliament, it is only three seats short of the 251
seats required to attain a majority in the House of Representatives (down from a
12-seat shortfall just after the October 1996 election). The popularity of the
LDP declined, however, due to dissatisfaction with Mr. Hashimoto's leadership.
In the July 1998 House of Councillors election, the LDP's representation fell to
103 seats from 120 seats. As a result of the LDP's defeat, Mr. Hashimoto
resigned as prime minister and leader of the LDP. Mr. Hashimoto was replaced by
Keizo Obuchi. For the past several years, Japan's banking industry has been
weakened by a significant amount of problem loans. Japan's banks also have
significant exposure to the current financial turmoil in other Asian markets.
Following the insolvency of one of Japan's largest banks in November 1997, the
government proposed several plans designed to strengthen the weakened banking
sector. In October 1998, the Japanese parliament approved several new laws that
will make $508 billion in public funds available to increase the capital of
Japanese banks, to guarantee depositors' accounts and to nationalize the weakest
banks. It is unclear whether these new laws will achieve their intended effect.
For further information regarding Japan, see the Statements of Additional
Information for All-Asia Investment Fund and International Fund.
Investment in Greater China Issuers. China, in particular, but Hong Kong and
Taiwan, as well, in significant measure because of their existing and increasing
economic, and now in the case of Hong Kong, direct political ties with China,
may be subject to a greater degree of economic, political and social instability
than is the case in the United States.
China's economy is very much in transition. While the government still controls
production and pricing in major economic sectors, significant steps have been
taken toward capitalism and China's economy has become increasingly market
oriented. China's strong economic growth and ability to attract significant
foreign investment in recent years stem from the economic liberalization
initiated by Deng Xiaoping who assumed
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power in the late 1970s. The economic growth, however, has not been smooth and
has been marked by extremes in many respects of inordinate growth, which has not
been tightly controlled, followed by rigid measures of austerity.
The rapidly and erratic nature of the growth have resulted in inefficiencies and
dislocations, including at times high rates of inflation.
China's economic development has occurred notwithstanding the continuation of
the power of China's Communist Party and China's authoritarian government
control, not only of centrally planned economic decisions, but of many aspects
of the social structure. While a significant portion of China's population has
benefited from China's economic growth, the conditions of many leave much room
for improvement. Notwithstanding restrictions on freedom of expression and the
absence of a free press, and notwithstanding the extreme manner in which past
unrest has been dealt with, the 1989 Tiananmen Square uprising being a recent
reminder, the potential for renewed popular unrest associated with demands for
improved social, political and economic conditions be dismissed.
Following the death of Deng Xiaoping in February 1997, Jiang Zemin became the
leader of China's Communist Party. The transfer of political power has
progressed smoothly and Jiang's popularity and credibility have gradually
increased. Jiang continues to consolidate his power, but as of yet does not
appear to have the same degree of control as did Deng Xiaoping. Jiang has
continued the market-oriented policies of Deng. Currently, China's major
economic challenge centers on reforming or eliminating inefficient state-owned
enterprises without creating an unacceptable level of unemployment. Recent
capitalistic policies have in many respects effectively outdated the Communist
Party and the governmental structure, but both remain entrenched. The Communist
Party still controls access to governmental positions and closely monitors
governmental action. Essentially there exists an inefficient set of parallel
bureaucracies and attendant opportunities for corruption.
In addition to the economic impact of China's internal political uncertainties,
the potential effect of China's actions, not only on China itself, but on Hong
Kong and Taiwan as well, could also be significant.
China is heavily dependent on foreign trade, particularly with the United
States, South Korea, Japan and Germany. Political developments adverse to its
trading partners, as well as political and social repression, could cause the
United States and others to alter their trading policy towards China. For
example, in the United States, the continued extension of most favored nation
trading status to China which is reviewed regularly and was renewed in 1999, is
an issue of significant controversy. Loss of that status would clearly hurt
China's economy by reducing its exports. With much of China's trading activity
being funneled through Hong Kong and with trade through Taiwan becoming
increasingly significant, any sizable reduction in demand for goods from China
would have negative implications for both countries. China is believed to be the
largest investor in Hong Kong and its markets and an economic downturn in China
would be expected to reverberate through Hong Kong's markets as well.
Although China has committed by treaty to preserve Hong Kong's autonomy and its
economic, political and social freedoms for fifty years from the July 1, 1997
transfer of sovereignty from Great Britain to China. Hong Kong is headed by a
chief executive, appointed by the central government of China, whose power is
checked by both the government of China and a Legislative Council. Although Hong
Kong voters voted overwhelmingly for pro-democracy candidates in the recent
election, it remains possible that China could exert its authority so as to
alter the economic structure, political structure or existing social policy of
Hong Kong. Investor and business confidence in Hong Kong can be significantly
affected by such developments, which in turn can affect markets and business
performance. In this connection, it is noted that a substantial portion of the
companies listed on the Hong Kong Stock Exchange are involved in real estate-
related activities.
The securities markets of China, and to a lesser extent Taiwan, are relatively
small, with the majority of market capitalization and trading volume
concentrated in a limited number of companies representing a small number of
industries. Consequently, Greater China '97 Fund may experience greater price
volatility and significantly lower liquidity than a portfolio invested solely in
equity securities of U.S. companies. These markets may be subject to greater
influence by adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual in the U.S.
Securities settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign investment in the securities markets of China and Taiwan is restricted
or controlled to varying degrees. These restrictions or controls, which apply to
the Greater China '97 Fund, may at times limit or preclude investment in certain
securities and may increase the cost and expenses of the Fund. China and Taiwan
require governmental approval prior to investments by foreign persons or limit
investment by foreign persons to only a specified percentage of an issuer's
outstanding securities or a specific class of securities which may have less
advantageous terms (including price) than securities of the company available
for purchase by nationals. In addition, the repatriation of investment income,
capital or the proceeds of sales of securities from China and Taiwan is
controlled under regulations, including in some cases the need for certain
advance government notification or authority, and if a deterioration occurs in a
country's balance of payments, the country could impose restrictions on foreign
capital remittances.
Greater China '97 Fund could be adversely affected by delays in, or a refusal to
grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. The liquidity of the
Fund's investments in any country in which any of these factors exists could be
affected by any such factor or factors on the Fund's investments.
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The limited liquidity in certain Greater China markets is a factor to be taken
into account in the Fund's valuation of portfolio securities in this category
and may affect the Fund's ability to dispose of securities in order to meet
redemption requests at the price and time it wishes to do so. It is also
anticipated that transaction costs, including brokerage commissions for
transactions both on and off the securities exchanges in Greater China
countries, will be higher than in the U.S.
Issuers of securities in Greater China countries are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such matters
as timely disclosure of information, insider trading rules, restrictions on
market manipulation and shareholder proxy requirements. Reporting, accounting
and auditing standards of Greater China countries may differ, in some cases
significantly, from U.S. standards in important respects, and less information
may be available to investors in securities of Greater China country issuers
than to investors in securities of U.S. issuers.
Investment in Greater China companies which are in the initial stages of their
development involves greater risk than is customarily associated with securities
of more established companies. The securities of such companies may have
relatively limited marketability and may be subject to more abrupt or erratic
market movements than securities of established companies or broad market
indices.
Investment in Smaller, Emerging Companies. The Funds may invest in smaller,
emerging companies. Global Small Cap Fund and New Europe Fund will emphasize
investment in, and All-Asia Investment Fund, Greater China '97 Fund and Global
Environment Fund may emphasize investment in, smaller, emerging companies.
Investment in such companies involves greater risks than is customarily
associated with securities of more established companies. Companies in the
earlier stages of their development often have products and management personnel
which have not been thoroughly tested by time or the marketplace; their
financial resources may not be as substantial as those of more established
companies. The securities of smaller companies may have relatively limited
marketability and may be subject to more abrupt or erratic market movements than
securities of larger companies or broad market indices. The revenue flow of such
companies may be erratic and their results of operations may fluctuate widely
and may also contribute to stock price volatility.
Extreme Governmental Action; Less Protective Laws. In contrast with investing
in the United States, foreign investment may involve in certain situations
greater risk of nationalization, expropriation, confiscatory taxation, currency
blockage or other extreme governmental action which could adversely impact a
Fund's investment. In the event of certain such actions, a Fund could lose its
entire investment in the country involved. In addition, laws in various foreign
countries, including in certain respects each of the Greater China countries,
governing, among other subjects, business organization and practices, securities
and securities trading, bankruptcy and insolvency may provide less protection to
investors such as the Fund than provided under United States laws.
Investing in Environmental Companies by Global Environment Fund. Governmental
regulations or other action can inhibit an Environmental Company's performance,
and it may take years to translate environmental legislation into sales and
profits. Environmental Companies generally face competition in fields often
characterized by relatively short product cycles and competitive pricing
policies. Losses may result from large product development or expansion costs,
unprotected marketing or distribution systems, erratic revenue flows and low
profit margins. Additional risks that Environmental Companies may face include
difficulty in financing the high cost of technological development,
uncertainties due to changing governmental regulation or rapid technological
advances, potential liabilities associated with hazardous components and
operations, and difficult in finding experienced employees.
The Real Estate Industry. Although Real Estate Investment Fund does not invest
directly in real estate, it invests primarily in Real Estate Equity
Securities and has a policy of concentration of its investments in the
real estate industry. Therefore, an investment in the Fund is subject to certain
risks associated with the direct ownership of real estate and with the real
estate industry in general. These risks include, among others: possible declines
in the value of real estate; risks related to general and local economic
conditions; possible lack of availability of mortgage funds; overbuilding;
extended vacancies of properties; increases in competition, property taxes and
operating expenses; changes in zoning laws; costs resulting from the clean-up
of, and liability to third parties for damages resulting from, environmental
problems; casualty or condemnation losses; uninsured damages from floods,
earthquakes or other natural disasters; limitations on and variations in rents;
and changes in interest rates. To the extent that assets underlying the Fund's
investments are concentrated geographically, by property type or in certain
other respects, the Fund may be subject to certain of the foregoing risks to a
greater extent.
In addition, if Real Estate Investment Fund receives rental income or income
from the disposition of real property acquired as a result of a default on
securities the Fund owns, the receipt of such income may adversely affect the
Fund's ability to retain its tax status as a regulated investment company. See
"Dividends, Distributions and Taxes" in the Fund's Statement of Additional
Information. Investments by the Fund in securities of companies providing
mortgage servicing will be subject to the risks associated with refinancings and
their impact on servicing rights.
REITs. Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, default by borrowers and self-
liquidation. REITs are also subject to the possibilities of failing to qualify
for tax free pass-through of income under the Code and failing to maintain their
exemptions from registration under the 1940 Act.
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REITs (especially mortgage REITs) are also subject to interest rate risks. When
interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities. Historically, small
capitalization stocks, such as REITs, have been more volatile in price than the
larger capitalization stocks included in the S&P Index of 500 Common Stocks.
Mortgage-Backed Securities. As discussed above, investing in Mortgage-Backed
Securities involves certain unique risks in addition to those risks associated
with investment in the real estate industry in general. These risks include the
failure of a counterparty to meet its commitments, adverse interest rate changes
and the effects of prepayments on mortgage cash flows. When interest rates
decline, the value of an investment in fixed rate obligations can be expected to
rise. Conversely, when interest rates rise, the value of an investment in fixed
rate obligations can be expected to decline. In contrast, as interest rates on
adjustable rate mortgage loans are reset periodically, yields on investments in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
Further, the yield characteristics of Mortgage-Backed Securities, such as those
in which Real Estate Investment Fund may invest, differ from those of
traditional fixed-income securities. The major differences typically include
more frequent interest and principal payments (usually monthly), the
adjustability of interest rates, and the possibility that prepayments of
principal may be made substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and a
variety of economic, geographic, social and other factors, and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Early payment associated
with Mortgage-Backed Securities causes these securities to experience
significantly greater price and yield volatility than that experienced by
traditional fixed-income securities. Under certain interest rate and prepayment
rate scenarios, the Fund may fail to recoup fully its investment in Mortgage-
Backed Securities notwithstanding any direct or indirect governmental or agency
guarantee. When the Fund reinvests amounts representing payments and unscheduled
prepayments of principal, it may receive a rate of interest that is lower than
the rate on existing adjustable rate mortgage pass-through securities. Thus,
Mortgage-Backed Securities, and adjustable rate mortgage pass-through securities
in particular, may be less effective than other types of U.S. Government
securities as a means of "locking in" interest rates.
U.S. and Foreign Taxes. A Fund's investment in foreign securities may be subject
to taxes withheld at the source on dividend or interest payments. Foreign taxes
paid by a Fund may be creditable or deductible by U.S. shareholders for U.S.
income tax purposes. No assurance can be given that applicable tax laws and
interpretations will not change in the future. Moreover, non-U.S. investors may
not be able to credit or deduct such foreign taxes. Investors should review
carefully the information discussed under the heading "Dividends, Distributions
and Taxes" and should discuss with their tax advisers the specific tax
consequences of investing in a Fund.
Fixed-Income Securities. The value of each Fund's shares will fluctuate with the
value of its investments. The value of each Fund's investments in fixed-income
securities will change as the general level of interest rates fluctuates. During
periods of falling interest rates, the values of fixed-income securities
generally rise. Conversely, during periods of rising interest rates, the values
of fixed-income securities generally decline.
Under normal market conditions, the average dollar-weighted maturity of a Fund's
portfolio of debt or other fixed-income securities is expected to vary between
five and 30 years in the case of All-Asia Investment Fund, between five and 25
years in the case of Utility Income Fund and between one year or less and 30
years in the case of all other Funds that invest in such securities. In periods
of increasing interest rates, each of the Funds may, to the extent it holds
mortgage-backed securities, be subject to the risk that the average dollar-
weighted maturity of the Fund's portfolio of debt or other fixed-income
securities may be extended as a result of lower than anticipated prepayment
rates. See "Additional Investment Practices--Mortgage-Backed Securities."
Securities Ratings. The ratings of securities by S&P, Moody's, Duff & Phelps and
Fitch are a generally accepted barometer of credit risk. They are, however,
subject to certain limitations from an investor's standpoint. The rating of an
issuer is heavily weighted by past developments and does not necessarily reflect
probable future conditions. There is frequently a lag between the time a rating
is assigned and the time it is updated. In addition, there may be varying
degrees of difference in credit risk of securities within each rating category.
Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are
considered to be of the highest quality; capacity to pay interest and repay
principal is extremely strong. Securities rated Aa by Moody's and AA by S&P,
Duff & Phelps and Fitch are considered to be high quality; capacity to repay
principal is considered very strong, although elements may exist that make risks
appear somewhat larger than exist with securities rated Aaa
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or AAA. Securities rated A are considered by Moody's to
possess adequate factors giving security to principal and interest. S&P, Duff &
Phelps and Fitch consider such securities to have a strong capacity to pay
interest and repay principal. Such securities are more susceptible to adverse
changes in economic conditions and circumstances than higher-rated securities.
Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are
considered to have an adequate capacity to pay interest and repay principal.
Such securities are considered to have speculative characteristics and share
some of the same characteristics as lower-rated securities. Sustained periods of
deteriorating economic conditions or of 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. Securities rated Ba by Moody's and
BB by S&P, Duff & Phelps and Fitch are considered to have speculative
characteristics with respect to capacity to pay interest and repay principal
over time; their future cannot be considered as well-assured. Securities rated B
by Moody's, S&P, Duff & Phelps and Fitch are considered to have highly
speculative characteristics with respect to capacity to pay interest and repay
principal. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are of
poor standing and there is a present danger with respect to payment of principal
or interest. Securities rated Ca by Moody's and CC by S&P and Fitch are
minimally protected, and default in payment of principal or interest is
probable. Securities rated C by Moody's, S&P and Fitch are in imminent default
in payment of principal or interest and have extremely poor prospects of ever
attaining any real investment standing. Securities rated D by S&P and Fitch are
in default. The issuer of securities rated DD by Duff & Phelps is under an order
of liquidation.
Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities, i.e.,
those rated Ba and lower by Moody's or BB and lower by S&P, Duff & Phelps or
Fitch, are subject to greater risk of loss of principal and interest than
higher-rated securities. They are also generally considered to be subject to
greater market risk than higher-rated securities, and the capacity of issuers of
lower-rated securities to pay interest and repay principal is more likely to
weaken than is that of issuers of higher-rated securities in times of
deteriorating economic conditions or rising interest rates. In addition, lower-
rated securities may be more susceptible to real or perceived adverse economic
conditions than investment grade securities.
The market for lower-rated securities may be thinner and less active than that
for higher-rated securities, which can adversely affect the prices at which
these securities can be sold. To the extent that there is no established
secondary market for lower-rated securities, a Fund may experience difficulty in
valuing such securities and, in turn, the Fund's assets. In addition, adverse
publicity and investor perceptions about lower-rated securities, whether or not
factual, may tend to impair their market value and liquidity.
Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political conditions.
However, there can be no assurance that losses will not occur. Since the risk of
default is higher for lower-rated securities, Alliance's research and credit
analysis are a correspondingly more important aspect of its program for managing
a Fund's securities than would be the case if a Fund did not invest in lower-
rated securities.
In seeking to achieve a Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization of
capital losses on securities in a Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated securities of
comparable quality may be subject to wider fluctuations in yield and market
values than higher-rated securities under certain market conditions. Such
fluctuations after a security is acquired do not affect the cash income received
from that security but are reflected in the net asset value of a Fund. See the
Statement of Additional Information for each Fund that invests in lower-rated
securities for a description of the bond ratings of Moody's, S&P, Duff & Phelps
and Fitch.
Certain lower-rated securities in which Growth Fund and Utility Income Fund may
invest may contain call or buy-back features that permit the issuers thereof to
call or repurchase such securities. Such securities may present risks based on
prepayment expectations. If an issuer exercises such a provision, a Fund may
have to replace the called security with a lower yielding security, resulting in
a decreased rate of return to the Fund.
Non-Diversified Status. Each of Worldwide Privatization Fund, New Europe Fund,
All-Asia Investment Fund, Greater China '97 Fund and Global Environmental Fund
is a "non-diversified" investment company, which means the Fund is not limited
in the proportion of its assets that may be invested in the securities of a
single issuer. However, each Fund intends to conduct its operations so as to
qualify to be taxed as a "regulated investment company" for purposes of the
Code, which will relieve the Fund of any liability for federal income tax to the
extent its earnings are distributed to shareholders. See "Dividends,
Distributions and Taxes" in each Fund's Statement of Additional Information. To
so qualify, among other requirements, the Fund will limit its investments so
that, at the close of each quarter of the taxable year, (i) not more than 25% of
the Fund's total assets will be invested in the securities of a single issuer,
and (ii) with respect to 50% of its total assets, not more than 5% of its total
assets will be invested in the securities of a single issuer and the Fund will
not own more than 10% of the outstanding voting securities of a single issuer. A
Fund's investments in U.S. Government securities and other regulated investment
companies are not subject to these limitations. Because each of Worldwide
Privatization Fund, New Europe Fund, Greater China '97 Fund, Global Environment
Fund and All-Asia Investment Fund is a non-diversified investment company, it
may invest in a smaller number of individual issuers than a diversified
investment
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company, and an investment in such Fund may, under certain circumstances,
present greater risk to an investor than an investment in a diversified
investment company.
Foreign government securities are not treated like U.S. Government securities
for purposes of the diversification tests described in the preceding paragraph,
but instead are subject to these tests in the same manner as the securities of
non-governmental issuers.
Year 2000 and Euro. Many computer systems and applications in use today process
transactions using two-digit date fields for the year of the transaction, rather
than the full four digits. If these systems are not modified or replaced,
transactions occurring after 1999 could be processed as year "1900", which could
result in processing inaccuracies and computer system failures. This is commonly
known as the Year 2000 problem. In addition to the Year 2000 problem, the
European Economic and Monetary Union has established a single currency, the Euro
Currency ("Euro") that will replace the national currency of certain European
countries effective January 1, 1999. Computer systems and applications must be
adapted in order to be able to process Euro sensitive information accurately
beginning in 1999. Should any of the computer systems employed by the Funds'
major service providers fail to process Year 2000 or Euro related information
properly, that could have a significant negative impact on the Funds' operations
and the services that are provided to the Funds' shareholders. In addition, to
the extent that the operations of issuers of securities held by the Funds are
impaired by the Year 2000 problem or the Euro, or prices of securities held by
the Funds' decline as a result of real or perceived problems relating to the
Year 2000 or the Euro, the value of the Funds' shares may be materially
affected.
With respect to the Year 2000, the Funds have been advised that Alliance, each
Fund's investment adviser, Alliance Fund Distributors, Inc. ("AFD"), each Fund's
principal underwriter, and Alliance Fund Services, Inc. ("AFS"), each Fund's
registrar transfer agent and dividend disbursing agent (collectively,
"Alliance") began to address the Year 2000 issue several years ago in connection
with the replacement or upgrading of certain computer systems and applications.
During 1997, Alliance began a formal Year 2000 initiative, which established a
structured and coordinated process to deal with the Year 2000 issue. Alliance
reports that it has completed its assessment of the Year 2000 issues on its
domestic and international computer systems and applications. Currently,
management of Alliance expects that the required modifications for the majority
of its significant systems and applications that will be in use on January 1,
2000, will be completed and tested by the end of 1998. Full integration testing
of these systems and testing of interfaces with third-party suppliers will
continue through 1999. At this time, management of Alliance believes that the
costs associated with resolving this issue will not have a material adverse
effect on its operations or on its ability to provide the level of services it
currently provides to the Funds.
With respect to the Euro, the Funds have been advised that Alliance has
established a project team to assess changes that will be required in connection
with the introduction of the Euro. Alliance reports that its project team has
assessed all systems, including those developed or managed internally, as well
as those provided by vendors, in order to determine the modifications that will
be required to process accurately transactions denominated in Euro after 1998.
At this time, management of Alliance expects that the required modifications for
the introduction of the Euro will be completed and tested before the end of
1998. Management of Alliance believes that the costs associated with resolving
this issue will not have a material adverse effect on its operations or on its
ability to provide the level of services it currently provides to the Funds.
The Funds and Alliance have been advised by the Funds' Custodians that they are
also in the process of reviewing their systems with the same goals. As of the
date of this prospectus, the Funds and Alliance have no reason to believe that
the Custodians will be unable to achieve these goals.
--------------------------------------
Purchase And Sale
--------------------------------------
Of Shares
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HOW TO BUY SHARES
Each Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares of each Fund may be purchased
through your financial representative at net asset value without any initial or
contingent deferred sales charges and are not subject to ongoing distribution
expenses. Advisor Class shares may be purchased and held solely (i) through
accounts established under a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary and approved by AFD,
(ii) through a self-directed defined contribution employee benefit plan (e.g., a
401(k) plan) that has at least 1,000 participants or $25 million in assets,
(iii) by investment advisory clients of, and certain other persons associated
with, Alliance and its affiliates or the Funds, and (iv) through registered
investment advisers or other financial intermediaries who charge a management,
consulting or other fee for their service and who purchase shares through a
broker or agent approved by AFD and clients of such registered investment
advisers or financial intermediaries whose accounts are linked to the master
account of such investment adviser or financial intermediary on the books of
such approved broker or agent. For more detailed information about who may
purchase and hold Advisor Class shares see the Statements of Additional
Information. A shareholder's Advisor Class shares will automatically convert to
Class A shares of the same Fund under certain circumstances.
For a more detailed description of the conversion feature and Class A shares,
see "Conversion Feature."
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Generally, a fee-based program must charge an asset-based or other similar fee
and must invest at least $250,000 in Advisor Class shares of each Fund in which
the program invests in order to be approved by AFD for investment in Advisor
Class shares. Share certificates are issued only upon request. See the
Subscription Application and the Statements of Additional Information for more
information.
The Funds may refuse any order to purchase Advisor Class shares. In this regard,
the Funds reserve the right to restrict purchases of Advisor Class shares
(including through exchanges) when there appears to be evidence of a pattern of
frequent purchases and sales made in response to short-term considerations.
How the Funds Value Their Shares
The net asset value of Advisor Class shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to the Advisor Class by the
outstanding shares of the Advisor Class. Shares are valued each day the Exchange
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as the Fund's Directors believe accurately reflects fair
market value.
HOW TO SELL SHARES
You may "redeem" (i.e., sell your shares in a Fund to the Fund) on any day the
Exchange is open, either directly or through your financial representative. The
price you will receive is the net asset value next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check or electronic
funds transfer, a Fund will not send proceeds until it is reasonably satisfied
that the check or electronic funds transfer has been collected (which may take
up to 15 days). If you are in doubt about what documents are required by your
fee-based program or employee benefit plan, you should contact your financial
representative.
Selling Shares Through Your Financial Representative
Your financial representative must receive your request before 4:00 p.m. Eastern
time, and your financial representative must transmit your request to the Fund
by 5:00 p.m. Eastern time, for you to receive that day's net asset value. Your
financial representative is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service.
Selling Shares Directly To A Fund
Send a signed letter of instruction or stock power form to AFS along with
certificates, if any, that represent the shares you want to sell. For your
protection, signatures must be guaranteed by a bank, a member firm of a national
stock exchange or other eligible guarantor institution. Stock power forms are
available from your financial representative, AFS, and many commercial banks.
Additional documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
800-221-5672
Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to 800-221-5672.
Telephone redemption requests must be made by 4 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value. A shareholder who
has completed the appropriate section of the Subscription Application, or the
Shareholder Options form obtained from AFS, can elect to have the proceeds of
his or her redemption sent to his or her bank via an electronic funds transfer.
Proceeds of telephone redemptions also may be sent by check to a shareholder's
address of record. Except for certain omnibus accounts, redemption requests by
electronic funds transfer may not exceed $100,000 and redemption requests by
check may not exceed $50,000 per day. Telephone redemption is not available for
shares held in nominee or "street name" accounts or retirement plan accounts or
shares held by a shareholder who has changed his or her address of record within
the previous 30 calendar days.
General
The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, a Fund may suspend redemptions or postpone payment for up
to seven days or longer, as permitted by federal securities law. The Funds
reserve the right to close an account that through redemption has remained below
$200 for 90 days. Shareholders will receive 60 days' written notice to increase
the account value before the account is closed.
During drastic economic or market developments, you might have difficulty
reaching AFS by telephone, in which event you should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephonic requests to
purchase, sell or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephonic requests. The telephone
service may be suspended or terminated at any time without notice.
AFD from time to time pays additional cash or other incentives to dealers or
agents in connection with the sale of shares of the Funds. Such additional
amounts may be utilized, in whole or in part, in some cases together with other
revenues of such dealers or agents, to provide additional compensation to
registered representatives who sell shares of the Funds. On some occasions, such
cash or other incentives will be conditioned upon the sale of specified minimum
dollar amount of the shares of a Fund and/or other Alliance Mutual Funds during
a specific period of time. Such incentives may take the
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form of payment for attendance at seminars, meals, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with dealer or agent to urban or
resort locations within or outside the United States. Such dealer or agent may
elect to receive cash incentives of equivalent amount in lieu of such payments.
SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more information about these
services or your account, call AFS's toll-free number, 800-221-5672.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares of any Fund for Advisor Class shares
of other Alliance Mutual Funds (including AFD Exchange Reserves, a money market
fund managed by Alliance). Exchanges of shares are made at the net asset value
next determined and without sales or service charges. Exchanges may be made by
telephone or written request. Telephone exchange requests must be received by
AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that
day's net asset value.
Please read carefully the prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to exchange
uncertificated shares. An exchange is a taxable capital transaction for federal
tax purposes. The exchange service may be changed, suspended, or terminated on
60 days' written notice.
GENERAL
If you are a Fund shareholder through an account established under a fee-based
program, your fee-based program may impose requirements with respect to the
purchase, sale or exchange of Advisor Class shares of a Fund that are different
from those described in this Prospectus. A transaction, service, administrative
or other similar fee may be charged by your broker-dealer, agent, financial
intermediary or other financial representative with respect to the purchase,
sale or exchange of Advisor Class shares made through such financial
representative. Such financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are different from, or
in addition to, those imposed by a Fund, including requirements as to the
minimum initial and subsequent investment amounts.
Each Fund offers three classes of shares other than the Advisor Class, which are
Class A, Class B and Class C. All classes of shares of a Fund have a common
investment objective and investment portfolio. Class A shares are offered with
an initial sales charge and pay a distribution services fee. Class B shares have
a contingent deferred sales charge (a "CDSC") and also pay a distribution
services fee. Class C shares have no initial sales charge or CDSC as long as
they are not redeemed within one year of purchase, but pay a distribution
services fee. Because Advisor Class shares have no initial sales charge or CDSC
and pay no distribution services fee, Advisor Class shares are expected to have
different performance from Class A, Class B or Class C shares. You can obtain
more information about Class A, Class B and Class C shares, which are not
offered by this Prospectus, by contacting AFS by telephone at 800-221-5672 or by
contacting your financial representative.
-----------------------------------
Management Of The Funds
-----------------------------------
ADVISER
Alliance, which is a Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been retained under an
advisory agreement (the "Advisory Agreement") to provide investment advice and,
in general, to conduct the management and investment program of each Fund,
subject to the general supervision and control of the Directors of the Fund.
The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time that
each person has been primarily responsible, and each person's principal
occupation during the past five years.
<TABLE>
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
<S> <C> <C>
Alliance Fund Alden M. Stewart since 1997- Associated with
Executive Vice President of Alliance
Alliance Capital Management
Corporation ("ACMC")*
Randall E. Haase since 1997- Associated with
Senior Vice President of ACMC Alliance
Growth Fund Tyler Smith since inception- Associated with
Senior Vice President of ACMC Alliance
Premier Growth Fund Alfred Harrison since inception- Associated with
Vice Chairman of ACMC Alliance
Technology Fund Peter Anastos since 1992- Associated with
Senior Vice President of ACMC Alliance
Gerald T. Malone since 1992- Associated with
Senior Vice President of ACMC Alliance
Quasar Fund Alden M. Stewart since (see above)
1994--
(see above)
Randall E. Haase since (see above)
1994--
(see above)
International Fund Bruce W. Calvert since 1998-- Associated with
Vice Chairman and Chief Alliance
Investment Officer
of ACMC
International Premier Alfred Harrison since 1998-- (see above)
Growth Fund (see above)
Thomas Kamp since 1998-- Associated with
Senior Vice President Alliance
of ACMC
</TABLE>
43
<PAGE>
<TABLE>
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
<S> <C> <C>
Worldwide Privatization Mark H. Breedon since inception-- Associated with
Fund Senior Vice President of ACMC Alliance
and Director and Vice President
of Alliance Capital Limited **
New Europe Fund Steven Beinhacker since 1997-- Associated with
Vice President of ACMC Alliance
All-Asia Hiroshi Motoki since 1998-- Associated with
Investment Fund Senior Vice President of ACMC Alliance since
and Director of Japanese/Asian 1994; prior
Equity research thereto
associated
with Ford Motor
Company
Greater China Matthew W. S. Lee since 1997-- Associated with
'97 Fund Vice President of ACMC Alliance since
1997; prior
thereto
associated with
National Mutual
Funds
Management (Asia)
since 1994 and
James Capel and
Co. since prior to
1994
Global Small Cap Alden M. Stewart since 1994-- (see above)
Fund (see above)
Randall E. Haase since 1994-- (see above)
(see above)
Ronald L. Simcoe since 1993-- Associated with
Vice President of ACMC Alliance
Global Environment Linda Bolton Weiser since 1998-- Associated with
Fund Vice President of ACMC Alliance
Balanced Shares Paul Rissman since 1997-- Associated with
Senior Vice President of ACMC Alliance
Utility Income Fund Paul Rissman since 1996-- (see above)
(see above)
Growth & Income Paul Rissman since 1994-- (see above)
Fund (see above)
Real Estate Daniel G. Pine since 1996-- Associated with
Investment Fund Senior Vice President Alliance since
of ACMC 1996; prior
thereto, Senior
Vice President of
Desai Capital
Management
David Kruth since 1997-- Associated with
Vice President of ACMC Alliance since
1997; prior
thereto Senior
Vice President of
the Yarmouth
Group
- --------------------------------------------------------------------------------
</TABLE>
* The sole general partner of Alliance.
** An indirect wholly-owned subsidiary of Alliance.
Alliance is a leading international investment manager supervising client
accounts with assets as of June 30, 1998 totaling more than $262 billion (of
which approximately $107 billion represented the assets of investment
companies). Alliance's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations and
endowment funds. The 58 registered investment companies managed by Alliance
comprising 123 separate investment portfolios currently have over two million
shareholders. As of June 30, 1998, Alliance was an investment manager of
employee benefit plan assets for 32 of the Fortune 100 companies.
Alliance Capital Management Corporation ("ACMC"), the sole general partner of,
and the owner of a 1% general partnership interest in, Alliance, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies in the United
States, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA-UAP, a French insurance
holding company. Certain information concerning the ownership and control of
Equitable by AXA-UAP is set forth in each Fund's Statement of Additional
Information under "Management of the Funds."
Performance of Similarly Managed Portfolios. In addition to managing the assets
of Premier Growth Fund, Mr. Harrison has ultimate responsibility for the
management of discretionary tax-exempt accounts of institutional clients managed
as described below without significant client-imposed restrictions ("Historical
Portfolios"). These accounts have substantially the same investment objectives
and policies and are managed in accordance with essentially the same investment
strategies and techniques as those for Premier Growth Fund, except for the
ability of Premier Growth Fund to use futures and options as hedging tools and
to invest in warrants. The Historical Portfolios are also not subject to certain
limitations, diversification requirements and other restrictions imposed under
the 1940 Act and the Code to which Premier Growth Fund, as a registered
investment company, is subject and which, if applicable to the Historical
Portfolios, may have adversely affected the performance results of the
Historical Portfolios. See "Investment Objective and Policies."
Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the nineteen full calendar years during which
Mr. Harrison has managed the Historical Portfolios as an employee of Alliance
and cumulatively through September 30, 1998. As of September 30, 1998, the
assets in the Historical Portfolios totaled approximately $12.3 billion and the
average size of an institutional account in the Historical Portfolio was $412
million. Each Historical Portfolio has a nearly identical composition of
investment holdings and related percentage weightings.
The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be
44
<PAGE>
payable by Premier Growth Fund, which are higher than the fees imposed on the
Historical Portfolio and will result in a higher expense ratio and lower returns
for Premier Growth Fund. Expenses associated with the distribution of Class A,
Class B and Class C shares of Premier Growth Fund in accordance with the plan
adopted by Premier Growth Fund's Board of Directors pursuant to Rule 12b-1 under
the 1940 Act ("distribution fees") are also excluded. See "Expense Information."
The performance data has also not been adjusted for corporate or individual
taxes, if any, payable by the account owners.
Alliance has calculated the investment performance of the Historical Portfolios
on a trade-date basis. Dividends have been accrued at the end of the month and
cash flows weighted daily. Composite investment performance for all portfolios
has been determined on an asset-weighted basis. New accounts are included in the
composite investment performance computations at the beginning of the quarter
following the initial contribution. The total returns set forth below are
calculated using a method that links the monthly return amounts for the
disclosed periods, resulting in a time-weighted rate of return.
As reflected below, the Historical Portfolios have over time performed favorably
when compared with the performance of recognized performance indices. The S&P
500 Index is a widely recognized, unmanaged index of market activity based upon
the aggregate performance of a selected portfolio of publicly traded common
stocks, including monthly adjustments to reflect the reinvestment of dividends
and other distributions. The S&P 500 Index reflects the total return of
securities comprising the Index, including changes in market prices as well as
accrued investment income, which is presumed to be reinvested. The Russell 1000
universe of securities is compiled by Frank Russell Company and is segmented
into two style indices, based on the capitalization-weighted median book-to-
price ratio of each of the securities. At each reconstitution, the Russell 1000
constituents are ranked by their book-to-price ratio. Once so ranked, the
breakpoint for the two styles is determined by the median market capitalization
of the Russell 1000. Thus, those securities falling within the top fifty percent
of the cumulative market capitalization (as ranked by descending book-to-price)
become members of the Russell Price-Driven Indices. The Russell 1000 Growth
Index is, accordingly, designed to include those Russell 1000 securities with a
greater-than-average growth orientation. In contrast with the securities in the
Russell Price-Driven Indices, companies in the Growth Index tend to exhibit
higher price-to-book and price-earnings ratios, lower dividend yield and higher
forecasted growth values.
To the extent Premier Growth Fund does not invest in U.S. common stocks or
utilizes investment techniques such as futures or options, the S&P 500 Index and
Russell 1000 Growth Index may not be substantially comparable to Premier Growth
Fund. The S&P 500 Index and Russell 1000 Growth Index are included to illustrate
material economic and market factors that existed during the time period shown.
The S&P 500 Index and Russell 1000 Growth Index do not reflect the deduction of
any fees. If Premier Growth Fund were to purchase a portfolio of securities
substantially identical to the securities comprising the S&P 500 Index or the
Russell 1000 Growth Index, Premier Growth Fund's performance relative to the
index would be reduced by Premier Growth Fund's expenses, including brokerage
commissions, advisory fees, distribution fees, custodial fees, transfer agency
costs and other administrative expenses as well as by the impact on Premier
Growth Fund's shareholders of sales charges and income taxes.
The Lipper Growth Fund Index is prepared by Lipper Analytical Services, Inc. and
represents a composite index of the investment performance for the 30 largest
growth mutual funds. The composite investment performance of the Lipper Growth
Fund Index reflects investment management and administrative fees and other
operating expenses paid by these mutual funds and reinvested income dividends
and capital gain distributions, but excludes the impact of any income taxes and
sales charges.
The following performance data is provided solely to illustrate Mr. Harrison's
performance in managing the Historical Portfolios and the Premier Growth Fund as
measured against certain broad based market indices and against the composite
performance of other open-end growth mutual funds. Investors should not rely on
the following performance data of the Historical Portfolios as an indication of
future performance of Premier Growth Fund. The composite investment performance
for the periods presented may not be indicative of future rates of return. Other
methods of computing investment performance may produce different results, and
the results for different periods may vary.
<TABLE>
<CAPTION>
Schedule of Composite Investment Performance--Historical Portfolios*
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
Fund Total Return** Total Return Total Return Total Return
------ --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1/1/98 to
9/30/98*** 9.09% 15.27% 6.04% 9.44% 2.38%
Year ended:
1997*** 27.05% 34.64% 33.36% 30.49% 25.30%
1996*** 18.84 22.06 22.96 23.12 17.48
1995*** 40.66 39.83 37.58 37.19 32.65
1994 (9.78) (4.82) 1.32 2.66 (1.57)
1993 5.35 10.54 10.08 2.90 11.98
1992 -- 12.18 7.62 5.00 7.63
1991 -- 38.91 30.47 41.16 35.20
1990 -- (1.57) (3.10) (0.26) (5.00)
1989 -- 38.80 31.69 35.92 28.60
1988 -- 10.88 16.61 11.27 15.80
1987 -- 8.49 5.25 5.31 1.00
1986 -- 27.40 18.67 15.36 15.90
1985 -- 37.41 31.73 32.85 30.30
1984 -- (3.31) 6.27 (.95) (2.80)
1983 -- 20.80 22.56 15.98 22.30
1982 -- 28.02 21.55 20.46 20.20
1981 -- (1.09) (4.92) (11.31) (8.40)
1980 -- 50.73 32.50 39.57 37.30
1979 -- 30.76 18.61 23.91 27.40
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Russell Lipper
Premier Historical S&P 500 1000 Growth
Growth Portfolios Index Growth Index Fund Index
Fund Total Return** Total Return Total Return Total Return
------ --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cumulative total
return for
the period
January 1,
1979 to
September 30,
1998 -- 3,542% 2,064% 1,852% 1,613%
</TABLE>
* Total return is a measure of investment performance that is based upon the
change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
distributions. The basis of preparation of this data is described in the
preceding discussion. Total returns for Premier Growth Fund are for Class A
Shares with imposition of the maximum 4.25% sales charge.
** Assumes imposition of the maximum advisory fee charged by Alliance for any
Historical Portfolio for the period involved.
*** During this period, the Historical Portfolios differed from Premier Growth
Fund in that Premier Growth Fund invested a portion of its net assets in
warrants on equity securities in which the Historical Portfolios were
unable, by their investment restrictions, to purchase. In lieu of warrants,
the Historical Portfolios acquired the common stock upon which the warrants
were based.
The average annual total returns presented below are based upon the cumulative
total return as of September 30, 1998, and for more than one year assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.
<TABLE>
<CAPTION>
Average Annual Total Returns
---------------------------------------------------------------
Premier Russell Lipper
Growth Historical S&P 500 1000 Growth
Fund Portfolios** Index Growth Index Fund Index
-------- ------------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
One year........ 6.21% 13.19% 6.08% 11.11% 3.07%
Three years..... 21.82 24.22 22.60 22.50 16.43
Five years...... 20.23 20.70 19.91 20.80 15.52
Ten years*...... 19.98+ 19.70 17.29 18.07 15.01
Since January 1,
1979.......... -- 19.97 16.84 16.23 15.47
---------------------------------------------------------------
</TABLE>
* Since inception on 9/28/92
ADMINISTRATOR TO ALL-ASIA INVESTMENT FUND
Alliance has been retained by All-Asia Investment Fund under an administration
agreement (the "Administration Agreement") to perform administrative services
necessary for the operation of the Fund. For a description of such services, see
the Statement of Additional Information of the Fund.
CONSULTANT TO ALLIANCE WITH RESPECT TO GREATER CHINA COUNTRIES
In connection with its provisions of advisory services to Greater China '97
Fund, Alliance has retained at its expense as a consultant New Alliance, a joint
venture company headquartered in Hong Kong which was formed in 1997 by Alliance
and Sun Hung Kai Properties Limited ("SHKP"). New Alliance provides Alliance
with ongoing, current and comprehensive information and analysis of conditions
and developments in Greater China countries consisting of, but not limited to,
statistical and factual research and assistance with respect to economic,
financial, political, technological and social conditions and trends in Greater
China countries, including information on markets and industries. In addition to
its own staff of professionals, New Alliance has access to the expertise and
personnel of SHKP, one of Hong Kong's preeminent property and business groups.
SHKP is one of the largest enterprises in Hong Kong measured by market
capitalization and has considerable expertise in evaluating business and market
conditions in Hong Kong and the other Greater China countries. Its activities
complementary to property development include insurance and estate management,
and SHKP is diversified as well into telecommunications and infrastructure
projects.
CONSULTANT TO ALLIANCE WITH RESPECT TO INVESTMENT IN REAL ESTATE SECURITIES
Alliance, with respect to investment in real estate securities, has retained as
a consultant CB Richard Ellis, Inc. ("CBRE"), a publicly held company and the
largest real estate services company in the United States, comprised of real
estate brokerage, property and facilities management, and real estate finance
and investment advisory activities. In 1997, CBRE completed 22,100 sale and
lease transactions, managed over 6,600 client properties, created over $5
billion in mortgage originations, and completed over 3,600 appraisal and
consulting assignments. In addition, they advised and managed for institutions
over $4 billion in real estate investments. CBRE will make available to Alliance
the CBRE National Real Estate Index, which gathers, analyzes and publishes
targeted research data for the 66 largest U.S. markets, based on a variety of
public-sector and private-sector sources as well as CBRE's proprietary database
of approximately 80,000 property transactions representing over $500 billion of
investment property. This information provides a substantial component of the
research and data used to create the REIT.Score model. As a consultant, CBRE
provides to Alliance, at Alliance's expense, such in-depth information regarding
the real estate market, the factors influencing regional valuations and analysts
of recent transactions in office, retail, industrial and multi-family properties
as Alliance shall from time to time request. CBRE will not furnish advice or
make recommendations regarding the purchase or sale of securities by the Fund
nor will it be responsible for making investment decisions involving Fund
assets.
CBRE is one of the three largest fee-based property management firms in the
United States, the largest commercial real estate lease brokerage firm in the
country, the largest investment property brokerage firm in the country, as well
as one of the largest publishers of real estate research, with approximately
8,000 employees worldwide. CBRE will provide Alliance with exclusive access to
its REIT . Score model which ranks approximately 142 REITs based on the relative
attractiveness of the property markets in which they own real estate. This model
scores the approximately 18,000 individual properties owned by these companies.
REIT . Score is in turn based on CBRE's National Real Estate Index which
gathers, analyzes and publishes targeted research for the 66 largest U.S. real
estate markets based on a variety of public- and private-sector sources as well
as CBRE's proprietary database of 80,000 commercial property transactions
representing over $500 billion of investment property and over 2,500 tracked
properties which report rent and expense data quarterly. CBRE has previously
provided access to its REIT.Score model results primarily to the institutional
market
46
<PAGE>
through subscriptions. The model is no longer provided to any research
publications and Real Estate Investment Fund is currently the only mutual fund
available to retail investors that has access to CBRE's REIT . Score model.
DISTRIBUTION SERVICES AGREEMENTS
Each Fund has entered into a Distribution Services Agreement with AFD with
respect to the Advisor Class shares. The Glass-Steagall Act and other applicable
laws may limit the ability of a bank or other depository institution to become
an underwriter or distributor of securities. However, in the opinion of the
Funds' management, based on the advice of counsel, these laws do not prohibit
such depository institutions from providing services for investment companies
such as the administrative, accounting and other services referred to in the
Agreements. In the event that a change in these laws prevented a bank from
providing such services, it is expected that other service arrangements would be
made and that shareholders would not be adversely affected. The State of Texas
requires that shares of a Fund may be sold in that state only by dealers or
other financial institutions that are registered there as broker-dealers.
--------------------------------
Dividends, Distributions
And Taxes
--------------------------------
DIVIDENDS AND DISTRIBUTIONS
If you receive an income dividend or capital gains distribution in cash you may,
within 120 days following the date of its payment, reinvest the dividend or
distribution in additional shares of that Fund without charge by returning to
Alliance, with appropriate instructions, the check representing such dividend or
distribution. Thereafter, unless you otherwise specify, you will be deemed to
have elected to reinvest all subsequent dividends and distributions in shares of
that Fund.
Each income dividend and capital gains distribution, if any, declared by a Fund
on its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of the same class of shares of that Fund having an
aggregate net asset value as of the payment date of such dividend or
distribution equal to the cash amount of such income dividend or distribution.
Election to receive dividends and distributions in cash or shares is made at the
time shares are initially purchased and may be changed at any time prior to the
record date for a particular dividend or distribution. Cash dividends can be
paid by check or, if the shareholder so elects, electronically via the ACH
network. There is no sales or other charge in connection with the reinvestment
of dividends and capital gains distributions.
While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by such Fund of income and capital gains
from investments. There is no fixed dividend rate, and there can be no assurance
that a Fund will pay any dividends or realize any capital gains. Since REITs pay
distributions based on cash flow, without regard to depreciation and
amortization, it is likely that a portion of the distributions paid to Real
Estate Investment Fund and subsequently distributed to shareholders may be a
nontaxable return of capital. The final determination of the amount of a Fund's
return of capital distributions for the period will be made after the end of
each calendar year.
If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.
FOREIGN INCOME TAXES
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid
(or to permit shareholders to claim a deduction for such foreign taxes), but
there can be no assurance that any Fund will be able to do so. Furthermore, a
shareholder's ability to claim a foreign tax credit or deduction in respect of
foreign taxes paid by a Fund may be subject to certain limitations imposed by
the Code, as a result of which a shareholder may not be permitted to claim a
full credit or deduction for the amount of such taxes.
U.S. FEDERAL INCOME TAXES
Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. Qualification as a regulated investment company relieves that
Fund of federal income taxes on that part of its taxable income including net
capital gain which it pays out to its shareholders. Dividends out of net
ordinary income and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of corporate
shareholders, such dividends may be eligible for the dividends-received
deduction, except that the amount eligible for the deduction is limited to the
amount of qualifying dividends received by the Fund. Dividends received from
REITs or from foreign corporations generally do not constitute qualifying
dividends. A corporation's dividends-received deduction generally will be
disallowed unless the corporation holds shares in the Fund at least 46 days
during the 90 day period beginning 45 days before the date on which the
corporation becomes entitled to receive the dividend. Furthermore, the
dividends-received deduction will be disallowed to the extent a corporation's
investment in shares of a Fund is financed with indebtedness.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gain,
regardless of how long a shareholder has held shares in a Fund. Distributions of
net capital gain are not eligible for the dividends-received deduction referred
to above.
Under current federal tax law, the amount of an income dividend or capital gains
distribution declared by a Fund
47
<PAGE>
during October, November or December of a year to shareholders of record as of a
specified date in such a month that is paid during January of the following year
is includable in the prior year's taxable income of shareholders that are
calendar year taxpayers.
Any dividend or distribution received by a shareholder on shares of a Fund will
have the effect of reducing the net asset value of such shares by the amount of
such dividend or distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder, although in effect a
return of capital to that particular shareholder, would be taxable to him or her
as described above. If a shareholder held shares six months or less and during
that period received a distribution of net capital gain, any loss realized on
the sale of such shares during such six-month period would be a long-term
capital loss to the extent of such distribution.
A dividend or capital gains distribution with respect to shares of a Fund held
by a tax-deferred or qualified plan, such as an individual retirement account,
403(b)(7) retirement plan or corporate pension or profit-sharing plan, generally
will not be taxable to the plan. Distributions from such plans will be taxable
to individual participants under applicable tax rules without regard to the
character of the income earned by the qualified plan.
A Fund will be required to withhold 31% of any payments made to a shareholder if
the shareholder has not provided a certified taxpayer identification number to
the Fund, or the Secretary of the Treasury notifies a Fund that a shareholder
has not reported all interest and dividend income required to be shown on the
shareholder's Federal income tax return.
Under certain circumstances, if a Fund realizes losses (e.g., from fluctuations
in currency exchange rates) after paying a dividend, all or a portion of the
dividend may subsequently be characterized as a return of capital. Returns of
capital are generally nontaxable, but will reduce a shareholder's basis in
shares of a Fund. If that basis is reduced to zero (which could happen if the
shareholder does not reinvest distributions and returns of capital are
significant) any further returns of capital will be taxable as capital gain. See
"Dividends, Distributions and Taxes" in the Statements of Additional
Information. Shareholders will be advised annually as to the tax status of
dividends and capital gains and return of capital distributions. Shareholders
are urged to consult their tax advisors regarding their own tax situation.
Distributions by a Fund may be subject to state and local taxes.
------------------------------
Conversion Feature
------------------------------
CONVERSION TO CLASS A SHARES
Advisor Class shares may be held solely through the fee-based program accounts,
employee benefit plans and registered investment advisory or other financial
intermediary relationships described above under "Purchase and Sale of Shares--
How to Buy Shares," and by investment advisory clients of, and certain other
persons associated with, Alliance and its affiliates or the Funds. If (i) a
holder of Advisor Class shares ceases to participate in the fee-based program or
plan, or to be associated with an investment advisor or financial intermediary,
in each case that satisfies the requirements to purchase shares set forth under
"Purchase and Sale of Shares--How to Buy Shares" or (ii) the holder is otherwise
no longer eligible to purchase Advisor Class shares as described in this
Prospectus (each, a "Conversion Event"), then all Advisor Class shares held by
the shareholder will convert automatically and without notice to the
shareholder, other than the notice contained in this Prospectus, to Class A
shares of the Fund during the calendar month following the month in which the
Fund is informed of the occurrence of the Conversion Event. The failure of a
shareholder or a fee-based program to satisfy the minimum investment
requirements to purchase Advisor Class shares will not constitute a Conversion
Event. The conversion would occur on the basis of the relative net asset values
of the two classes and without the imposition of any sales load, fee or other
charge. Class A shares are subject to a distribution fee that may not exceed an
annual rate of .30%. The higher fees mean a higher expense ratio, so Class A
shares pay correspondingly lower dividends and may have a lower net asset value
than Advisor Class shares.
--------------------------------
General Information
--------------------------------
PORTFOLIO TRANSACTIONS
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, a Fund may
consider sales of its shares as a factor in the selection of dealers to enter
into portfolio transactions with the Fund.
ORGANIZATION
Each of the following Funds is a Maryland corporation organized in the year
indicated: The Alliance Fund, Inc. (1938), Alliance Balanced Shares, Inc.
(1932), Alliance Premier Growth Fund, Inc. (1992), Alliance Technology Fund,
Inc. (1980), Alliance Quasar Fund, Inc. (1968), Alliance International Premier
Growth Fund (1997), Alliance Worldwide Privatization Fund, Inc. (1994), Alliance
New Europe Fund, Inc. (1990), Alliance All-Asia Investment Fund, Inc. (1994),
Alliance Greater China '97 Fund (1997), Alliance Global Small Cap Fund, Inc.
(1966), Alliance Global Environment Fund, Inc. (1990), Alliance Utility Income
Fund, Inc. (1993), Alliance Growth and Income Fund, Inc. (1932) and Real Estate
Investment Fund, Inc. (1996). Each of the following Funds is either a
Massachusetts business trust or a series of a Massachusetts business trust
organized in the year indicated: Alliance Growth Fund (a series of The Alliance
Portfolios) (1987), and Alliance International Fund (1980). Prior to August 2,
1993, The Alliance Portfolios was known as The Equitable Funds and Growth Fund
was known as The Equitable Growth Fund.
48
<PAGE>
It is anticipated that annual shareholder meetings will not be held; shareholder
meetings will be held only when required by federal or state law. Shareholders
have available certain procedures for the removal of Directors.
A shareholder in a Fund will be entitled to share pro rata with other holders of
the same class of shares all dividends and distributions arising from the Fund's
assets and, upon redeeming shares, will receive the then current net asset value
of the Fund represented by the redeemed shares. The Funds are empowered to
establish, without shareholder approval, additional portfolios, which may have
different investment objectives and policies than those of the Fund, and
additional classes of shares within the Funds, if an additional portfolio or
class were established in a Fund, each share of the portfolio or class would
normally be entitled to one vote for all purposes. Generally, shares of each
portfolio and class would vote together as a single class on matters, such as
the election of Directors, that affect each portfolio and class in substantially
the same manner. Advisor Class, Class A, Class B and Class C shares have
identical voting, dividend, liquidation and other rights, except that each class
bears its own transfer agency expenses, each of Class A, Class B and Class C
shares of each Fund bears its own distribution expenses and Class B and Advisor
Class shares convert to Class A shares under certain circumstances. Each class
of shares of each Fund votes separately with respect to matters for which
separate class voting is appropriate under applicable law. Shares are freely
transferable, are entitled to dividends as determined by the Directors and, in
liquidation of a Fund, are entitled to receive the net assets of the Fund. Since
this Prospectus sets forth information about all the Funds, it is theoretically
possible that a Fund might be liable for any materially inaccurate or incomplete
disclosure in this Prospectus concerning another Fund. Based on the advice of
counsel, however, the Funds believe that the potential liability of each Fund
with respect to the disclosure in this Prospectus extends only to the disclosure
relating to that Fund. Certain additional matters relating to a Fund's
organization are discussed in its Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent
and dividend-disbursing agent for a fee based upon the number of shareholder
accounts maintained for the Funds.
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.
PERFORMANCE INFORMATION
From time to time, the Funds advertise their "total return," which is computed
separately for each class of shares, including Advisor Class shares. Such
advertisements disclose a Fund's average annual compounded total return for the
periods prescribed by the Commission. A Fund's total return for each such period
is computed by finding, through the use of a formula prescribed by the
Commission, the average annual compounded rate of return over the period that
would equate an assumed initial amount invested to the value of the investment
at the end of the period. For purposes of computing total return, income
dividends and capital gains distributions paid on shares of a Fund are assumed
to have been reinvested when paid and the maximum sales charges applicable to
purchases and redemptions of a Fund's shares are assumed to have been paid.
Balanced Shares, Growth and Income Fund, Real Estate Investment Fund and Utility
Income Fund may also advertise their "yield," which is also computed separately
for each class of shares, including Advisor Class shares. A Fund's yield for any
30-day (or one-month) period is computed by dividing the net investment income
per share earned during such period by the maximum public offering price per
share on the last day of the period, and then annualizing such 30-day (or one-
month) yield in accordance with a formula prescribed by the Commission which
provides for compounding on a semi-annual basis.
Balanced Shares, Utility Income Fund, Real Estate Investment Fund and Growth and
Income Fund may also state in sales literature an "actual distribution rate" for
each class which is computed in the same manner as yield except that actual
income dividends declared per share during the period in question are
substituted for net investment income per share. The actual distribution rate is
computed separately for each class of shares, including Advisor Class shares.
A Fund's advertisements may quote performance rankings or ratings of a Fund by
financial publications or independent organizations such as Lipper Analytical
Services, Inc. and Morningstar, Inc. or compare a Fund's performance to various
indices.
ADDITIONAL INFORMATION
This Prospectus and the Statements of Additional Information, which have been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Funds with the Commission under the
Securities Act. Copies of the Registration Statements may be obtained at a
reasonable charge from the Commission or may be examined, without charge, at the
offices of the Commission in Washington, D.C.
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
This prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this prospectus relating to any
other Fund. See "General Information--Organization."
49
<PAGE>
- --------------------------------------
Alliance Stock Funds
Subscription Application
- - Advisor Class
- --------------------------------------
The Alliance Fund
Growth Fund
Premier Growth Fund
Technology Fund
Quasar Fund
International Fund
International Premier Growth Fund
Worldwide Privatization Fund
New Europe Fund
All-Asia Investment Fund
Greater China '97 Fund
Global Small Cap Fund
Global Environment Fund
Balanced Shares
Utility Income Fund
Growth & Income Fund
Fund Real Estate Investment Fund
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:
. 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.
. Transfer on Death:
o Ensure that your state participates
. 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.
. 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'.
<PAGE>
(2) Write the dollar amount of your initial purchase in the column titled
`Indicate Dollar Amount'.
(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 any
of your Alliance Funds in one of three ways. First, by a periodic withdrawal
($25 minimum) directly from your bank account and invested into an Alliance
Fund. Second, you can direct your distributions (dividends and capital gains)
from one Alliance Fund into another Fund. Or third, you can automatically
exchange monthly ($25 minimum) shares of one Alliance Fund for shares of another
Fund. To elect one of these options, complete the appropriate portion of Section
4A & 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 one of your fund accounts. 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.
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.
- ------------------------------------
For Literature Call: (800) 227-4618
- ------------------------------------
<PAGE>
The Alliance Stock Funds Subscription Application - Advisor Class
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*, (MI) (Last Name)
Transfer On Death Beneficiary
or Minor
[_][_][_]-[_][_]-[_][_][_][_] If Uniform Gift/Transfer
Social Security Number of Owner to Minor Account:
or Minor (required to open account) [_][_] Minor's State of Residence
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
[_] Trust -or- [_] Corporation -or- [_] Other_______________________________
[_][_][_][_][_][_][_][_][_][_] [_] [_][_][_][_][_][_][_][_][_][_]
Name of Trustee if applicable (MI) (Last Name)
(First 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
ALLIANCE CAPITAL [LOGO]
80887GEN-TASFApp-Advisor-P1
1
<PAGE>
- -----------------------------------
3. Your Initial Investment
- -----------------------------------
I hereby subscribe for shares of the following Alliance Stock Fund(s) Advisor
Class 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.
- ----------- -------------- ---------------------- ------------------------
Make all Indicate three Distributions Options
checks/*/ digit Fund Indicate Dollar Amount /*/Check One/*/
payable to: number ------------------------
Alliance located below --------- -------------
Funds Dividends Capital Gains
- ----------- -------------- ---------------------- --------- -------------
R C D R C D
- ----------------------------
Total Investment
- ----------------------------
/*/ Cash and money orders are not accepted
- -----------------------------------------------------
Alliance Stock Fund Names and Numbers
- -----------------------------------------------------
------------
Advisor
Class
------------
The Alliance Fund 444
Growth Fund 431
- -------- Premier Growth Fund 478
DOMESTIC Technology Fund 482
- -------- Quasar Fund 426
International Fund 440
International Premier Growth 479
Worldwide Privatization Fund 412
- ------ New Europe Fund 462
GLOBAL All-Asia Investment Fund 418
- ------ Greater China '97 Fund 460
Global Small Cap Fund 445
Global Environment Fund 481
- ------ Balanced Shares 496
TOTAL Utility Income Fund 409
RETURN Growth & Income Fund 494
- ------ Real Estate Investment Fund 410
80887GEN-TASFApp-Advisor-P2
2
<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).
<TABLE>
<S> <C> <C> <C>
1- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_] Frequency:
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency M = monthly
Q = quarterly
A = annually
2- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_]
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
3- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_]
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
(*) Electronic Funds Transfer. Your bank must be a member of the National Automated Clearing House Association (NACHA)
</TABLE>
[_] 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 ($25 minimum) 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.
- --------------------------------------------------------------------------------
80887GEN-TASFApp-Advisor-P3
3
<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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_]
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
Frequency:
2- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_] M = monthly
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency Q = quarterly
A = annually
3- [_] [_] [_] [_] [_] [_] [_] [_] [_],[_] [_] [_].00 [_]
Fund Number Beginning Date (MM,DD) Amount ($25 minimum) Frequency
Please send my SWP proceeds to:
[_] My Address of Record (via check)
[_] The Payee and address specified in section 4E (via check)(Medallion
Signature Guarantee required)
[_] My checking account-via EFT (complete section 4D) Your bank must be a
member of the National Automated Clearing House Association (NACHA)
in order for you to receive SWP proceeds directly into your bank
account. Otherwise payment will be made by check
D. Bank Information This bank account information will be used for:
[_] Distributions (Section 3) [_] Telephone Transactions
(Section 4B)
[_] Automatic Investments (Section 4A) [_] Withdrawals (Section 4C)
Please Tape a Pre-printed Voided Check Here(*)
103
J. Smith
123 Main Street
ANYTOWN, USA 12345 ____ 19 __
Pay to the
Order of ________________________________________$ _______________
____________________________________________________________Dollars
YOUR BANK
123 STREET
ANYTOWN, USA 12345 VOID
Note ___________________________ _______________________________
:000000000: 103 000000000:765
ABA Routing Number Check Bank Account Number
Number
(*) 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
</TABLE>
[_] Checking Account [_] Savings Account
80887GEN-TASFApp-Advisor-P4
4
<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
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
80887GEN-TASFApp-Advisor-P5
5
<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
ALLIANCE CAPITAL [LOGO]
80887GEN-TASFApp-Advisor-P6
6
<PAGE>
[LOGO] ALLIANCE TECHNOLOGY FUND, INC.
_________________________________________________________________
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
_________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
February 2, 1998
(as amended November 2, 1998)
_________________________________________________________________
This Statement of Additional Information is not a prospectus, but
supplements and should be read in conjunction with the current
Prospectus for the Alliance Technology Fund, Inc. (the "Fund")
that offers the Class A, Class B and Class C shares of the Fund
and the current Prospectus for the Fund that offers the Advisor
Class shares of the Fund (the "Advisor Class Prospectus" and,
together with the Prospectus for the Fund that offers the
Class A, Class B and Class C shares, the "Prospectus"). Copies
of the Prospectuses may be obtained by contacting Alliance Fund
Services, Inc. at the address or the "For Literature" telephone
number shown above.
TABLE OF CONTENTS
Page
DESCRIPTION OF THE FUND..................................
MANAGEMENT OF THE FUND...................................
EXPENSES OF THE FUND.....................................
PURCHASE OF SHARES.......................................
REDEMPTION AND REPURCHASE OF SHARES......................
BROKERAGE AND SHAREHOLDER SERVICES.......................
NET ASSET VALUE..........................................
DIVIDENDS, DISTRIBUTIONS AND TAXES.......................
PORTFOLIO TRANSACTIONS...................................
GENERAL INFORMATION......................................
APPENDIX A: Certain Employee Benefit Plans............... A-1
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT AUDITORS.....................................
___________________
(R) This registered service mark under license from the owner,
Alliance Capital Management L.P.
<PAGE>
________________________________________________________________
DESCRIPTION OF THE FUND
________________________________________________________________
Except as otherwise indicated, the investment policies
of the Fund are not "fundamental policies" and may, therefore, be
changed by the Board of Directors without a shareholder vote.
However, the Fund will not change its investment policies without
contemporaneous written notice to its shareholders. The Fund's
investment objective, as well as the Fund's 80% investment policy
described below, may not be changed without shareholder approval.
There can be, of course, no assurance that the Fund will achieve
its investment objective.
Investment Objective and Policies
The investment objective of the Fund is to emphasize
growth of capital, and investments will be made based upon their
potential for capital appreciation. Therefore, current income
will be incidental to the objective of capital growth. However,
subject to the limitations referred to under "Options" below, the
Fund may seek to earn income through the writing of listed call
options. In seeking to achieve its objective, the Fund will
invest primarily in securities of companies which are expected to
benefit from technological advances and improvements (i.e.,
companies which use technology extensively in the development of
new or improved products or processes). The Fund will have at
least 80% of its assets invested in the securities of such
companies except when the Fund assumes a temporary defensive
position. There obviously can be no assurance that the Fund's
investment objective will be achieved, and the nature of the
Fund's investment objective and policies may involve a somewhat
greater degree of risk than would be present in a more
conservative investment approach.
How the Fund Pursues Its Objective
The Fund expects under normal circumstances to have
substantially all of its assets invested in equity securities
(common stocks or securities convertible into common stocks or
rights or warrants to subscribe for or purchase common stocks).
When business or financial conditions warrant, the Fund may take
a defensive position and invest without limit in investment grade
debt securities or preferred stocks or hold its assets in cash.
The Fund at times may also invest in debt securities and
preferred stocks offering an opportunity for price appreciation
(e.g., convertible debt securities).
Critical factors which will be considered in the
selection of securities will include the economic and political
2
<PAGE>
outlook, the value of individual securities relative to other
investment alternatives, trends in the determinants of corporate
profits, and management capability and practices. Generally
speaking, disposal of a security will be based upon factors such
as (i) actual or potential deterioration of the issuer's earning
power which the Fund believes may adversely affect the price of
its securities, (ii) increases in the price level of the security
or of securities generally which the Fund believes are not fully
warranted by the issuer's earning power, and (iii) changes in the
relative opportunities offered by various securities.
Companies in which the Fund will invest include those
whose processes, products or services are anticipated by Alliance
Capital Management L.P., the Fund's investment adviser (the
"Adviser"), to be significantly benefited by the utilization or
commercial application of scientific discoveries or developments
in such fields as, for example, aerospace, aerodynamics,
astrophysics, biochemistry, chemistry, communications, computers,
conservation, electricity, electronics (including radio,
television and other media), energy (including development,
production and service activities), geology, health care,
mechanical engineering, medicine, metallurgy, nuclear physics,
oceanography and plant physiology.
The Fund will endeavor to invest in companies where the
expected benefits to be derived from the utilization of
technology will significantly enhance the prospects of the
company as a whole (including, in the case of a conglomerate,
affiliated companies). The Fund's investment objective permits
the Fund to seek securities having potential for capital
appreciation in a variety of industries.
Certain of the companies in which the Fund invests may
allocate greater than usual amounts to research and product
development. The securities of such companies may experience
above-average price movements associated with the perceived
prospects of success of the research and development programs.
In addition, companies in which the Fund invests could be
adversely affected by lack of commercial acceptance of a new
product or products or by technological change and obsolescence.
Additional Investment Policies and Practices
Options. In seeking to attain its investment goal of
capital appreciation, the Fund may supplement customary
investment practices by writing and purchasing call options
listed on one or more national securities exchanges and
purchasing listed put options, including put options on market
indices. Upon payment of a premium, a put option gives the buyer
of such option the right to deliver a specified number of shares
of a stock to the writer of the option on or before a fixed date,
3
<PAGE>
at a predetermined price. A call option gives the purchaser of
the option, upon payment of a premium, the right to call upon the
writer to deliver a specified number of shares of a specified
stock on or before a fixed date, at a predetermined price,
usually the market price at the time the contract is negotiated.
The writing of call options will involve a potential
loss of opportunity to sell securities at higher prices. In
exchange for the premium received, the writer of a fully
collateralized call option assumes the full downside risk of the
securities subject to such option. In addition, the writer of
the call gives up the gain possibility of the stock protecting
the call. Generally the opportunity for profit from the writing
of options is higher, and consequently the risks are greater,
when the stocks involved are lower priced or volatile, or both.
While an option that has been written is in force, the maximum
profit that may be derived from the optioned stock is the premium
less brokerage commissions and fees. The actual return earned by
the Fund from writing a call option depends on factors such as
the amount of the transaction costs and whether or not the option
is exercised. Option premiums vary widely depending primarily on
supply and demand.
Writing and purchasing options are highly specialized
activities and entail greater than ordinary investment risks. If
an option purchased by the Fund is not sold and is permitted to
expire without being exercised, its premium would be lost by the
Fund. When calls written by the Fund are exercised, the Fund
will be obligated to sell stocks below the current market price.
The Fund will not write a call unless the Fund at all
times during the option period owns either (a) the optioned
securities, or securities convertible into or carrying rights to
acquire the optioned securities, or (b) an offsetting call option
on the same securities. It is the Fund's policy not to write a
call option if the premium to be received by the Fund in
connection with such option would not produce an annualized
return of at least 15% of the then current market value of the
securities subject to option (without giving effect to
commissions, stock transfer taxes and other expenses of the Fund
which are deducted from premium receipts). The actual return
earned by the Fund from writing a call depends on factors such as
the amount of the transaction costs and whether or not the option
is exercised. Calls written by the Fund will ordinarily be sold
either on a national securities exchange or through put and call
dealers, most, if not all, of whom are members of a national
securities exchange on which options are traded, and will in such
cases be endorsed or guaranteed by a member of a national
securities exchange or qualified broker-dealer, which may be
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), an
affiliate of the Adviser. The endorsing or guaranteeing firm
4
<PAGE>
requires that the option writer (in this case the Fund) maintain
a margin account containing either corresponding stock or other
equity as required by the endorsing or guaranteeing firm.
In purchasing a call option, the Fund would be in a
position to realize a gain if, during the option period, the
price of the security increased over the strike price by an
amount in excess of the premium paid and commissions payable on
exercise. It would realize a loss if the price of the security
declined or remained the same or did not increase over the strike
price during the period by more than the amount of the premium
and commissions payable on exercise. By purchasing a put option,
the Fund would be in a position to realize a gain if, during the
option period, the price of the security declined below the
strike price by an amount in excess of the premium paid and
commissions payable on exercise. It would realize a loss if the
price of the security increased or remained the same or did not
decrease below the strike price during that period by more than
the amount of the premium and commissions payable on exercise.
If a put or call option purchased by the Fund were permitted to
expire without being sold or exercised, its premium would
represent a realized loss to the Fund.
If the Fund desires to sell a particular security from
its portfolio on which it has written an option, the Fund seeks
to effect a "closing purchase transaction" prior to, or
concurrently with, the sale of the security. A closing purchase
transaction is a transaction in which an investor who is
obligated as a writer of an option terminates his obligation by
purchasing an option of the same series as the option previously
written. (Such a purchase does not result in the ownership of an
option.) The Fund may enter into a closing purchase transaction
to realize a profit on a previously written option or to enable
the Fund to write another option on the underlying security with
either a different exercise price or expiration date or both.
The Fund realizes a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than
the premium received from the writing of the option. The Fund
may not, however, effect a closing purchase transaction with
respect to an option after it has been notified of the exercise
of such option.
The Fund may dispose of an option which it has purchased
by entering into a "closing sale transaction" with the writer of
the option. A closing sale transaction terminates the obligation
of the writer of the option and does not result in the ownership
of an option. The Fund realizes a profit or loss from a closing
sale transaction if the premium received from the transaction is
more than or less than the cost of the option.
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<PAGE>
The Fund will not write a call option if, as a result,
the aggregate of the Fund's portfolio securities subject to
outstanding call options (valued at the lower of the option price
or market value of such securities) would exceed 15% of the
Fund's total assets. The Fund will not sell any call option if
such sale would result in more than 10% of the Fund's assets
being committed to call options written by the Fund which, at the
time of sale by the Fund, have a remaining term of more than 100
days. The aggregate cost of all outstanding options purchased
and held by the Fund will at no time exceed 10% of the Fund's
total assets.
Options on Market Indices. Options on securities
indices are similar to options 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.
Through the purchase of listed index options, the Fund
could achieve many of the same objectives as through the use of
options on individual securities. Price movements in the Fund's
portfolio securities probably will not correlate perfectly with
movements in the level of the index and, therefore, the Fund
would bear a risk of loss on index options purchased by it if
favorable price movements of the hedged portfolio securities do
not equal or exceed losses on the options or if adverse price
movements of the hedged portfolio securities are greater than
gains realized from the options.
Warrants. The Fund may invest up to 10% of its total
assets in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time.
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 securities which
may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a warrant does not
necessarily change with the value of the underlying securities
and a warrant ceases to have value if it is not exercised prior
to the expiration date.
Foreign Securities. Investing in securities of
non-United States companies which are generally denominated in
foreign currencies involves certain considerations comprising
both risk and opportunity not typically associated with investing
in United States companies. These considerations include changes
in exchange rates and exchange control regulation, political and
social instability, expropriation, imposition of foreign taxes,
6
<PAGE>
less liquid markets and less available information than are
generally the case in the United States, higher transaction
costs, less government supervision of exchanges and brokers and
issuers, difficulty in enforcing contractual obligations, lack of
uniform accounting and auditing standards and greater price
volatility. Additional risks may be incurred in investing in
particular countries. The Fund will not purchase a foreign
security if such purchase at the time thereof would cause 10% or
more of the value of the Fund's total assets to be invested in
foreign securities.
Restricted Securities. The Fund may invest in
restricted securities and in other assets having no ready market
if such purchases at the time thereof would not cause more than
10% of the value of the Fund's net assets to be invested in all
such restricted or not readily marketable assets. This
limitation does not apply to liquid restricted securities, such
as those eligible for resale under Rule 144A of the Securities
Act of 1933, as amended (the "Securities Act"). Restricted
securities may be sold only in privately negotiated transactions,
in a public offering with respect to which a registration
statement is in effect under the Securities Act or pursuant to
Rules 144 or 144A promulgated under such Act. Where registration
is required, the Fund may be obligated to pay all or part of the
registration expense, and a considerable period may elapse
between the time of the decision to sell and the time the Fund
may be permitted to sell a security under an effective
registration statement. If during such a period adverse market
conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell.
Restricted securities will be valued in such manner as the Board
of Directors of the Fund, in good faith, deems appropriate to
reflect their fair market value.
Lending of Portfolio Securities. The Fund may seek to
increase income by lending portfolio securities. Under present
regulatory policies, such loans are required to be secured
continuously by collateral consisting of liquid assets maintained
in an amount at least equal to the market value of the securities
loaned. The Fund has the right to call such a loan and obtain
the securities loaned or equivalent securities at any time on
five days' notice. During the existence of a loan, the Fund will
receive the income earned on investment of the collateral. The
aggregate value of the securities loaned by the Fund may not
exceed 30% of the value of the Fund's total assets.
Portfolio Turnover. The investment activities described
above are likely to result in the Fund engaging in a considerable
amount of trading of securities held for less than one year.
Accordingly, it can be expected that the Fund will have a higher
turnover rate than might be expected from investment companies
7
<PAGE>
which invest substantially all of their funds on a long-term
basis. Correspondingly heavier brokerage commission expenses can
be expected to be borne by the Fund. Management anticipates that
the Fund's annual rate of portfolio turnover will not be in
excess of 100% in future years. A 100% annual turnover rate
would occur, for example, if all the stocks in the Fund's
portfolio were replaced once in a period of one year. The
portfolio turnover rates of the Fund for the fiscal years ended
in 1997 and 1996 were 51% and 30%, respectively.
Within this basic framework, the policy of the Fund is
to invest in any company and industry and in any type of security
which are believed to offer possibilities for capital
appreciation. Investments may be made in well-known and
established companies as well as in new and unseasoned companies.
Since securities fluctuate in value due to general economic
conditions, corporate earnings and many other factors, the shares
of the Fund will increase or decrease in value accordingly, and
there can be no assurance that the Fund will achieve its
investment goal or be successful.
Fundamental Investment Policies
The following restrictions may not be changed without
approval of a majority of the outstanding voting securities of
the Fund, which means the vote of (i) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares, whichever is less.
To maintain portfolio diversification and reduce
investment risk, as a matter of fundamental policy, the Fund may
not:
(i) with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items,
(b) securities issued or guaranteed as to principal or interest
by the U.S. Government or its agencies or instrumentalities, or
(c) securities of any one issuer (other than the U.S. Government
and its agencies or instrumentalities) not greater in value than
5% of the Fund's total assets, and not more than 10% of the
outstanding voting securities of such issuer;
(ii) purchase the securities of any one issuer, other
than the U.S. Government and its agencies or instrumentalities,
if immediately after and as a result of such purchase (a) the
value of the holdings of the Fund in the securities of such
issuer exceeds 25% of the value of the Fund's total assets, or
(b) the Fund owns more than 25% of the outstanding securities of
any one class of securities of such issuer;
8
<PAGE>
(iii) concentrate its investments in any one industry,
but the Fund has reserved the right to invest up to 25% of its
total assets in a particular industry;
(iv) invest in the securities of any issuer which has a
record of less than three years of continuous operation
(including the operation of any predecessor) if such purchase at
the time thereof would cause 10% or more of the value of the
total assets of the Fund to be invested in the securities of such
issuer or issuers;
(v) make short sales of securities or maintain a short
position or write put options;
(vi) mortgage, pledge or hypothecate or otherwise
encumber its assets, except as may be necessary in connection
with permissible borrowings mentioned in investment restriction
(xiv) listed below;
(vii) purchase the securities of any other investment
company or investment trust, except when such purchase is part of
a merger, consolidation or acquisition of assets;
(viii) purchase or sell real property (including limited
partnership interests but excluding readily marketable interests
in real estate investment trusts or readily marketable securities
of companies which invest in real estate) commodities or
commodity contracts;
(ix) purchase participations or other direct interests
in oil, gas, or other mineral exploration or development
programs;
(x) participate on a joint or joint and several basis
in any securities trading account;
(xi) invest in companies for the purpose of exercising
control;
(xii) purchase securities on margin, but it may obtain
such short-term credits from banks as may be necessary for the
clearance of purchases and sales of securities;
(xiii) make loans of its assets to any other person, which
shall not be considered as including the purchase of a portion of
an issue of publicly-distributed debt securities; except that the
Fund may purchase non-publicly distributed securities subject to
the limitations applicable to restricted or not readily
marketable securities and except for the lending of portfolio
securities as discussed under "Description of the Funds" in the
Prospectus;
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<PAGE>
(xiv) borrow money except for the short-term credits from
banks referred to in paragraph (xii) above and except for
temporary or emergency purposes and then only from banks and in
an aggregate amount not exceeding 5% of the value of its total
assets at the time any borrowing is made. Money borrowed by the
Fund will be repaid before the Fund makes any additional
investments;
(xv) act as an underwriter of securities of other
issuers, except that the Fund may acquire restricted or not
readily marketable securities under circumstances where, if sold,
the Fund might be deemed to be an underwriter for purposes of the
Securities Act (the Fund will not invest more than 10% of its net
assets in aggregate in restricted securities and not readily
marketable securities); and
(xvi) purchase or retain the securities of any issuer if,
to the knowledge of the Fund's management, those officers and
directors of the Fund, and those employees of the Adviser, who
each owns beneficially more than one-half of 1% of the
outstanding securities of such issuer together own more than 5%
of the securities of such issuer.
Whenever any investment policy or restriction states a
minimum or maximum percentage of the Fund's assets which may be
invested in any security or other asset, it is intended that such
minimum or maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of
such security or other asset. Accordingly, any later increase or
decrease in percentage beyond the specified limitations resulting
from a change in values or net assets will not be considered a
violation of this percentage limitation. In the event that the
aggregate of restricted and not readily marketable securities
exceeds 10% of the Fund's net assets, the management of the Fund
will consider whether action should be taken to reduce the
percentage of such securities.
The Fund is also subject to other restrictions under the
Investment Company Act of 1940, as amended (the "1940 Act"),
including restrictions on transactions with affiliated persons.
The registration of the Fund under the 1940 Act, however, does
not involve any supervision by any federal or other agency of the
Fund's management or investment practices or policies. In
connection with the qualification or registration of the Fund's
shares for sale under the securities laws of certain states, the
Fund has agreed, in addition to the foregoing investment
restrictions, that it will not invest in the securities of any
issuer which has a record of less than three years of continuous
operation (including the operation of any predecessor) if such
purchase at the time thereof would cause more than 5% of the
value of the Fund's total assets to be invested in the securities
10
<PAGE>
of such issuer or issuers. The Fund may not purchase or sell
real property (including limited partnership interests but
excluding readily marketable interests in real estate investment
trusts, or readily marketable securities of companies which
invest in real estate) commodities or commodity contracts. In
addition, the Fund may not invest in mineral leases.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
Adviser
Alliance Capital Management L.P., a Delaware limited
partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an
investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision of the Fund's Board of Directors (see "Management of
the Fund" in the Prospectus).
The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1998, totaling more than $262 billion (of which more than $107
billion represented the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies,
foundations and endowment funds. The 58 registered investment
companies managed by the Adviser, comprising 123 separate
investment portfolios, currently have more than 3.5 million
shareholders. As of July 31, 1998, the Adviser and its
subsidiaries employed approximately 2,000 employees who operate
out of domestic offices and the offices of subsidiaries in
Bahrain, Bangalore, Cairo, Chennai, Hong Kong, Istanbul,
Johannesburg, London, Luxembourg, Madrid, Moscow, Mumbai, New
Delhi, Paris, Pune, Sao Paolo, Seoul, Singapore, Sydney, Tokyo,
Toronto, Vienna and Warsaw. As of June 30, 1998, the Adviser was
retained as an investment manager for employee benefit plan
assets of 32 of the FORTUNE 100 companies.
Alliance Capital Management Corporation ("ACMC"), the
sole general partner of, and the owner of a 1% general
partnership interest in the Adviser, is an indirect wholly-owned
subsidiary of the Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of the
Equitable Companies Incorporated ("ECI"). ECI is a holding
company controlled by AXA-UAP ("AXA") a French insurance holding
company which at March 1, 1998, beneficially owned approximately
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<PAGE>
59% of the outstanding voting shares of ECI. As of June 30,
1998, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
together with Equitable, owned in the aggregate approximately 57%
of the issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser.
AXA is a holding company for an international group of
insurance and related financial services companies. AXA's
insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance
operations are diverse geographically, with activities
principally in Western Europe, North America and the Asia/Pacific
area. AXA is also engaged in asset management, investment
banking, securities trading, brokerage, real estate and other
financial services activities principally in the United States,
as well as in Western Europe and the Asia/Pacific area.
Based on information provided by AXA, as of March 31,
1998, more than 30% of the voting power of AXA was controlled
directly and indirectly by FINAXA, a French holding company. As
of March 31, 1998 approximately 74% of the voting power of FINAXA
was controlled directly and indirectly by four French mutual
insurance companies (the "Mutuelles AXA"), one of which, AXA
Assurances I.A.R.D. Mutuelle, itself controlled directly and
indirectly more than 42% of the voting power of FINAXA. Acting
as a group, the Mutuelles AXA control AXA and FINAXA.
The Adviser provides office space, investment advisory,
administrative and clerical services, and order placement
facilities for the Fund and pays all compensation of Directors
and officers of the Fund who are affiliated persons of the
Adviser.
Under its Advisory Agreement, the Fund pays a quarterly
fee to the Adviser on the first business day of January, April,
July and October equal to 1/4 of 1% (approximately 1% on an
annual basis) of the aggregate net asset value of the Fund at the
end of the previous quarter.
The Adviser is, under the Advisory Agreement,
responsible for any expenses incurred by the Fund in promoting
the sale of Fund shares (other than the portion of the
promotional expenses borne by the Fund in accordance with an
effective plan pursuant to Rule 12b-1 under the 1940 Act, and the
costs of printing and mailing Fund prospectuses and other reports
to shareholders and all expenses and fees related to proxy
solicitations and registrations and filings with the Securities
and Exchange Commission (the "Commission") and with state
regulatory authorities).
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The Fund has, under the Advisory Agreement, assumed the
obligation for payment of all of its other expenses. As to the
obtaining of services other than those specifically provided to
the Fund by the Adviser, the Fund may employ its own personnel.
For such services, it also may utilize personnel employed by the
Adviser or its affiliates and, in such event, the services will
be provided to the Fund at cost and the payments therefor must be
specifically approved by the Fund's Board of Directors.
For the fiscal years ended November 30, 1997, 1996 and
1995, the Adviser received from the Fund advisory fees of
$17,970,061, $10,945,614, and $4,894,844, respectively. For the
fiscal years ended November 30, 1997, 1996 and 1995 no
reimbursements were required.
The Advisory Agreement became effective on July 22,
1992. The Advisory Agreement was approved by the unanimous vote,
cast in person, of the Fund's Directors, including the Directors
who are not parties to the Advisory Agreement or "interested
persons" as defined in the 1940 Act of any such party, at a
meeting called for that purpose and held on October 22, 1991. At
a meeting held on June 11, 1992, a majority of the outstanding
voting securities of the Fund approved the Advisory Agreement.
The Advisory Agreement continues in effect for
successive twelve-month periods (computed from each January 1),
provided that such continuance is specifically approved at least
annually by the Directors of the Fund or by a majority vote of
the holders of the outstanding voting securities of the Fund,
and, in either case, by a majority of the Directors who are not
parties to the Advisory Agreement or "interested persons" as
defined in the 1940 Act of any such party. Most recently, the
continuance of the Advisory Agreement until December 31, 1998 was
approved by a vote, cast in person, of the Board of Directors,
including a majority of the Directors who are not parties to the
Advisory Agreement or "interested persons" of any such party, at
their Regular Meeting held on October 9, 1997.
The Advisory Agreement is terminable without penalty on
60 days' written notice by a vote of the majority of the Fund's
outstanding voting securities or by a vote of a majority of the
Fund's Directors, or by the Adviser on 60 days' written notice,
and will automatically terminate in the event of assignment. The
Adviser is not liable for any action or inaction in regard to its
obligations under the Advisory Agreement as long as it does not
exhibit willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations.
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The
Adviser may, from time to time, make recommendations which result
13
<PAGE>
in the purchase or sale of a particular security by its other
clients simultaneously with the Fund. If transactions on behalf
of more than one client during the same period increase the
demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity.
It is the policy of the Adviser to allocate advisory
recommendations and the placing of orders in a manner which is
deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the clients of the
Adviser (including the Fund) are purchasing or selling the same
security on a given day from the same broker-dealer, such
transactions may be averaged as to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to Alliance Institutional Reserves,
Inc., AFD Exchange Reserves, The Alliance Fund, Inc., Alliance
All-Asia Investment Fund, Inc., Alliance Balanced Shares, Inc.,
Alliance Bond Fund, Inc., Alliance Capital Reserves, Inc.,
Alliance Global Dollar Government Fund, Inc., Alliance Global
Environment Fund, Inc., Alliance Global Small Cap Fund, Inc.,
Alliance Global Strategic Income Trust, Inc., Alliance Government
Reserves, Alliance Greater China '97 Fund, Inc., Alliance Growth
and Income Fund, Inc., Alliance High Yield Fund, Inc., Alliance
Institutional Funds, Inc., Alliance International Fund, Alliance
International Premier Growth Fund, Inc., Alliance Limited
Maturity Government Fund, Inc., Alliance Money Market Fund,
Alliance Mortgage Securities Income Fund, Inc., Alliance Multi-
Market Strategy Trust, Inc., Alliance Municipal Income Fund,
Inc., Alliance Municipal Income Fund II, Alliance Municipal
Trust, Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc.,
Alliance Select Investor Series, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance Worldwide Privatization Fund, Inc., The Alliance
Portfolios and The Hudson River Trust, all registered open-end
investment companies; and to ACM Government Income Fund, Inc.,
ACM Government Opportunity Fund, Inc., ACM Government Securities
Fund, Inc., ACM Government Spectrum Fund, Inc., ACM Managed
Dollar Fund, Inc., ACM Managed Income Fund, Inc., ACM Municipal
Securities Income Fund, Inc., Alliance All-Market Advantage Fund,
Inc., Alliance World Dollar Government Fund, Inc., Alliance World
Dollar Government Fund II, Inc., The Austria Fund, Inc., The
Korean Investment Fund, Inc., The Southern Africa Fund, Inc. and
The Spain Fund, Inc., all registered closed-end investment
companies.
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Directors and Officers
The Directors and officers of the Fund, their ages and
their principal occupations during the past five years are set
forth below. Certain of the Directors and Officers are trustees,
directors or officers of other registered investment companies
sponsored by the Adviser. Unless otherwise specified, the
address of each of the following persons is 1345 Avenue of the
Americas, New York, New York, 10105.
Directors
JOHN D. CARIFA,* 53, Chairman of the Board is the
President, Chief Operating Officer and a Director of ACMC, with
which he has been associated since prior to 1993.
ROBERT C. ALEXANDER, 56, has been President of Alexander
& Associates, Management Consultants, since prior to 1993. His
address is 38 East 29th Street, New York, New York, 10016.
DAVID H. DIEVLER, 69, is an independent consultant. He
was formerly Senior Vice President of ACMC, until December 1993.
His address is P.O. Box 167, Spring Lake, New Jersey 07762.
CHARLES H. FERGUSON, 43, is an Independent Consultant,
and since prior to 1993, Senior Technology Adviser to Tucker
Anthony Incorporated. His address is 30-36 Bay State Road,
Cambridge, Massachusetts 02138.
WILLIAM H. FOULK, JR., 66, is an Investment Adviser and
an independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1993. His address is
2 Greenwich Plaza, Suite 100, Greenwich, Connecticut 06830.
D. JAMES GUZY, 62, is Chairman of the Board, President
and Chief Executive Officer of SRC Computers Inc., with which he
has been associated since June 1997. He is also President of the
Arbor Company (private family investments). He is a director of
Intel Corporation (semi-conductors), Cirrus Logic Corporation
(semi-conductors), Novellus Corporation (semi- conductor
equipment), Micro Component Technology (semi-conductor equipment)
and the Davis Selected Advisers Group of Mutual Funds (registered
investment companies). His address is P.O. Box 128, Glenbrook,
Nevada 89413.
____________________
* An "interested person" of the Fund as defined in the 1940
Act.
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<PAGE>
PETER J. POWERS, 54, is Chairman of High View Capital
Corporation (investment manager). Until September 1996, he
served as First Deputy Mayor of the City of New York. Prior to
1994, he was engaged in the private practice of law. His address
is 150 East 52 Street, Suite 1800, New York, New York 10022.
MARSHALL C. TURNER, JR., 57, is an Independent
Consultant and technology venture investor. He is General
Partner and co-founder of Taylor & Turner Associates, Ltd.
(venture capital partnerships) since prior to 1993. He is a
director of DuPont Photomasks, Inc. (semiconductor manufacturing
services), the Public Broadcasting Service (public television
network), the George Lucas Educational Foundation and the
Smithsonian Museum of Natural History. His address is 220
Montgomery Street, Penthouse 10, San Francisco, California 94104-
3402.
Officers
PETER ANASTOS, Senior Vice President, 56, is a Senior
Vice President of ACMC, with which he has been associated since
prior to 1993.
THOMAS J. BARDONG, Vice President, 53, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1993.
GERALD T. MALONE, Vice President, 44, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1993.
MARK D. GERSTEN, Treasurer and Chief Financial Officer,
48, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS"), with which he has been associated since prior to 1993.
VINCENT S. NOTO, Controller, 34, is a Vice President of
AFS, with which he has been associated since prior to 1993.
EDMUND P. BERGAN, JR., Secretary, 48, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and AFS, with which he has been associated since
prior to 1993.
ANDREW L. GANGOLF - Assistant Secretary, 44, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since December 1994. Prior thereto, he was Vice
President and Assistant Secretary of Delaware Management Co.,
Inc.
DOMENICK PUGLIESE - Assistant Secretary, 37, is a Vice
President and Assistant General Counsel of AFD, with which he has
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<PAGE>
been associated since May 1995. Prior thereto, he was Vice
President and Counsel of Concord Holding Corporation since 1994
and Vice President and Associate General Counsel of Prudential
Securities since 1992.
EMILIE D. WRAPP - Assistant Secretary, 42, is a Vice
President and Assistant General Counsel of AFD, with which she
has been associated since prior to 1993.
The aggregate compensation paid by the Fund to each of
the Directors during its fiscal year ended November 30, 1997, the
aggregate compensation paid to each of the Directors during
calendar year 1997 by all of the registered investment companies
to which the Adviser provides investment advisory services
(collectively, the "Alliance Fund Complex"), and the total number
of registered investment companies in the Alliance Fund Complex
with respect to which each of the Directors serves as a director
or trustee, are set forth below. Neither the Fund nor any other
registered investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement
benefits to any of its directors or trustees. Certain of the
Directors are directors or trustees of one or more other
registered investment companies in the Alliance Fund Complex.
Total Number
of Investment
Companies in Total Number
the Alliance of Investment
Total Fund Complex, Portfolios
Compensation Including the Within the Funds,
From the Fund, as to Including the
Alliance Fund which the Fund, as to which
Aggregate Complex, Director is the Director is a
Name of Director Compensation Including a Director Director or
of the Fund From the Fund the Fund or Trustee Trustee
John D. Carifa $0 $0 53 118
Robert C. Alexander $12,500 $12,500 1 1
David H. Dievler $14,069 $188,500 46 83
Charles H. Ferguson $ 8,750 $8,750 1 1
William H. Foulk, Jr. $14,105 $149,145 48 113
D. James Guzy $12,500 $12,500 1 1
Peter J. Powers $12,500 $12,500 1 1
Marshall C.
Turner, Jr. $12,500 $12,500 1 1
As of October 9, 1998 the Directors and officers of the
Fund as a group owned less than 1% of the shares of the Fund.
17
<PAGE>
________________________________________________________________
EXPENSES OF THE FUND
________________________________________________________________
Distribution Services Agreement
The Fund has entered into a Distribution Services
Agreement (the "Agreement") with AFD, the Fund's principal
underwriter (the "Principal Underwriter") to permit the Principal
Underwriter to distribute the Fund's shares and to permit the
Fund to pay distribution services fees to defray expenses
associated with the distribution of its Class A, Class B and
Class C shares in accordance with a plan of distribution which is
included in the Agreement and has been duly adopted and approved
in accordance with Rule 12b-1 adopted by the Commission under the
1940 Act (the "Rule 12b-1 Plan").
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge, and at the same time to permit the
Principal Underwriter to compensate broker-dealers in connection
with the sale of such shares. In this regard, the purpose and
function of the combined contingent deferred sales charge and
distribution services fees on the Class B shares and Class C
shares are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and distribution services fee
provide for the financing of the distribution of the relevant
class of the Fund's shares.
Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Directors of the
Fund on a quarterly basis. Also, the Agreement provides that the
selection and nomination of Directors who are not "interested
persons" of the Fund (as defined in the 1940 Act) are committed
to the discretion of such disinterested Directors then in office.
The Agreement became effective on July 22, 1992 and was
amended as of April 30, 1993 to permit the distribution of two
additional classes of shares, Class B shares and Class C shares
and July 11, 1996 with respect to Advisor Class shares.
The Agreement will continue in effect for successive
twelve-month periods (computed from each October 1), provided,
however, that such continuance is specifically approved at least
18
<PAGE>
annually by the Directors of the Fund or by vote of the holders
of a majority of the outstanding voting securities (as defined in
the 1940 Act) of that class, and in either case, by a majority of
the Directors of the Fund who are not parties to the Agreement or
"interested persons," as defined in the 1940 Act, of any such
party (other than as directors of the Fund) and who have no
direct or indirect financial interest in the operation of the
Rule 12b-1 Plan or any agreement related thereto. Most recently
the continuance of the Agreement until December 31, 1998 was
approved by a vote, cast in person, of the Board of Directors,
including a majority of the Directors who are not "interested
persons," as defined in the 1940 Act, at their Regular Meeting
held on October 9, 1997.
The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.
During the Fund's fiscal year ended November 30, 1997,
the Fund paid distribution services fees for expenditures under
the Agreement, with respect to Class A shares in amounts
aggregating $1,854,541, which constituted .30 of 1% of the Fund's
average daily net assets during the period, and the Adviser made
payments from its own resources as described above aggregating
$1,020,320. Of the $2,874,861 paid by the Fund and the Adviser
under the Agreement, $98,181 was spent on advertising, $53,151 on
the printing and mailing of prospectuses for persons other than
current shareholders, $1,276,385 for compensation to
broker-dealers (including $207,848 to the Fund's Principal
Underwriter), $744,599 for compensation to sales personnel and
$494,697 was spent on the printing of sales literature, due
diligence, travel, entertainment and other promotional expenses.
During the Fund's fiscal year ended November 30, 1997
distribution services fees for expenditures payable with respect
to Class B shares, in amounts aggregating $8,710,178 which
constituted 1.00% of the Fund's average daily net assets during
such fiscal period, and the Adviser made payments from its own
resources as described above aggregating $11,510,295. Of the
$20,220,473 paid by the Fund and the Adviser under the Agreement
with respect to Class B shares, $184,101 was spent on
advertising, $99,985 was spent on the printing and mailing of
prospectuses for persons other than current shareholders,
$17,661,397 for compensation to broker-dealers and other
financial intermediaries (including $390,291 to the Fund's
Principal Underwriter), $350,727 for compensation paid to
wholesalers of the Principal Underwriter in respect of sales of
shares of the Fund, $990,509 for interest on Class B shares
19
<PAGE>
financing and $543,463 was spent on the printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.
During the Fund's fiscal year ended November 30, 1997,
distribution services fees for expenditures payable under this
Agreement, with respect to Class C shares, in amounts aggregating
$1,458,366 which constituted 1.00% of the Fund's average daily
net assets during such fiscal period, and the Adviser made
payments from its own resources aggregating $572,565. Of the
$2,030,931 paid by the Fund and the Adviser under the Agreement
with respect to Class C shares, $ 37,520 was spent on
advertising, $20,255 was spent on the printing and mailing of
prospectuses for persons other than current shareholders,
$1,540,957 for compensation to broker-dealers and other financial
intermediaries (including $78,067 to the Fund's Principal
Underwriter), $91,703 for compensation paid to wholesalers of the
Principal Underwriter in respect of sales of shares of the Fund,
$152,894 for interest on Class C shares financing and $109,535
was spent on the printing of sales literature, travel,
entertainment, due diligence and other promotional expenses.
In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares,
Class C shares or Advisor Class shares, (i) no distribution
services fees (other than current amounts accrued but not yet
paid) would be owed by the Fund to the Principal Underwriter with
respect to that class, and (ii) the Fund would not be obligated
to pay the Principal Underwriter for any amounts expended under
the Agreement not previously recovered by the Principal
Underwriter from distribution services fees in respect of shares
of such class or through deferred sales charges.
All material amendments to the Agreement must be
approved by a vote of the Board of Directors or the holders of
the Fund's outstanding voting securities, voting separately by
class, and in either case by a majority of the disinterested
Directors, cast in person at a meeting called for the purpose of
voting on such approval; and the Agreement may not be amended in
order to increase materially the costs that the Fund may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class or
classes affected. The Agreement may be terminated (a) by the
Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting
separately by class, or by a majority vote of the Directors who
are not "interested persons," as defined in the 1940 Act, or
(b) by the Principal Underwriter. To terminate the Agreement,
any party must give the other parties 60 days' written notice; to
terminate the Rule 12b-1 Plan only, the Fund need not give notice
20
<PAGE>
to the Principal Underwriter. The Agreement will terminate
automatically in the event of its assignment.
Transfer Agency Agreement
AFS, an indirect wholly-owned subsidiary of the Adviser,
receives a transfer agency fee per account holder of each of the
Class A, Class B, Class C and Advisor Class shares of the Fund,
plus reimbursement for out-of-pocket expenses. The transfer
agency fee with respect to the Class B shares and Class C shares
is higher than the transfer agency fee with respect to the
Class A shares and Advisor Class shares, reflecting the
additional costs associated with the Class B and Class C
contingent deferred sales charges. For the fiscal year ended
November 30, 1997, the Fund paid $3,584,506 pursuant to the
Transfer Agency Agreement.
________________________________________________________________
PURCHASE OF SHARES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How to Buy Shares."
General
Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge and, as long as the shares are held for one
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
Class shares, without any initial, contingent deferred or asset-
based sales charge, in each case as described below. Shares of
the Fund that are offered subject to a sales charge are offered
through (i) investment dealers that are members of the National
Association of Securities Dealers, Inc. and have entered into
selected dealer agreements with the Principal Underwriter
("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered
into selected agent agreements with the Principal Underwriter
("selected agents") and (iii) the Principal Underwriter.
Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, (ii) through self-directed defined contribution
21
<PAGE>
employee benefit plans (e.g., 401(k) plans) that have at least
1,000 participants or $25 million in assets, or (iii) by the
categories of investors described in clauses (i) through (iv)
below under "--Sales at Net Asset Value" (other than officers,
directors and present and full-time employees of selected dealers
or agents, or relatives of such person, or any trust, individual
retirement account or retirement plan account for the benefit of
such relative, none of whom is eligible on the basis solely of
such status to purchase and hold Advisor Class shares), or
(iv) by directors and present or retired full-time employees of
CB Richard Ellis, Inc. Generally, a fee-based program must
charge an asset-based or other similar fee and must invest at
least $250,000 in Advisor Class shares of the Fund in order to be
approved by the Principal Underwriter for investment in Advisor
Class shares.
Investors may purchase shares of the Fund either through
selected broker-dealers, agents, financial intermediaries or
other financial representatives or directly through the Principal
Underwriter. A transaction, service, administrative or other
similar fee may be charged by your broker-dealer, agent,
financial intermediary or other financial representative with
respect to the purchase, sale or exchange of Class A, Class B,
Class C or Advisor Class shares made through such financial
representative. Such financial intermediaries may also impose
requirements with respect to the purchase, sale or exchange of
shares that are different from, or in addition to, those imposed
by the Fund, including requirements as to the minimum initial and
subsequent investment amounts. Sales personnel of selected
dealers and agents distributing the Fund's shares may receive
differing compensation for selling Class A, Class B, Class C or
Advisor Class shares.
The Fund may refuse any order for the purchase of
shares. The Fund reserves the right to suspend the sale of its
shares to the public in response to conditions in the securities
markets or for other reasons.
The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below under
"Class A Shares." On each Fund business day on which a purchase
or redemption order is received by the Fund and trading in the
types of securities in which the Fund invests might materially
affect the value of Fund shares, the per share net asset value is
computed in accordance with the Fund's Articles of Incorporation
and By-Laws as of the next close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern
time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
22
<PAGE>
A Fund business day is any day on which the Exchange is open for
trading.
The respective per share net asset values of the
Class A, Class B, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and
Class C shares may be lower than the per share net asset values
of the Class A and Advisor Class shares as a result of the
differential daily expense accruals of the distribution and
transfer agency fees applicable with respect to those classes of
shares. Even under those circumstances, the per share net asset
values of the four classes eventually will tend to converge
immediately after the payment of dividends, which will differ by
approximately the amount of the expense accrual differential
among the classes.
The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers, agents or financial representatives, as
applicable, the applicable public offering price will be the net
asset value as so determined, but only if the selected dealer,
agent or financial representative receives the order prior to the
close of regular trading on the Exchange and transmits it to the
Principal Underwriter prior to 5:00 p.m. Eastern time. The
selected dealer, agent or financial representative, as
applicable, is responsible for transmitting such orders by
5:00 p.m. Eastern time. (Certain selected dealers, agents or
financial representatives may enter into operating agreements
permitting them to transmit purchase information to the Principal
Underwriter after 5:00 p.m. Eastern time and receive that day's
net asset value). If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
23
<PAGE>
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
telephone purchase orders may not exceed $500,000. Payment for
shares purchased by telephone can be made only by electronic
funds transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day.
Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.
In addition to the discount or commission paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash or other incentives to dealers or agents,
including EQ Financial Consultants, Inc., formerly Equico
Securities, Inc., a affiliate of the Principal Underwriter, in
connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, to provide
additional compensation to registered representatives who sell
shares of the Fund. On some occasions, cash or other incentives
will be conditioned upon the sale of a specified minimum dollar
amount of the shares of the Fund and/or other Alliance Mutual
Funds, as defined below, during a specific period of time. On
some occasions, such cash or other incentives may take the form
of payment for attendance at seminars, meals, sporting events or
theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel taken by persons
associated with a dealer or agent to urban or resort locations
within or outside the United States. Such dealer or agent may
elect to receive cash incentives of equivalent amount in lieu of
such payments.
Class A, Class B, Class C and Advisor Class shares each
represent an interest in the same portfolio of investments of the
Fund, have the same rights and are identical in all respects,
24
<PAGE>
except that (i) Class A shares bear the expense of the initial
sales charge (or contingent deferred sales charge, when
applicable) and Class B and Class C shares bear the expense of
the deferred sales charge, (ii) Class B shares and Class C shares
each bear the expense of a higher distribution services fee than
those borne by Class A shares, and Advisor Class shares do not
bear such a fee, (iii) Class B and Class C shares bear higher
transfer agency costs than that borne by Class A and Advisor
Class shares, (iv) each of Class A, Class B and Class C shares
has exclusive voting rights with respect to provisions of the
Rule 12b-1 Plan pursuant to which its distribution services fee
is paid and other matters for which separate class voting is
appropriate under applicable law, provided that, if the Fund
submits to a vote of the Class A shareholders, an amendment to
the Rule 12b-1 Plan that would materially increase the amount to
be paid thereunder with respect to the Class A shares, then such
amendment will also be submitted to the Class B shareholders and
Advisor Class shareholders and the Class A, Class B and Advisor
Class shareholders will vote separately by class, and (v) Class B
shares and Advisor Class shares are subject to a conversion
feature. Each class has different exchange privileges and
certain different shareholder service options available.
The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B, Class C and Advisor Class shares. On an ongoing basis,
the Directors of the Fund, pursuant to their fiduciary duties
under the 1940 Act and state law, will seek to ensure that no
such conflict arises.
Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C Shares**
The alternative purchase arrangements available with
respect to Class A, Class B and Class C shares permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
investment in the Fund, the accumulated distribution services fee
and contingent deferred sales charge on Class B shares prior to
conversion, or the accumulated distribution services fee and
contingent deferred sales charge on Class C shares, would be less
than the initial sales charge and accumulated distribution
services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher
return of Class A shares. Class A shares will normally be more
____________________
** Advisor Class shares are sold only to investors described
above in this section under "--General."
25
<PAGE>
beneficial than Class B shares to the investor who qualifies for
reduced initial sales charges on Class A shares, as described
below. In this regard, the Principal Underwriter will reject any
order (except orders from certain retirement plans and certain
employee benefit plans) for more than $250,000 for Class B
shares. Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. (See Appendix A for information concerning the
eligibility of certain employee benefit plans to purchase Class B
shares at net asset value without being subject to a contingent
deferred sales charge and the ineligibility of certain such plans
to purchase Class A shares.) For this reason, the Principal
Underwriter will reject any order for more than $1,000,000 for
Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.
Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
being subject to a contingent deferred sales charge for a four-
year and one-year period, respectively. For example, based on
current fees and expenses, an investor subject to the 4.25%
initial sales charge on Class A shares would have to hold his or
her investment approximately seven years for the Class C
distribution services fee to exceed the initial sales charge plus
the accumulated distribution services fee of Class A shares. In
this example, an investor intending to maintain his or her
investment for a longer period might consider purchasing Class A
shares. This example does not take into account the time value
of money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in net
asset value or the effect of different performance assumptions.
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
26
<PAGE>
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
During the Fund's fiscal years ended in 1997, 1996 and
November 30, 1995, and for the fiscal period ended November 30,
1994, the aggregate amounts of underwriting commission payable
with respect to shares of the Fund were $10,255,458, $9,023,480
and $7,533,725, respectively. Of that amount, the Principal
Underwriter, received the amounts of $356,333, $448,982, and
$440,810, respectively, representing that portion of the sales
charges paid on shares of the Fund sold during the year which was
not reallowed to selected dealers (and was, accordingly, retained
by the Principal Underwriter). During the Fund's fiscal years
ended in in 1997, 1996 and 1995, the Principal Underwriter
received contingent deferred sales charges of $21,399, $-0- and
$-0-, respectively, on Class A Shares, $1,915,810, $1,108,455,
and $367,410, respectively on Class B Shares and $78,448, $-0-
and $-0-, respectively on Class C Shares.
Class A Shares
The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below.
Sales Charge
Discount or
Commission
As % of to Dealers
As % of the or Agents
Net Public As % of
Amount of Amount Offering Offering
Purchase Invested Price Price
Less than
$100,000 4.44% 4.25% 4.00%
$100,000 but less
than $250,000 3.36 3.25 3.00
$250,000 but less
than $500,000 2.30 2.25 2.00
$500,000 but less
than $1,000,000* 1.78 1.75 1.50
_________________
* There is no initial sales charge on transactions of $1,000,000
or more.
With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
27
<PAGE>
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, as described below under "--Class B
shares." In determining the contingent deferred sales charge
applicable to a redemption of Class A shares, it will be assumed
that the redemption is, first, of any shares that are not subject
to a contingent deferred sales charge (for example, because an
initial sales charge was paid with respect to the shares, or they
have been held beyond the period during which the charge applies
or were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. Proceeds from the
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling
Class A shares. With respect to purchases of $1,000,000 or more
made through selected dealers or agents, the Adviser may,
pursuant to the Distribution Services Agreement described above,
pay such dealers or agents from its own resources a fee of up to
1% of the amount invested to compensate such dealers or agents
for their distribution assistance in connection with such
purchases.
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (as that term is
defined under "Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge or (iii) upon the automatic conversion of Class B
shares or Advisor Class shares as described below under "-
- -Class B Shares-- Conversion Feature" and "--Conversion of
Advisor Class Shares to Class A Shares." The Fund receives the
entire net asset value of its Class A shares sold to investors.
The Principal Underwriter's commission is the sales charge shown
above less any applicable discount or commission "reallowed" to
selected dealers and agents. The Principal Underwriter will
reallow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, the Principal
Underwriter may elect to reallow the entire sales charge to
selected dealers and agents for all sales with respect to which
orders are placed with the Principal Underwriter. A selected
28
<PAGE>
dealer who receives reallowance in excess of 90% of such a sales
charge may be deemed to be an "underwriter" under the Securities
Act.
Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on May 31, 1998.
Net Asset Value per Class A
Share at May 31, 1998 $60.46
Class A Per Share Sales Charge -
4.25% of offering price (4.43%
of net asset value per share) $ 2.68
Class A Per Share Offering Price
to the public $63.14
======
Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but be subject in most such cases to a contingent
deferred sales charge) or (ii) a reduced initial sales charge.
The circumstances under which investors may pay a reduced initial
sales charge are described below.
Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges above by combining purchases of shares of the
Fund into a single "purchase," if the resulting "purchase" totals
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in
the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
29
<PAGE>
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:
AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance International Fund
Alliance International Premier Growth Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Portfolios
-Alliance Conservative Investors Fund
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-Alliance Growth Fund
-Alliance Growth Investors Fund
-Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting AFS at the address or the
"For Literature" telephone number shown on the front cover of
this Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on
the previous day) of (a) all shares of the Fund held by the
investor and (b) all shares of any other Alliance Mutual Fund
held by the investor; and
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder eligible to combine
his or her purchase with that of the investor into a single
"purchase" (see above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 purchase
would be at the 2.25% rate applicable to a single $300,000
purchase of shares of the Fund, rather than the 3.25% rate.
To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
Statement of Intention. Class A investors may also
obtain the reduced sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B,
Class C and/or Advisor Class shares) of the Fund or any other
Alliance Mutual Fund. Each purchase of shares under a Statement
of Intention will be made at the public offering price or prices
applicable at the time of such purchase to a single transaction
of the dollar amount indicated in the Statement of Intention. At
the investor's option, a Statement of Intention may include
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purchases of shares of the Fund or any other Alliance Mutual Fund
made not more than 90 days prior to the date that the investor
signs the Statement of Intention; however, the 13-month period
during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will be necessary to invest
only a total of $60,000 during the following 13 months in shares
of the Fund or any other Alliance Mutual Fund, to qualify for the
3.25% sales charge on the total amount being invested (the sales
charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher sales
charge applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrowed shares will
be involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow
will be released. To the extent that an investor purchases more
than the dollar amount indicated on the Statement of Intention
and qualifies for a further reduced sales charge, the sales
charge will be adjusted for the entire amount purchased at the
end of the 13-month period. The difference in the sales charge
will be used to purchase additional shares of the Fund subject to
the rate of the sales charge applicable to the actual amount of
the aggregate purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting AFS at the address or
telephone numbers shown on the cover of this Statement of
Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
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monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of the sales charges set forth in this
Statement of Additional Information, to an investment 13 times
larger than such initial purchase. The sales charge applicable
to each succeeding monthly purchase will be that normally
applicable, under such schedule, to an investment equal to the
sum of (i) the total purchase previously made during the 13-month
period and (ii) the current month's purchase multiplied by the
number of months (including the current month) remaining in the
13-month period. Sales charges previously paid during such
period will not be retroactively adjusted on the basis of later
purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A or Class B shares of the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinvestment of
such shares. Shares are sold to a reinvesting shareholder at the
net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal income tax purposes
except that no loss will be recognized to the extent that the
proceeds are reinvested in shares of the Fund within 30 calendar
days after the redemption or repurchase transaction. Investors
may exercise the reinstatement privilege by written request sent
to the Fund at the address shown on the cover of this Statement
of Additional Information.
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without a contingent deferred sales charge to certain
categories of investors including: (i) investment management
clients of the Adviser or its affiliates; (ii) officers and
present or former Directors of the Fund; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser, the Principal Underwriter, AFS and their affiliates;
officers and directors of ACMC, the Principal Underwriter, AFS
and their affiliates; officers, directors and present full-time
employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively, "relatives")
of any such person; or any trust, individual retirement account
or retirement plan account for the benefit of any such person or
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relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not
be resold except to the Fund); (iii) the Adviser, the Principal
Underwriter, AFS and their affiliates; and certain employee
benefit plans for employees of the Adviser, the Principal
Underwriter, AFS and their affiliates; (iv) registered investment
advisers or other financial intermediaries who charge a
management, consulting or other fee for their services and who
purchase shares through a broker or agent approved by the
Principal Underwriter and clients of such registered investment
advisers or financial intermediaries whose accounts are linked to
the master account of such investment adviser or financial
intermediary on the books of such approved broker or agent;
(v) persons participating in a fee-based program, sponsored and
maintained by a registered broker-dealer or other financial
intermediary and approved by the Principal Underwriter, pursuant
to which such persons pay an asset-based fee to such broker-
dealer or financial intermediary, or its affiliate or agent, for
service in the nature of investment advisory or administrative
services; (vi) persons who establish to the Principal
Underwriter's satisfaction that they are investing, within such
time period as may be designated by the Principal Underwriter,
proceeds of redemption of shares of such other registered
investment companies as may be designated from time to time by
the Principal Underwriter; (vii) employer- sponsored qualified
pension or profit-sharing plans (including Section 401(k) plans),
custodial accounts maintained pursuant to Section 403(b)(7)
retirement plans and individual retirement accounts (including
individual retirement accounts to which simplified employee
pension ("SEP") contributions are made), if such plans or
accounts are established or administered under programs sponsored
by administrators or other persons that have been approved by the
Principal Underwriter; (viii) a unit investment trust organized
and sponsored by Prudential Securities Incorporated, the
portfolio of which consists of Class A shares of the Fund and
stripped U.S. Treasury issued notes or bonds bearing no current
interest (the "Trust"); and (ix) unit holders of the Trust
investing the proceeds of cash distributions from the Trust under
circumstances described in the prospectus of the Trust, including
distributions upon the termination of the Trust provided that the
proceeds of such termination are invested in the Fund within 30
days of such termination and that the Fund's principal
underwriter is provided with evidence that establishes to the
Fund's satisfaction that the investment in the Fund is being made
exclusively from the proceeds from such distribution.
Class B Shares
Investors may purchase Class B shares at the public
offering price equal to the net asset value per share of the
Class B shares on the date of purchase without the imposition of
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a sales charge at the time of purchase. The Class B shares are
sold without an initial sales charge so that the Fund will
receive the full amount of the investor's purchase payment.
Proceeds from the contingent deferred sales charge on
Class B shares are paid to the Principal Underwriter and are used
by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.
To illustrate, assume that an investor purchased 100
Class B shares at $10 per share (at a cost of $1,000) and in the
second year after purchase, the net asset value per share is $12
and, during such time, the investor has acquired 10 additional
Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 50 Class B shares
(proceeds of $600), 10 Class B shares will not be subject to the
charge because of dividend reinvestment. With respect to the
remaining 40 Class B shares, the charge is applied only to the
original cost of $10 per share and not to the increase in net
asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds will be charged at a rate of 3.0% (the
applicable rate in the second year after purchase, as set forth
below).
The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.
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Contingent Deferred Sales Charge as a %
of Dollar Amount Subject to Charge
Shares Purchased Shares Purchased
on or before on or after
Year Since Purchase November 19, 1993 November 19, 1993
First 5.5% 4.0%
Second 4.5% 3 0%
Third 3.5% 2.0
Fourth 2.5% 1.0%
Fifth 1.5% 1.0%
Sixth 0.5% None
Seventh and thereafter None None
In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that were acquired
upon the reinvestment of dividends or distributions and, second,
of shares held longest during the time they are subject to the
sales charge. When shares acquired in an exchange are redeemed,
the applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied at the time of the
purchase of shares of the corresponding class of the Alliance
Mutual Fund originally purchased by the shareholder.
The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), of a shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who
has attained the age of 70-1/2, (iii) that had been purchased by
present or former Directors of the Fund, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative or by the estate of any such person or relative, or
(iv) pursuant to a systematic withdrawal plan (see "Shareholder
Services--Systematic Withdrawal Plan" below).
Conversion Feature. Eight years after the end of the
calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A
shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
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<PAGE>
compensated for distribution expenses incurred in the sale of
such shares.
For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.
The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.
Class C Shares
Investors may purchase Class C shares at the public
offering price equal to the net asset value per share of the
Class C shares on the date of purchase without the imposition of
a sales charge either at the time of purchase or, as long as the
shares are held for one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, as long as the shares are held for one year or more, without
a contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell Class C shares without either an initial
or contingent deferred sales charge, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares of the Fund and incur higher distribution
services fees and transfer agency costs than Class A shares and
Advisor Class shares, and will thus have a higher expense ratio
and pay correspondingly lower dividends than Class A shares and
Advisor Class shares.
Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
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the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on shares
derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
shares will be waived on certain redemptions, as described above
under "--Class B shares." In determining the contingent deferred
sales charge applicable to a redemption of Class C shares, it
will be assumed that the redemption is, first, of any shares that
are not subject to a contingent deferred sales charge (for
example, because the shares have been held beyond the period
during which the charge applies or were acquired upon the
reinvestment of dividends or distributions) and, second, of
shares held longest during the time they are subject to the sales
charge.
Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
related to Class A shares and Advisor Class shares.
Conversion of Advisor Class Shares to Class A Shares
Advisor Class shares may be held solely through the fee-
based program accounts and employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares--General," and by
investment advisory clients of, and by certain other persons
associated with, the Adviser and its affiliates or the Fund. If
(i) a holder of Advisor Class shares ceases to participate in the
fee-based program or plan, or to be associated with the
investment adviser or financial intermediary, in each case, that
satisfies the requirements to purchase shares set forth under
"Purchase of Shares--General" or (ii) the holder is otherwise no
longer eligible to purchase Advisor Class shares as described in
the Advisor Class Prospectus and this Statement of Additional
Information (each, a "Conversion Event"), then all Advisor Class
shares held by the shareholder will convert automatically and
without notice to the shareholder, other than the notice
contained in the Advisor Class Prospectus and this Statement of
Additional Information, to Class A shares of the Fund during the
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calendar month following the month in which the Fund is informed
of the occurrence of the Conversion Event. The failure of a
shareholder or a fee-based program to satisfy the minimum
investment requirements to purchase Advisor Class shares will not
constitute a Conversion Event. The conversion would occur on the
basis of the relative net asset values of the two classes and
without the imposition of any sales load, fee or other charge.
Class A shares currently bear a .30% distribution services fee
and have a higher expense ratio than Advisor Class shares. As a
result, Class A shares may pay correspondingly lower dividends
and have a lower net asset value than Advisor Class shares.
The conversion of Advisor Class shares to Class A shares
is subject to the continuing availability of an opinion of
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class shares
to Class A shares may be suspended if such an opinion is no
longer available at the time such conversion is to occur. In
that event, the Advisor Class shareholder would be required to
redeem his or her Advisor Class shares, which would constitute a
taxable event under federal income tax law.
________________________________________________________________
REDEMPTION AND REPURCHASE OF SHARES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Sell Shares." If you are an Advisor Class
shareholder through an account established under a fee-based
program your fee-based program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares
of the Fund that are different from those described herein. A
transaction fee may be charged by your financial representative
with respect to the purchase, sale or exchange of Advisor Class
shares made through such financial representative.
Redemption
Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge which may be applicable
to Class A, Class B or Class C shares, there is no redemption
charge. Payment of the redemption price will be made within seven
days after the Fund's receipt of such tender for redemption. If
a shareholder is in doubt about what documents are required by
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<PAGE>
his or her fee-based program or employee benefit plan, the
shareholder should contact his or her financial representative.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his or her shares, assuming the
shares constitute capital assets in his or her hands, will result
in long-term or short-term capital gain (or loss) depending upon
the shareholder's holding period and basis in respect of the
shares redeemed.
To redeem shares of the Fund for which no stock
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
To redeem shares of the Fund represented by stock
certificates, the investor should forward the appropriate stock
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
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signature or signatures on the assignment form must be guaranteed
in the manner described above.
Telephone Redemption by Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by Electronic
Funds Transfer of shares for which no stock certificates have
been issued by telephone at 800-221-5672 by a shareholder who has
completed the appropriate portion of the Subscription Application
or, in the case of an existing shareholder, an "Autosell"
application obtained from AFS. A telephone redemption request by
electronic funds transfer may not exceed $100,000 (except for
certain omnibus accounts), and must be made by 4:00 p.m. Eastern
time on a Fund business day as defined above. Proceeds of
telephone redemptions will be sent by electronic funds transfer
to a shareholder's designated bank account at a bank selected by
the shareholder that is a member of the NACHA.
Telephone Redemption by Check. Each Fund shareholder is
eligible to request redemption by check of Fund shares for which
no stock certificates have been issued by telephone at
800-221-5672 before 4:00 p.m. Eastern time on a Fund business day
in an amount not exceeding $50,000. Proceeds of such redemptions
are remitted by check to the shareholder's address of record. A
shareholder otherwise eligible for telephone redemption by check
may cancel the privilege by written instruction to AFS, or by
checking the appropriate box on the Subscription Application
found in the Prospectus.
Telephone Redemptions -- General. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information. The
Fund reserves the right to suspend or terminate its telephone
redemption service at any time without notice. Telephone
redemption is not available with respect to shares (i) for which
certificates have been issued, (ii) held by a shareholder who has
changed his or her address of record within the preceding 30
calendar days or (iv) held in any retirement plan account.
Neither the Fund nor the Adviser, the Principal Underwriter or
Alliance Fund Services, Inc. will be responsible for the
authenticity of telephone requests for redemptions that the Fund
reasonable believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for redemptions are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
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Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.
Repurchase
The Fund may repurchase shares through the Principal
Underwriter, selected financial intermediaries or selected
dealers or agents. The repurchase price will be the net asset
value next determined after the Principal Underwriter receives
the request (less the contingent deferred sales charge, if any,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. Eastern time. (Certain
selected dealers, agents or financial representatives may enter
into operating agreements permitting them to transmit purchase
information to the Principal Underwriter after 5:00 p.m. Eastern
time and receive that day's net asset value). If the financial
intermediary or selected dealer or agent fails to do so, the
shareholder's right to receive that day's closing price must be
settled between the shareholder and the dealer or agent. A
shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
shares of the Fund are offered through a financial intermediary
or selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
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not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.
________________________________________________________________
SHAREHOLDER SERVICES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares- -Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class shareholder through an account established under a
fee-based program your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein. A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing electronic funds transfer
drawn on the investor's own bank account. Under such a program,
pre-authorized monthly drafts for a fixed amount (at least $25)
are used to purchase shares through the selected dealer or
selected agent designated by the investor at the public offering
price next determined after the Principal Underwriter receives
the proceeds from the investor's bank. In electronic form,
drafts can be made on or about a date each month selected by the
shareholder. Investors wishing to establish an automatic
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application found in the Prospectus. Current shareholders should
contact AFS at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.
Exchange Privilege
You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by the Adviser).
In addition, (i) present officers and full-time employees of the
Adviser, (ii) present Directors or Trustees of any Alliance
Mutual Fund and (iii) certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, AFS and
their affiliates may, on a tax-free basis, exchange Class A
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shares of the Fund for Advisor Class shares of the Fund.
Exchanges of shares are made at the net asset value next
determined and without sales or service charges. Exchanges may be
made by telephone or written request. Telephone exchange
requests must be received by AFS, Inc. by 4:00 p.m. Eastern time
on a Fund business day in order to receive that day's net asset
value.
Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.
Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call AFS at 800-221-5672 to exchange uncertificated shares.
Except with respect to exchanges of Class A shares of the Fund
for Advisor Class shares of the Fund, exchanges of shares as
described above in this section are taxable transactions for
federal income tax purposes. The exchange service may be
changed, suspended, or terminated on 60 days' written notice.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for federal income tax purposes.
Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless AFS
receives written instruction to the contrary from the
shareholder, or the shareholder declines the privilege by
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<PAGE>
checking the appropriate box on the Subscription Application
found in the Prospectus. Such telephone requests cannot be
accepted with respect to shares then represented by stock
certificates. Shares acquired pursuant to a telephone request
for exchange will be held under the same account registration as
the shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange
should telephone AFS with their account number and other details
of the exchange, at (800) 221-5672 before 4:00 p.m. Eastern time
on a Fund business day as defined above. Telephone requests for
exchange received before 4:00 p.m. Eastern time on a Fund
business day will be processed as of the close of business on
that day. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching AFS
by telephone (although no such difficulty was apparent at any
time in connection with the 1987 market break). If a shareholder
were to experience such difficulty, the shareholder should issue
written instructions to AFS at the address shown on the cover of
this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto.
None of the Alliance Mutual Funds, the Adviser, the
Principal Underwriter or AFS will be responsible for the
authenticity of telephone requests for exchanges that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers, agents or financial
representatives, as applicable, may charge a commission for
handling telephone requests for exchanges.
The exchange privilege is available only in states where
shares of the Alliance Mutual Fund being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.
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Retirement Plans
The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact AFS at the "For Literature"
telephone number on the cover of this Statement of Additional
Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.
If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan reaches $1 million
on or before December 15 in any year, all Class B or Class C
shares of the Fund held by the plan can be exchanged, at the
plan's request, without any sales charge, for Class A shares of
the Fund.
Simplified Employee Pension Plan ("SEP"). Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.
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403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirement plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to AFS as compensation for its services to the retirement plan
accounts maintained with the Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact AFS.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund account, a
Class A, Class B, Class C or Advisor Class account with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B, Class C
or Advisor Class Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges, in
shares of the same class of such other Alliance Mutual Fund(s).
Further information can be obtained by contacting AFS at the
address or the "For Literature" telephone number shown on the
cover of this Statement of Additional Information. Investors
wishing to establish a dividend direction plan in connection with
their initial investment should complete the appropriate section
of the Subscription Application found in the Prospectus. Current
shareholders should contact AFS to establish a dividend direction
plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
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Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such payments will be subject to any
taxes applicable to redemptions and, except as discussed below,
any applicable contingent deferred sales charge. Shares acquired
with reinvested dividends and distributions will be liquidated
first to provide such withdrawal payments and thereafter other
shares will be liquidated to the extent necessary, and depending
upon the amount withdrawn, the investor's principal may be
depleted. A systematic withdrawal plan may be terminated at any
time by the shareholder or the Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level. Therefore,
redemptions of shares under the plan may reduce or even liquidate
a shareholder's account and may subject the shareholder to the
Fund's involuntary redemption provisions. See "Redemption and
Repurchase of Shares--General." Purchases of additional shares
concurrently with withdrawals are undesirable because of sales
charges when purchases are made. While an occasional lump-sum
investment may be made by a holder of Class A shares who is
maintaining a systematic withdrawal plan, such investment should
normally be an amount equivalent to three times the annual
withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting AFS at the address or the "For Literature"
telephone number shown on the cover of this Statement of
Additional Information.
CDSC Waiver for Class B Shares and Class C Shares.
Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B or Class C shares in a shareholder's account may
be redeemed free of any contingent deferred sales charge.
With respect to Class B shares, the waiver applies only
with respect to shares acquired after July 1, 1995. Class B
shares that are not subject to a contingent deferred sales charge
(such as shares acquired with reinvested dividends or
distributions) will be redeemed first and will count toward the
foregoing limitations. Remaining Class B shares that are held
the longest will be redeemed next. Redemptions of Class B shares
in excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.
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With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.
Statements and Reports
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, Ernst & Young LLP, as
well as a confirmation of each purchase and redemption. By
contacting his or her broker or AFS, a shareholder can arrange
for copies of his or her account statements to be sent to another
person.
________________________________________________________________
NET ASSET VALUE
________________________________________________________________
The per share net asset value is computed in accordance
with the Fund's Articles of Incorporation and By-Laws at the next
close of regular trading on the Exchange (ordinarily 4:00 p.m.
Eastern time) following receipt of a purchase or redemption order
by the Fund on each Fund business day on which such an order is
received and on such other days as the Board of Directors deems
appropriate or necessary in order to comply with Rule 22c-1 under
the 1940 Act. The Fund's per share net asset value is calculated
by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
A Fund business day is any weekday on which the Exchange is open
for trading.
In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the Exchange or on a
foreign securities exchange (other than foreign securities
exchanges whose operations are similar to those of the United
States over-the-counter market) are valued, except as indicted
below, at the last sale price reflected on the consolidated tape
at the close of the Exchange or, in the case of a foreign
securities exchange, at the last quoted sale price, in each case
on the business day as of which such value is being determined.
If there has been no sale on such day, the securities are valued
at the mean of the closing bid and asked prices on such day. If
no bid or asked prices are quoted on such day, then the security
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is valued in good faith at fair value by, or in accordance with
procedures established by, the Board of Directors. Readily
marketable securities not listed on the Exchange or on a foreign
securities exchange but listed on other United States national
securities exchanges or traded on The Nasdaq Stock Market, Inc.
are valued in like manner. Portfolio securities traded on the
Exchange and on one or more foreign or other national securities
exchanges, and portfolio securities not traded on the Exchange
but traded on one or more foreign or other national securities
exchanges are valued in accordance with these procedures by
reference to the principal exchange on which the securities are
traded.
Readily marketable securities traded in the over-the-
counter market, securities listed on a foreign securities
exchange whose operations are similar to those of the United
States over-the-counter market, and securities listed on a U.S.
national securities exchange whose primary market is believed to
be over-the-counter (but excluding securities traded on The
Nasdaq Stock Market, Inc.), are valued at the mean of the current
bid and asked prices as reported by Nasdaq or, in the case of
securities not quoted by Nasdaq, the National Quotation Bureau or
another comparable sources.
Listed put or call options purchased by the Fund are
valued at the last sale price. If there has been no sale on that
day, such securities will be valued at the closing bid prices on
that day.
Open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price, If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used.
U.S. Government securities and other debt instruments
having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or
by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days
(unless in either case the Board of Directors determines that
this method does not represent fair value).
Fixed-income securities may be valued on the basis of
prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.
The prices provided by pricing service take into account many
factors, including institutional size trading in similar groups
of securities and any developments related to specific
securities.
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All other assets of the Fund are valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors.
Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Fund business
day. In addition, trading in foreign markets may not take place
on all Fund business days. Furthermore, trading may take place
in various foreign markets on days that are not Fund business
days. The Fund's calculation of the net asset value per share,
therefore, does not always take place contemporaneously with the
most recent determination of the prices of portfolio securities
in these markets. Events affecting the values of these portfolio
securities that occur between the time their prices are
determined in accordance with the above procedures and the close
of the Exchange will not be reflected in the Fund's calculation
of net asset value unless it is believed that these prices do not
reflect current market value, in which case the securities will
be valued in good faith by, or in accordance with procedures
established by, the Board of Directors at fair value.
The Board of Directors may suspend the determination of
the Fund's, net asset value (and the offering and sale of
shares), subject to the rules of the Commission and other
governmental rules and regulations, at a time when: (1) the
Exchange is closed, other than customary weekend and holiday
closings, (2) an emergency exists as a result of which it is not
reasonably practicable for the Fund to dispose of securities
owned by it or to determine fairly the value of its net assets,
or (3) for the protection of shareholders, the Commission by
order permits a suspension of the right of redemption or a
postponement of the date of payment on redemption.
For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in a
foreign currency will be converted into U.S. dollars at the mean
of the current bid and asked prices of such currency against the
U.S. dollar last quoted by a major bank that is a regular
participant in the relevant foreign exchange market or on the
basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If such quotations are
not available as of the close of the Exchange, the rate of
exchange will be determined in good faith by, or under the
direction of, the Board of Directors.
The assets attributable to the Class A shares, Class B
shares, Class C shares and Advisor Class shares will be invested
together in a single portfolio. The net asset value of each
class will be determined separately by subtracting the
liabilities allocated to that class from the assets belonging to
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that class in conformance with the provisions of a plan adopted
by the Fund in accordance with Rule 18f-3 under the 1940 Act.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
United States Federal Income Taxation of Dividends and
Distributions
General
The Fund intends for each taxable year to qualify as a
"regulated investment company" under the Code. Such
qualification relieves the Fund of federal income tax liability
on the part of its investment company taxable income and net
realized capital gains which it timely distributes to its
shareholders. Such qualification does not, of course, involve
governmental supervision of management or investment practices or
policies. Investors should consult their own counsel for a
complete understanding of the requirements the Fund must meet to
qualify to be taxed as a "regulated investment company."
The information set forth in the Prospectus and the
following discussion relate solely to the significant United
States federal income taxes on dividends and distributions by the
Fund and assumes that the Fund qualifies to be taxed as a
regulated investment company. Investors should consult their own
tax counsel with respect to the specific tax consequences of
their being shareholders of the Fund, including the effect and
applicability of federal, state and local tax laws to their own
particular situation and the possible effects of changes therein.
It is the present policy of the Fund to distribute to
shareholders all net investment income and to distribute realized
capital gains. However, 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 amount of any dividend or
distribution paid on shares of the Fund must necessarily depend
upon the realization of income and capital gains from the Fund's
investments.
The Fund intends to declare and distribute dividends in
the amounts and at the times necessary to avoid the application
of the 4% federal excise tax imposed on certain undistributed
income of regulated investment companies. The Fund will be
required to pay the 4% excise tax to the extent it does not
distribute to its shareholders during any calendar year an amount
equal to at least the sum of (i) 98% of its ordinary income for
the calendar year, (ii) 98% of its capital gain net income and
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foreign currency gains for the twelve months ended November 30
of such year, and (iii) any ordinary income or capital gains from
the preceding calendar year that was not distributed during such
year. For this purpose, income or gain retained by the Fund that
is subject to corporate income tax will be considered to have
been distributed by the Fund by year-end. For federal income and
excise tax purposes, dividends declared and payable to
shareholders of record as of a date in October, November or
December but actually paid during the following January will be
taxable to these shareholders for the year declared, and not for
the subsequent calendar year in which the shareholders actually
receive the dividend.
Dividends of the Fund's net ordinary income and
distributions of any net realized short-term capital gain are
taxable to shareholders as ordinary income. In view of the
Fund's investment policies, it is expected that dividends from
domestic corporations will be a significant part of the Fund's
gross income and, accordingly, that a significant part of the
Fund's dividends will be eligible for the dividends-received
deduction; however, this is largely dependent on the Fund's
investment activities, and accordingly cannot be predicted with
certainty. The amount of such dividends eligible for the
dividends-received deduction is limited to the amount of
qualifying dividends from domestic corporations received by the
Fund during the fiscal year. Under provisions of the tax law a
corporation's dividends-received deduction will be disallowed
unless the corporation holds shares in the Fund on the ex-
dividend date and for at least 45 other days during the 90-day
period beginning 45 days prior to the ex-dividend date. In
determining the holding period of such shares for this purpose,
any period during which a shareholder's risk of loss is offset by
means of options, short sales or similar transactions is not
counted. Furthermore, provisions of the tax law disallow the
dividends-received deduction to the extent a corporation's
investment in shares of the Fund is financed with
indebtedness.
Distributions of net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) are
taxable as long-term capital gain, regardless of how long a
shareholder has held shares in the Fund. Any dividend or
distribution received by a shareholder on shares of the Fund will
have the effect of reducing the net asset value of such shares by
the amount of such dividend or distribution. Furthermore, a
dividend or distribution made shortly after the purchase of such
shares by a shareholder, although in effect a return of capital
to that particular shareholder, would be taxable to him as
described above. If a shareholder has held shares in the Fund
for six months or less and during that period has received a
distribution of net capital gain, any loss recognized by the
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shareholder on the sale of those shares during the six-month
period will be treated as a long-term capital loss to the extent
of the distribution. In determining the holding period of such
shares for this purpose, any period during which a shareholder's
risk of loss is offset by means of options, short sales or
similar transactions is not counted.
Dividends are taxable in the manner discussed regardless
of whether they are paid to the shareholder in cash or are
reinvested in additional shares of the Fund or another Alliance
Mutual Fund.
The Fund generally will be required to withhold tax at
the rate of 31% with respect to dividends of net ordinary income
and net distributions of realized capital gains payable to a non-
corporate shareholder unless the shareholder certifies on his
subscription application that the social security or taxpayer
identification number provided is correct and that the
shareholder has not been notified by the Internal Revenue Service
that he is subject to backup withholding.
The foregoing discussion relates only to U.S. federal
income tax law as it affects shareholders who are U.S. citizens
or residents or U.S. corporations. The effects of federal income
tax law on shareholders who are non-resident aliens or foreign
corporations may be substantially different. Foreign investors
should consult their counsel for further information as to the
U.S. tax consequences of receipt of income from the Fund.
United States Federal Income Taxation of the Fund
The following discussion relates to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.
Options. Certain listed nonequity options are
considered "section 1256 contracts" for federal income tax
purposes. Section 1256 contracts held by the Fund at the end of
each taxable year will be "marked to market" and treated for
federal income tax purposes as though sold for fair market value
on the last business day of such taxable year. Gain or loss
realized by the Fund on section 1256 contracts generally will be
considered 60% long-term and 40% short-term capital gain or loss.
The Fund can elect to exempt its section 1256 contracts which are
part of a "mixed straddle" (as described below) from the
application of section 1256.
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With respect to equity options, gain or loss realized by
the Fund upon the lapse or sale of such options held by the Fund
will be either long-term or short-term capital gain or loss
depending upon the Fund's holding period with respect to such
options. However, gain or loss realized upon the lapse or
closing out of such options that are written by the Fund will be
treated as short-term capital gain or loss. In general, if the
Fund exercises an option, or if an option that the Fund has
written is exercised, gain or loss on the option will not be
separately recognized but the premium received or paid will be
included in the calculation of gain or loss upon disposition of
the property underlying the option.
Tax Straddles. Any option or other position entered
into or held by the Fund in conjunction with any other position
held by the Fund may constitute a "straddle" for federal income
tax purposes. A straddle of which at least one, but not all, the
positions are section 1256 contracts may constitute a "mixed
straddle." In general, straddles are subject to certain rules
that may affect the character and timing of the Fund's gains and
losses with respect to straddle positions by requiring, among
other things, that (i) loss realized on disposition of one
position of a straddle not be recognized to the extent that the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the Fund's holding period in straddle
positions be suspended while the straddle exists (possibly
resulting in gain being treated as short-term capital gain rather
than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as
60% long-term and 40% short-term capital loss; (iv) losses
recognized with respect to certain straddle positions which would
otherwise constitute short-term capital losses be treated as
long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may
be deferred. Various elections are available to the Fund which
may mitigate the effects of the straddle rules, particularly with
respect to mixed straddles. In general, the straddle rules
described above do not apply to any straddles held by the Fund,
all of the offsetting positions of which consist of section 1256
contracts.
________________________________________________________________
BROKERAGE AND PORTFOLIO TRANSACTIONS
________________________________________________________________
Subject to the general supervision of the Board of
Directors of the Fund, the Adviser makes the Fund's portfolio
decisions and determines the broker to be used in specific
transactions with the objective of negotiating a combination of
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the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution).
Consistent with the objective of obtaining best execution, the
Fund may use brokers and dealers who supply investment
information to the Adviser.
Neither the Fund nor the Adviser entered into agreements
or understandings with any brokers regarding the placement of
securities transactions because of research or statistical
services they provide. To the extent that such persons or firms
supply investment information to the Adviser for use in rendering
investment advice to the Fund, such information may be supplied
at no cost to the Adviser. While it is impossible to place an
actual dollar value on such investment information, its receipt
by the Adviser probably does not reduce the overall expenses of
the Adviser to any material extent.
The investment information provided to the Adviser is of
the type described in Section 28(e)(3) of the Securities Exchange
Act of 1934 and is designed to augment the Adviser's own internal
research and investment strategy capabilities. Research and
statistical services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its client accounts but not all such services may
be used by the Adviser in connection with the Fund. There may be
occasions where the transaction cost charged by a broker may be
greater than that which another broker may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relation to the value of the brokerage, research
and statistical services provided by the executing broker.
The Fund may deal in some instances in securities which
are not listed on a national stock exchange but are traded in the
over-the-counter market. The Fund may also purchase listed
securities through the third market, from a dealer which is not a
member of the Exchange on which a security is listed. Where
transactions are executed in the over-the-counter market or third
market, the Fund will seek to deal with the primary market
makers; but when necessary in order to obtain the best price and
execution, it will utilize the services of others. In all cases,
the Fund will attempt to negotiate best execution.
The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
56
<PAGE>
as well as the Fund; but, on the other hand, certain research
services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in serving the Fund. Consistent with the Conduct Rules of
the National Association of Securities Dealers, Inc. and subject
to seeking best execution, the Fund may consider sales of shares
of the Fund or other investment companies managed by the Adviser
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ for which DLJ may receive a portion of the
brokerage commissions. In such instances the placement of orders
with such brokers would be consistent with the Fund's objective
of obtaining best execution and would not be dependent upon the
fact that DLJ is an affiliate of the Adviser. With respect to
orders placed with DLJ for execution on a national securities
exchange, commissions received must conform to Section
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which
permit an affiliated person of a registered investment company
(such as the Fund), or any affiliated person of such person, to
receive a brokerage commission from such registered investment
company provided that such commission is reasonable and fair
compared to the commissions received by other brokers in
connection with comparable transactions involving similar
securities during a comparable period of time.
During the fiscal years ended November 30, 1997, 1996
and 1995, the Fund incurred brokerage commissions amounting in
the aggregate of $1,098,027, $603,145, and $330,748 and $96,154,
respectively. During the fiscal years ended November 30, 1997,
1996 and 1995, brokerage commissions amounting in the aggregate
of $-0-, $-0- and $-0-, respectively, were paid to DLJ and
brokerage commissions amounting in the aggregate of $9,645, $-0-
and $-0-, respectively, were paid to brokers utilizing the
Pershing Division of DLJ. During the fiscal year ended
November 30, 1997, the brokerage commissions paid to DLJ
constituted 0.89% of the Fund's aggregate brokerage commissions
and the brokerage commissions paid to brokers utilizing the
Pershing Division of DLJ constituted -0-% of the Fund's
aggregated brokerage commissions. During the fiscal year ended
November 30, 1997, transactions in portfolio securities of the
Fund aggregating $604,910,699, with associated brokerage
commissions of approximately $333,523 were allocated to persons
or firms supplying research services to the Fund or the Adviser.
57
<PAGE>
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
Capitalization
The authorized capital stock of the Fund consists of
3,000,000,000 shares of Class A Common Stock, 3,000,000,000
shares of Class B Common Stock, 3,000,000,000 shares of Class C
Common Stock and 3,000,000,000 shares of Advisor Class Common
Stock, each having a par value of $.01 per share. All shares of
the Fund when duly issued will be fully paid and
non-assessable.
The Board of Directors is authorized to reclassify and
issue any unissued shares to any number of additional series and
classes without shareholder approval. Accordingly, the Board may
create additional series of shares in the future, for reasons
such as the desire to establish one or more additional portfolios
of the Fund with different investment objectives, policies or
restrictions. Any issuance of shares of another series would be
governed by the 1940 Act and the laws of the State of Maryland.
If shares of another series were issued in connection with the
creation of a second portfolio, each share of either portfolio
would normally be entitled to one vote for all purposes.
Generally, shares of both portfolios would vote as a single
series for the election of directors and on any other matter that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Advisory Agreement and changes in investment policy, shares
of each portfolio would vote as separate series.
At the close of business on October 9, 1998, there were
42,031,770 shares of common stock of the Fund outstanding,
including 12,128,708 Class A shares, 22,331,503 Class B shares,
4,167,243 Class C shares and 3,404,316 Advisor Class shares. To
the knowledge of the Fund the following persons owned of record
or beneficially 5% or more of a class of the outstanding shares
of the Fund as of October 9, 1998.
58
<PAGE>
No. of % of
Name and Address Shares Class
Class A
MLPF&S For the Sole Benefit of 1,090,741 8.99%
Its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Class B
MLPF&S For the Sole Benefit of 4,076,997 18.3%
Its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Class C
MLPF&S For the Sole Benefit of 1,201,280 28.8%
Its Customers
Attn: Fund Administration
4800 Deer Lake Drive East
2nd Floor
Jacksonville, FL 32246-6484
Advisor Class
Merrill Lynch 2,530,294 74.3%
Mutual Fund Operations
4800 Deer Lake Drive East
3rd Floor
Jacksonville, FL 32246-6486
Trust for Profit Sharing Pl 211,903 6.2%
for Employees of Alliance
Capital Management L.P. Plan F
Att: Jill Smith 32nd Fl
1345 Avenue of the Americas
New York, NY 10105-0302
59
<PAGE>
Dingle & Co. 343,985 10.1%
FBO Ford General Ret Plan #112
c/o Comerica Bank
P.O. Box 75000
Att M/C 3446 Mutual Funds
Detroit, MI 48275-0001
Custodian
State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts, 02110, will act as the Fund's Custodian for
the assets of the Fund but plays no part in deciding on the
purchase or sale of portfolio securities. Subject to the
supervision of the Fund's Directors, State Street Bank and Trust
Company may enter into sub-custodial agreements for the holding of
the Fund's foreign securities.
Principal Underwriter
Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's Principal
Underwriter, and as such may solicit orders from the public to
purchase shares of the Fund. Under the Agreement, the Fund has
agreed to indemnify the distributors, in the absence of its
willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations thereunder, against certain civil
liabilities, including liabilities under the Securities Act.
Counsel
Legal matters in connection with the issuance of the
shares of the Fund offered hereby will be passed upon by Seward &
Kissel, New York, New York. Seward & Kissel has relied upon the
opinion of Venable, Baetjer and Howard, LLP, Baltimore, Maryland,
for matters relating to Maryland law.
Independent Auditors
Ernst & Young LLP, New York, New York, has been selected
as independent auditors for the Fund.
Performance Information
From time to time the Fund advertises its "total return."
Computed separately for each class, the Fund's "total return" is
its average annual total return for its most recently completed
one-, five- and ten-year periods (or the period since the Fund's
inception). The Fund's total return for such a period is computed
by finding, through the use of a formula prescribed by the
Commission, the average annual compounded rates of return over the
period that would equate an assumed initial amount invested to the
60
<PAGE>
value of such investment at the end of the period. For purposes
of computing total return, income dividends and capital gains
distributions paid on shares of the Fund are assumed to have been
reinvested when received and the maximum sales charge applicable
to purchases of Fund shares is assumed to have been paid.
The Fund reclassified its shares outstanding prior to
May 3, 1993 as Class A shares. The Fund's average annual total
return for Class A shares was 19.29% for the one-year period ended
May 31, 1998; 25.43% for the five-year period ended May 31, 1998
and 19.20% for the ten-year period ended May 31, 1998. The Fund's
average annual compounded total return for Class B shares for the
one-year period ended May 31, 1998 was 18.46%, and for the period
May 3, 1993 (commencement of distribution) through May 31, 1998
was 26.80%. The Fund's average annual compounded total return for
Class C shares for the one-year period ended May 31, 1998 was
18.44%, and for the period May 3, 1993 (commencement of
distribution) through May 31, 1998 was 26.79%. The Fund's average
annual compounded total return for Advisor Class shares for the
period October 1, 1996 (commencement of distribution) through
May 31, 1998 was 17.56%.
The Fund's total return is computed separately for
Class A, Class B, Class C and Advisor Class shares. The Fund's
total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and
quality of the securities in the Fund's portfolio and the Fund's
expenses. Total return information is useful in reviewing the
Fund's performance but such information may not provide a basis
for comparison with bank deposits or other investments which pay a
fixed return for a stated period of time. An investor's principal
invested in the Fund is not fixed and will fluctuate in response
to prevailing market conditions.
Advertisements quoting performance rankings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. ("Lipper")
and Morningstar, Inc., and advertisements presenting the
historical record of payments of income dividends may from time to
time be sent to investors or placed in newspapers or magazines
such as The New York Times, The Wall Street Journal, Barron's,
Business Week, Changing Times, Fortune, Forbes, Money Magazine, or
other media on behalf of the Fund. The Fund is included in Lipper
rankings under the category "Science and Technology."
Additional Information
Shareholder inquiries may be directed to the
shareholder's broker or to AFS at the address or telephone numbers
shown on the front cover of this Statement of Additional
Information. This Statement of Additional Information does not
61
<PAGE>
contain all the information set forth in the Registration
Statement filed by the Fund with the Commission under the
Securities Act. Copies of the Registration Statement may be
obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in
Washington, D.C.
62
<PAGE>
________________________________________________________________
REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS
_________________________________________________________________
63
<PAGE>
ALLIANCE TECHNOLOGY FUND
SEMI-ANNUAL REPORT
MAY 31, 1998
ALLIANCE CAPITAL
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-98.9%
TECHNOLOGY-97.2%
COMMUNICATION EQUIPMENT-11.2%
Alcatel Alsthom Maroc (ADR) 1,260,000 $ 54,495,000
Glenayre Technologies, Inc. (a) 1,755,500 26,881,094
Nokia Corp. (ADR) (b) 1,303,000 84,613,563
PairGain Technologies, Inc. (a) 616,600 9,634,375
Tellabs, Inc. (a) 1,274,000 87,547,687
------------
263,171,719
COMPUTER HARDWARE-11.4%
Apex PC Solutions, Inc. (a) 840,900 21,127,612
Compaq Computer Corp. 3,500,000 95,593,750
Dell Computer Corp. (a) 1,836,800 151,363,800
------------
268,085,162
COMPUTER PERIPHERALS-1.6%
Lexmark International Group, Inc. Cl.A (a) 701,200 38,916,600
COMPUTER SERVICES-14.3%
Computer Sciences Corp. 1,010,200 52,467,262
DST Systems, Inc. (a) 1,025,800 54,239,175
First Data Corp. 2,000,300 66,509,975
Fiserv, Inc. (a) 742,700 43,796,091
Galileo International, Inc. 627,600 24,711,750
Gartner Group, Inc. Cl.A (a) 945,600 31,263,900
Renaissance Worldwide, Inc. (a) 827,200 15,561,700
SunGard Data Systems, Inc. (a) 1,398,600 47,727,225
------------
336,277,078
COMPUTER SOFTWARE-17.4%
Cadence Design Systems, Inc. (a) 1,113,800 39,261,450
HBO & Co. 1,273,400 73,499,056
Health Management Systems, Inc. (a) 1,714,300 18,857,300
I2 Technologies, Inc. (a) 139,400 8,303,013
Industri-Matematik International Corp. (a) 739,600 11,879,825
Intuit, Inc. (a) 1,650,700 78,201,913
J.D. Edwards & Co. (a) 347,400 12,777,806
Microsoft Corp. (a) 480,000 40,710,000
Network Associates, Inc. (a) 1,185,500 72,611,875
Pegasystems, Inc. (a) 600,500 13,004,578
PeopleSoft, Inc. (a) 936,700 40,922,081
------------
410,028,897
NETWORKING SOFTWARE-15.7%
Ascend Communications, Inc. (a) 1,734,000 74,887,125
Bay Networks, Inc. (a) 1,391,400 38,524,388
CIENA Corp. (a) 500,000 26,000,000
Cisco Systems, Inc. (a) 1,931,500 146,069,687
Fore Systems, Inc. (a) 3,094,100 68,070,200
Newbridge Networks Corp. (a) 610,000 17,308,750
------------
370,860,150
SEMI-CONDUCTOR CAPITAL EQUIPMENT-5.4%
Amkor Technology, Inc. (a) 1,164,000 12,076,500
Applied Materials, Inc. (a) 1,323,130 42,340,160
ISS Group, Inc. (a) 88,300 3,333,325
KLA-Tencor Corp. (a) 1,324,000 44,850,500
Teradyne, Inc. (a) 782,300 24,055,725
------------
126,656,210
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
SEMI-CONDUCTOR COMPONENTS-11.4%
Altera Corp. (a) 1,957,000 $ 65,804,125
Cirrus Logic, Inc. (a) 1,679,000 16,790,000
Cypress Semiconductor Corp. (a) 1,400,000 11,987,500
Intel Corp. 750,000 53,578,125
PMC-Sierra, Inc. (a) 671,700 26,154,319
Taiwan Semiconductor
Manufacturing Co., Ltd.
(ADR) (a)(c) 1,258,500 23,754,188
Texas Instruments, Inc. 588,400 30,229,050
Xilinx, Inc. (a) 1,074,000 40,845,562
------------
269,142,869
MISCELLANEOUS-8.8%
Com21, Inc. (a) 62,000 906,750
Ingram Micro, Inc. Cl.A (a) 1,126,600 49,640,812
Sanmina Holdings Corp. (a) 866,400 67,470,900
Solectron Corp. (a) 1,419,400 58,727,675
Tech Data Corp. (a) 779,000 31,646,875
------------
208,393,012
------------
2,291,531,697
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
UTILITIES-1.3%
TELEPHONE UTILITY-1.3%
WorldCom, Inc. (a) 674,850 $ 30,705,675
CONSUMER SERVICES-0.4%
MISCELLANEOUS-0.4%
Equifax, Inc. 267,000 9,712,125
Total Common Stocks
(cost $1,704,586,260) 2,331,949,497
PRIVATE PLACEMENT-0.0%
Interactive Light Holdings, Inc.
8.00%, 2/07/99 (d)
(cost $500,000) $500 500,000
TOTAL INVESTMENTS-98.9%
cost $1,705,086,260) 2,332,449,497
Other assets less liabilities-1.1% 25,172,509
NET ASSETS-100% $2,357,622,006
(a) Non-income producing security.
(b) Country of origin--Finland.
(c) Country of origin--Taiwan.
(d) Illiquid security, valued at fair value (see Notes A & F).
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $1,705,086,260) $2,332,449,497
Receivable for investment securities sold 36,411,631
Receivable for capital stock sold 5,343,947
Interest and dividends receivable 221,257
Prepaid expenses 85,868
Total assets 2,374,512,200
LIABILITIES
Due to custodian 4,348,651
Advisory fee payable 5,894,055
Payable for investment securities purchased 3,763,249
Payable for capital stock redeemed 2,147,432
Distribution fee payable 281,435
Accrued expenses and other liabilities 455,372
Total liabilities 16,890,194
NET ASSETS $2,357,622,006
COMPOSITION OF NET ASSETS
Capital stock, at par $ 399,385
Additional paid-in capital 1,573,244,873
Net investment loss (16,165,131)
Accumulated net realized gain on investment transactions 172,779,642
Net unrealized appreciation of investments 627,363,237
$2,357,622,006
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($720,674,493 / 11,919,729 shares of capital stock
issued and outstanding) $60.46
Sales charge--4.25% of public offering price 2.68
Maximum offering price $63.14
CLASS B SHARES
Net asset value and offering price per share
($1,248,322,912 / 21,461,230 shares of capital stock
issued and outstanding) $58.17
CLASS C SHARES
Net asset value and offering price per share
($219,120,319 / 3,767,545 shares of capital stock
issued and outstanding) $58.16
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per share
($169,504,282 / 2,789,903 shares of capital stock issued
and outstanding) $60.76
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 4,527,265
Dividends (net of foreign taxes withheld
of $210,455) 1,718,052 $ 6,245,317
EXPENSES
Advisory fee 11,788,508
Distribution fee - Class A 1,018,467
Distribution fee - Class B 5,804,477
Distribution fee - Class C 1,007,257
Transfer agency 2,328,624
Printing 208,213
Custodian 129,859
Registration 86,057
Administrative 61,000
Taxes 50,613
Audit and legal 48,704
Directors' fees 43,000
Miscellaneous 33,873
Total expenses 22,608,652
Less: expense offset arrangement
(see Note B) (198,204)
Net expenses 22,410,448
Net investment loss (16,165,131)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 180,343,918
Net change in unrealized appreciation of
investments 91,954,204
Net gain on investments 272,298,122
NET INCREASE IN NET ASSETS FROM OPERATIONS $256,132,991
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997
---------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (16,165,131) $ (23,986,074)
Net realized gain on investment
transactions 180,343,918 14,764,297
Net change in unrealized appreciation
of investments 91,954,204 133,346,847
Net increase in net assets from
operations 256,132,991 124,125,070
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (6,722,769) (4,879,329)
Class B (11,607,315) (5,671,805)
Class C (2,036,454) (916,491)
Advisor Class (1,788,297) (4,489)
CAPITAL STOCK TRANSACTIONS
Net increase 94,178,145 551,976,958
Total increase 328,156,301 664,629,914
NET ASSETS
Beginning of year 2,029,465,705 1,364,835,791
End of period $2,357,622,006 $2,029,465,705
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Technology 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% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
to investors participating in fee-based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The 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 prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. 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 the 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.
4. 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.
5. 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
10
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
tax basis treatment; temporary differences, do not require such
reclassification.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser"), an advisory fee at a quarterly rate
equal to .25% (approximately 1% on an annual basis) of the net assets of the
Fund valued on the last business day of the previous quarter.
Pursuant to the advisory agreement, the Fund paid $61,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the six months ended May 31, 1998.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $1,500,673 for the six months ended May 31, 1998.
In addition, for the six months ended May 31, 1998, the Fund's expenses were
reduced by $198,204 under an expense offset arrangement with Alliance Fund
Services. Transfer agency fees reported in the statement of operations exclude
these credits.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. The Distributor
received front-end sales charges of $154,285 from the sales of Class A shares
and $36,464, $1,439,243 and $66,277 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class A, Class B and Class C
shares, respectively, for the six months ended May 31, 1998.
Brokerage commissions paid on investment transactions for the six months ended
May 31, 1998 amounted to $874,048 of which $4,800 was paid to Donaldson, Lufkin
& Jenrette Securities Corp., an affiliate of the Adviser.
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 reimbursed by the Fund in the amount of
$34,864,082 and $1,619,211 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 Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $846,148,152 and $639,269,723,
respectively, for the six months ended May 31, 1998. There were no purchases or
sales of U.S. government and government agency obligations for the six months
ended May 31, 1998.
At May 31, 1998, the cost of investments for federal income tax purposes was
$1,709,334,238. Accordingly, gross unrealized appreciation of investments was
$682,121,973 and gross unrealized depreciation of investments was $59,006,714
resulting in net unrealized appreciation of $623,115,259.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes call options
listed on national securities exchanges and purchases listed put options,
including put options on market indices.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions,
is also treated as a realized gain, or if the premium received is less than the
amount paid for the closing purchase transaction, as a realized loss. If a call
option is exercised, the premium received is added to the proceeds from the
sale of the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option was exercised the
underlying security could then be purchased or sold by the Fund at a
disadvantageous price.
For the six months ended May 31, 1998, the Fund did not engage in any option
transactions.
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:
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS A
Shares sold 7,788,951 10,236,552 $ 448,819,909 $ 542,859,733
Shares issued in
reinvestment of
distributions 110,995 78,573 5,935,121 3,946,887
Shares converted
from Class B 63,769 125,065 3,612,357 6,591,693
Shares redeemed (7,518,671) (10,594,530) (435,479,238) (567,186,149)
Net increase
(decrease) 445,044 (154,340) $ 22,888,149 $ (13,787,836)
CLASS B
Shares sold 3,507,048 9,702,206 $ 189,867,729 $ 491,739,865
Shares issued in
reinvestment of
distributions 209,351 90,233 10,804,657 4,406,275
Shares converted
to Class A (66,185) (129,230) (3,612,357) (6,591,693)
Shares redeemed (2,223,739) (2,910,995) (123,316,761) (148,766,672)
Net increase 1,426,475 6,752,214 $ 73,743,268 $ 340,787,775
12
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, MAY 31, 1998 NOVEMBER 30,
(UNAUDITED) 1997 (UNAUDITED) 1997
------------ ------------ -------------- --------------
CLASS C
Shares sold 6,144,106 4,659,352 $ 337,492,531 $ 244,912,719
Shares issued in
reinvestment of
distributions 35,111 11,825 1,812,083 577,411
Shares redeemed (5,915,297) (3,347,816) (326,481,857) (179,818,433)
Net increase 263,920 1,323,361 $ 12,822,757 $ 65,671,697
ADVISOR CLASS
Shares sold 1,102,826 4,033,381 $ 62,049,444 $ 216,794,442
Shares issued in
reinvestment of
distributions 32,400 89 1,738,612 4,489
Shares redeemed (1,404,313) (985,537) (79,064,085) (57,493,609)
Net increase (decrease) (269,087) 3,047,933 $ (15,276,029) $ 159,305,322
NOTE F: ILLIQUID SECURITY
DATE ACQUIRED COST
------------- ------------
Interactive Light Holdings, Inc.
8.00%, 2/07/99 1/27/94 $500,000
The security shown above is illiquid and has been valued at fair value in
accordance with the procedures described in Note A. The value of this security
at May 31, 1998 was $500,000, representing .02% of net assets.
13
FINANCIAL HIGHLIGHTS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------------------
SIX MONTHS JANUARY 1,
ENDED YEAR ENDED NOVEMBER 30, 1994 TO YEAR ENDED
MAY 31, 1998 ------------------------------------- NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $54.44 $51.15 $46.64 $31.98 $26.12 $28.20
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.30)(b) (.51)(b) (.39)(b) (.30)(b) (.32) (.29)
Net realized and unrealized gain on
investment transactions 6.90 4.22 7.28 18.13 6.18 6.39
Net increase in net asset value from
operations 6.60 3.71 6.89 17.83 5.86 6.10
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $60.46 $54.44 $51.15 $46.64 $31.98 $26.12
TOTAL RETURN
Total investment return based on net
asset value (c) 12.25% 7.32% 16.05% 61.93% 22.43% 21.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $720,675 $624,716 $594,861 $398,262 $202,929 $173,732
Ratio of expenses to average net assets 1.63%(d)(e) 1.67%(e) 1.74% 1.75% 1.66%(d) 1.73%
Ratio of net investment loss to average
net assets (1.04)%(d) (.97)% (.87)% (.77)% (1.22)%(d) (1.32)%
Portfolio turnover rate 31% 51% 30% 55% 55% 64%
</TABLE>
See footnote summary on page 17.
14
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------------------------
SIX MONTHS JANUARY 1, MAY 3,
ENDED YEAR ENDED NOVEMBER 30, 1994 TO 1993(F) TO
MAY 31, 1998 ------------------------------------- NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $52.58 $49.76 $45.76 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.49)(b) (.88)(b) (.70)(b) (.60)(b) (.23) (.12)
Net realized and unrealized gain on
investment transactions 6.66 4.12 7.08 17.92 5.86 6.84
Net increase in net asset value from
operations 6.17 3.24 6.38 17.32 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $58.17 $52.58 $49.76 $45.76 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (c) 11.87% 6.57% 15.20% 60.95% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,248,323 $1,053,436 $660,921 $277,111 $18,397 $1,645
Ratio of expenses to average net assets 2.35%(d)(e) 2.38%(e) 2.44% 2.48% 2.43%(d) 2.57%(d)
Ratio of net investment loss to average
net assets (1.76)%(d) (1.70)% (1.61)% (1.47)% (1.95)%(d) (2.30)%(d)
Portfolio turnover rate 31% 51% 30% 55% 55% 64%
</TABLE>
See footnote summary on page 17.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------------------
SIX MONTHS JANUARY 1, MAY 3,
ENDED YEAR ENDED NOVEMBER 30, 1994 TO 1993(F) TO
MAY 31, 1998 ------------------------------------- NOVEMBER 30, DECEMBER 31,
(UNAUDITED) 1997 1996 1995 1994(A) 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $52.57 $49.76 $45.77 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.48)(b) (.88)(b) (.70)(b) (.58)(b) (.24) (.13)
Net realized and unrealized gain on
investment transactions 6.65 4.11 7.07 17.91 5.87 6.85
Net increase in net asset value from
operations 6.17 3.23 6.37 17.33 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $58.16 $52.57 $49.76 $45.77 $31.61 $25.98
TOTAL RETURN
Total investment return based on net
asset value (c) 11.86% 6.55% 15.17% 60.98% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $219,120 $184,194 $108,488 $43,161 $7,470 $1,096
Ratio of expenses to average net assets 2.35%(d)(e) 2.38%(e) 2.44% 2.48% 2.41%(d) 2.52%(d)
Ratio of net investment loss to average
net assets (1.77)%(d) (1.70)% (1.60)% (1.47)% (1.94)%(d) (2.25)%(d)
Portfolio turnover rate 31% 51% 30% 55% 55% 64%
</TABLE>
See footnote summary on page 17.
16
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
ADVISOR CLASS
----------------------------------------
OCTOBER 2,
SIX MONTHS 1996(F)
ENDED YEAR ENDED TO
MAY 31, 1998 NOVEMBER 30, NOVEMBER 30,
(UNAUDITED) 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $54.63 $51.17 $47.32
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.21) (.45) (.05)
Net realized and unrealized gain on
investment transactions 6.92 4.33 3.90
Net increase in net asset value from
operations 6.71 3.88 3.85
LESS: DISTRIBUTIONS
Distributions from net realized gains (.58) (.42) -0-
Net asset value, end of period $60.76 $54.63 $51.17
TOTAL RETURN
Total investment return based on net
asset value (c) 12.41% 7.65% 8.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $169,504 $167,120 $566
Ratio of expenses to average net assets 1.33%(d)(e) 1.39%(e) 1.75%(d)
Ratio of net investment loss to average
net assets (.74)%(d) (.81)% (1.21)%(d)
Portfolio turnover rate 31% 51% 30%
</TABLE>
(a) The 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) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended May 31, 1998 and the year ended
November 30, 1997, the ratios of expenses to average net assets were 1.61% and
1.66% for Class A shares, 2.33% and 2.36% for Class B shares, 2.33% and 2.37%
for Class C shares and 1.31% and 1.38% for Advisor Class shares, respectively.
(f) Commencement of distribution.
17
<PAGE>
ALLIANCE TECHNOLOGY FUND
ANNUAL REPORT
NOVEMBER 30, 1997
ALLIANCE CAPITAL
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
COMMON STOCKS-91.3%
TECHNOLOGY-88.7%
COMMUNICATIONS EQUIPMENT-8.9%
Ericsson (L.M.) Telephone
Co. Cl.B (ADR) (a) 900,000 $ 36,393,750
Lucent Technologies, Inc. 360,000 28,845,000
Motorola, Inc. 307,690 19,346,009
Nokia Corp. (ADR) (b) 454,000 37,738,750
PairGain Technologies, Inc. (c) 616,600 14,567,175
Tellabs, Inc. (c) 864,000 44,928,000
---------------
181,818,684
COMPUTER HARDWARE-11.7%
Apex PC Solutions, Inc. (c) 397,400 8,742,800
COMPAQ Computer Corp. (c) 1,750,000 109,265,625
Dell Computer Corp. (c) 1,299,400 109,393,237
Sun Microsystems, Inc. (c) 290,000 10,440,000
---------------
237,841,662
COMPUTER PERIPHERALS-0.8%
Iomega Corp. (c) 500,000 16,437,500
COMPUTER SERVICES-9.1%
Computer Sciences Corp. (c) 501,000 39,672,937
DST Systems, Inc. (c) 641,800 23,786,712
E*TRADE Group, Inc. (c) 360,700 9,040,044
First Data Corp. 669,300 18,949,556
Fiserv, Inc. (c) 314,800 15,267,800
Galileo International, Inc. 376,600 10,097,588
Gartner Group, Inc. Cl.A (c) 756,600 22,035,975
PMT Services, Inc. (c) 554,700 8,736,525
Registry, Inc. (c) 257,600 11,350,500
SunGard Data Systems, Inc. (c) 964,600 24,959,025
---------------
183,896,662
COMPUTER SOFTWARE-16.5%
Cadence Design Systems, Inc. (c) 1,113,800 28,123,450
Concord Communications, Inc. (c) 34,100 745,938
HBO & Co. 1,396,400 62,663,450
I2 Technologies, Inc. (c) 139,400 6,342,700
Industri-Matematik International Corp. (c) 462,600 12,605,850
J.D. Edwards & Co. (c) 257,400 8,815,950
Microsoft Corp. (c) 387,610 54,846,815
Network Associates, Inc. (c) 663,000 30,332,250
New Era of Networks, Inc. (c) 136,100 1,760,794
Oracle Corp. (c) 2,105,550 70,141,134
Pegasystems, Inc. (c) 500,500 9,634,625
PeopleSoft, Inc. (c) 724,000 47,376,750
SCM Microsystems, Inc. (c) 27,800 721,931
---------------
334,111,637
NETWORKING SOFTWARE-12.1%
3Com Corp. (c) 581,000 21,061,250
Bay Networks, Inc. (c) 2,130,490 64,047,856
Cisco Systems, Inc. (c) 1,351,000 116,523,750
Fore Systems (c) 886,000 15,338,875
Newbridge Networks Corp. (c) 668,000 28,139,500
---------------
245,111,231
SEMI-CONDUCTOR CAPITAL EQUIPMENT-4.8%
Applied Materials, Inc. (c) 1,583,130 52,243,290
Silicon Valley Group, Inc. (c) 814,750 19,350,312
Teradyne, Inc. (c) 782,300 25,669,219
---------------
97,262,821
SEMI-CONDUCTOR COMPONENTS-18.0%
Altera Corp. (c) 1,717,000 80,377,062
6
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- -------------------------------------------------------------------------
Atmel Corp. (c) 821,000 $ 18,421,188
Cirrus Logic, Inc. (c) 2,480,000 32,860,000
Intel Corp. 825,000 64,040,625
KLA-Tencor Corp. (c) 184,000 7,130,000
Microchip Technology, Inc. (c) 737,845 25,824,575
National Semiconductor Corp. (c) 1,119,100 37,070,187
PMC-Sierra, Inc. (c) 160,200 4,405,500
Taiwan Semiconductor
Manufacturing Co., Ltd. (ADR) (d) 2,164,700 47,623,400
Texas Instruments, Inc. 549,400 27,057,950
Xilinx, Inc. (c) 589,000 20,357,313
---------------
365,167,800
MISCELLANEOUS-6.8%
Ingram Micro, Inc. Cl.A (c) 894,600 27,117,563
Sanmina Holdings Corp. (c) 760,600 51,720,800
Solectron Corp. (c) 1,249,400 45,525,012
Tech Data Corp. (c) 335,400 13,541,775
---------------
137,905,150
---------------
1,799,553,147
UTILITIES-2.2%
TELEPHONE UTILITIES-2.2%
ACC Corp. (c) 484,900 22,669,075
WorldCom, Inc. (c) 670,450 21,454,400
---------------
44,123,475
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------
CONSUMER SERVICES-0.4%
MISCELLANEOUS-0.4%
Equifax, Inc. 267,000 $ 9,111,375
Total Common Stocks
(cost $1,317,378,964) 1,852,787,997
PRIVATE PLACEMENT-0.0%
Interactive Light Holdings, Inc.
8.00%, 2/07/99 (e)
(cost $500,000) $ 500 500,000
SHORT-TERM INVESTMENTS-8.8%
American Express Co.
5.53%, 12/02/97 30,000 29,995,392
General Electric Capital Corp.
5.52%, 12/05/97 42,220 42,194,105
Prudential Funding
5.45%, 12/02/97 27,875 27,870,780
5.56%, 12/02/97 50,000 49,992,278
5.56%, 12/12/97 28,300 28,251,921
Total Short-Term Investments
(amortized cost $178,304,476) 178,304,476
TOTAL INVESTMENTS-100.1%
(cost $1,496,183,440) 2,031,592,473
Other assets less liabilities-(0.1%) (2,126,768)
NET ASSETS-100% $2,029,465,705
(a) Country of origin--Sweden.
(b) Country of origin--Finland.
(c) Non-income producing security.
(d) Country of origin--Taiwan.
(e) Illiquid security, valued at fair value (see Notes A & F).
Glossary:
ADR - American Depositary Receipt
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value
(cost $1,496,183,440) $ 2,031,592,473
Cash 34,956
Receivable for capital stock sold 21,807,781
Receivable for investment securities sold 4,433,872
Interest and dividends receivable 227,807
Total assets 2,058,096,889
LIABILITIES
Payable for investment securities purchased 14,874,483
Payable for capital stock redeemed 7,400,837
Advisory fee payable 5,073,664
Distribution fee payable 270,355
Accrued expenses and other liabilities 1,011,845
Total liabilities 28,631,184
NET ASSETS $ 2,029,465,705
COMPOSITION OF NET ASSETS
Capital stock, at par $ 380,721
Additional paid-in capital 1,479,085,392
Accumulated net realized gain on investment transactions 14,590,559
Net unrealized appreciation of investments 535,409,033
$ 2,029,465,705
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($624,716,405 / 11,474,685 shares of capital
stock issued and outstanding) $54.44
Sales charge-4.25% of public offering price 2.42
Maximum offering price $56.86
CLASS B SHARES
Net asset value and offering price per share
($1,053,435,753 / 20,034,755 shares of capital
stock issued and outstanding) $52.58
CLASS C SHARES
Net asset value and offering price per share
($184,193,672 / 3,503,625 shares of capital
stock issued and outstanding) $52.57
ADVISOR CLASS SHARES
Net asset value, redemption and offering price per
share ($167,119,875 / 3,058,990 shares of capital
stock issued and outstanding) $54.63
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $ 10,254,417
Dividends (net of foreign taxes
withheld of $79,639) 1,225,505 $ 11,479,922
EXPENSES
Advisory fee 17,970,061
Distribution fee - Class A 1,854,541
Distribution fee - Class B 8,710,178
Distribution fee - Class C 1,458,366
Transfer agency 3,833,444
Printing 709,147
Registration 327,579
Custodian 238,090
Taxes 172,405
Administrative 138,000
Audit and legal 135,914
Directors' fees 89,000
Miscellaneous 78,209
Total expenses 35,714,934
Less: expense offset arrangement (see Note B) (248,938)
Net expenses 35,465,996
Net investment loss (23,986,074)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 14,764,297
Net change in unrealized appreciation of investments 133,346,847
Net gain on investments 148,111,144
NET INCREASE IN NET ASSETS FROM OPERATIONS $124,125,070
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
1997 1996
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (23,986,074) $ (12,439,324)
Net realized gain on investment
transactions 14,764,297 9,777,700
Net change in unrealized appreciation
of investments 133,346,847 194,911,740
Net increase in net assets
from operations 124,125,070 192,250,116
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (4,879,329) (20,562,397)
Class B (5,671,805) (14,814,489)
Class C (916,491) (2,297,287)
Advisor Class (4,489) -0-
CAPITAL STOCK TRANSACTIONS
Net increase 551,976,958 491,726,042
Total increase 664,629,914 646,301,985
NET ASSETS
Beginning of year 1,364,835,791 718,533,806
End of year $2,029,465,705 $1,364,835,791
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Technology 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% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are subject to a contingent deferred sales charge of
1% on redemptions made within the first year after purchase. Advisor Class
shares are sold without an initial or contingent deferred sales charge and are
not subject to ongoing distribution expenses. Advisor Class shares are offered
to investors participating in fee-based programs and to certain retirement plan
accounts. All four classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices 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 prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Fund's 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 value of such securities.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. 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 the securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts as adjustments to interest income.
4. 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.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment, temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net investment
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
losses, resulted in a net decrease in accumulated net investment loss and a
corresponding decrease in net realized gain on investment transactions and
additional paid-in capital. This reclassification had no effect on net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") an advisory fee at a quarterly rate
equal to .25% of 1% (approximately 1% on an annual basis) of the net assets of
the Fund valued on the last business day of the previous quarter.
Pursuant to the advisory agreement, the Fund paid $138,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 1997.
The Fund compensates Alliance Fund Services, Inc., a wholly-owned subsidiary of
the Adviser, under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $2,378,639 for the year ended November 30, 1997.
In addition, for the year ended November 30, 1997, the Fund's expenses were
reduced by $248,938 under an expense offset arrangement with Alliance Fund
Services. Transfer agency fees reported in the Statement of Operations exclude
these credits.
Alliance Fund Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of the Adviser, serves as the Distributor of the Fund's shares. The Distributor
received front-end sales charges of $356,333 from the sales of Class A shares
and $21,399, $1,915,810 and $78,448 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, 1997.
Brokerage commissions paid on investment transactions for the year ended
November 30, 1997 amounted to $1,098,027 of which $9,645 was paid to Donaldson,
Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of the Adviser.
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 reimbursed by the Fund in the amount of
$32,259,341 and $1,464,569, 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 Adviser may use its own resources to finance the distribution of the Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $1,218,243,694 and $771,594,133,
respectively, for the year ended November 30, 1997. There were no purchases or
sales of U.S. government and government agency obligations for the year ended
November 30, 1997.
At November 30, 1997, the cost of investments for federal income tax purposes
was $1,503,509,084. Accordingly, gross unrealized appreciation of investments
was $601,674,463 and gross unrealized depreciation of investments was
$73,591,074 resulting in net unrealized appreciation of $528,083,389.
12
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
OPTION TRANSACTIONS
For hedging and investment purposes, the Fund purchases and writes (sells) put
and call options on U.S. securities that are traded on U.S. securities
exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of premium and change in market value should the counterparty not
perform under the contract. Put and call options purchased are accounted for in
the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written. Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains from option
transactions. The difference between the premium received and the amount paid
on effecting a closing purchase transaction, including brokerage commissions,
is also treated as a realized gain, or if the premium is less than the amount
paid for the closing purchase transaction, as a realized loss. If a call option
is exercised, the premium received is added to the proceeds from the sale of
the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium received
reduces the cost basis of the security or currency purchased by the Fund. The
risk involved in writing an option is that, if the option was exercised the
underlying security could then be purchased or sold by the Fund at a
disadvantageous price.
For the year ended November 30, 1997, the Fund did not engage in any option
transactions.
NOTE E: CAPITAL STOCK
There are 250,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Class A shares consist of 100,000,000 authorized shares, Class B,
Class C and Advisor Class each consist of 50,000,000 authorized shares.
Transactions in capital stock were as follows:
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 10,236,552 6,739,722 $ 542,859,733 $ 295,599,004
Shares issued in
reinvestment of
distributions 78,573 444,491 3,946,887 18,184,138
Shares converted
from Class B 125,065 71,011 6,591,693 3,227,821
Shares redeemed (10,594,530) (4,165,299) (567,186,149) (185,541,160)
Net increase
(decrease) (154,340) 3,089,925 $ (13,787,836) $ 131,469,803
CLASS B
Shares sold 9,702,206 9,295,231 $ 491,739,865 $ 397,304,488
Shares issued in
reinvestment of
distributions 90,233 288,200 4,406,275 11,551,039
Shares converted
to Class A (129,230) (72,846) (6,591,693) (3,227,821)
Shares redeemed (2,910,995) (2,284,157) (148,766,672) (98,298,021)
Net increase 6,752,214 7,226,428 $ 340,787,775 $ 307,329,685
13
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SHARES AMOUNT
--------------------------- ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS C
Shares sold 4,659,352 2,488,614 $ 244,912,719 $ 106,395,529
Shares issued in
reinvestment
of distributions 11,825 34,075 577,411 1,366,065
Shares redeemed (3,347,816) (1,285,491) (179,818,433) (55,371,330)
Net increase 1,323,361 1,237,198 $ 65,671,697 $ 52,390,264
YEAR ENDED OCT. 2,1996(A) YEAR ENDED OCT. 2,1996(A)
NOV. 30, TO NOV. 30, TO
1997 NOV. 30, 1996 1997 NOV. 30, 1996
----------- ------------- -------------- --------------
ADVISOR CLASS
Shares sold 4,033,381 11,363 $ 216,794,442 $ 551,761
Shares issued in
reinvestment of
distributions 89 -0- 4,489 -0-
Shares redeemed (985,537) (306) (57,493,609) (15,471)
Net increase 3,047,933 11,057 $ 159,305,322 $ 536,290
NOTE F: ILLIQUID SECURITY
DATE ACQUIRED COST
------------- --------
Interactive Light Holdings, Inc.
8.00%, 2/07/99 1/27/94 $500,000
The security shown above is illiquid and has been valued at fair value in
accordance with the procedures described in Note A. The value of this security
at November 30, 1997 was $500,000, representing .02% of net assets.
(a) Commencement of distribution.
14
FINANCIAL HIGHLIGHTS ALLIANCE TECHNOLOGY 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,
1997 1996 1995 1994(A) 1993
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $51.15 $46.64 $31.98 $26.12 $28.20
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.51)(b) (.39)(b) (.30)(b) (.32) (.29)
Net realized and unrealized gain
on investment transactions 4.22 7.28 18.13 6.18 6.39
Net increase in net asset value
from operations 3.71 6.89 17.83 5.86 6.10
LESS: DISTRIBUTIONS
Distributions from net realized gains (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $54.44 $51.15 $46.64 $31.98 $26.12
TOTAL RETURN
Total investment return based on
net asset value (c) 7.32% 16.05% 61.93% 22.43% 21.63%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $624,716 $594,861 $398,262 $202,929 $173,732
Ratio of expenses to average net assets 1.67%(d) 1.74% 1.75% 1.66%(e) 1.73%
Ratio of net investment loss to
average net assets (.97)% (.87)% (.77)% (1.22)%(e) (1.32)%
Portfolio turnover rate 51% 30% 55% 55% 64%
Average commission rate (f) $.0564 $.0612 -- -- --
</TABLE>
See footnote summary on page 18.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------
JANUARY 1, MAY 3,
YEAR ENDED NOVEMBER 30, 1994 TO 1993(G) TO
----------------------------------------- NOVEMBER 30, DECEMBER 31,
1997 1996 1995 1994(A) 1993
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $49.76 $45.76 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.88)(b) (.70)(b) (.60)(b) (.23) (.12)
Net realized and unrealized gain on
investment transactions 4.12 7.08 17.92 5.86 6.84
Net increase in net asset value
from operations 3.24 6.38 17.32 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $52.58 $49.76 $45.76 $31.61 $25.98
TOTAL RETURN
Total investment return based
on net asset value (c) 6.57% 15.20% 60.95% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,053,436 $660,921 $277,111 $18,397 $1,645
Ratio of expenses to average net assets 2.38%(d) 2.44% 2.48% 2.43%(e) 2.57%(e)
Ratio of net investment loss to
average net assets (1.70)% (1.61)% (1.47)% (1.95)%(e) (2.30)%(e)
Portfolio turnover rate 51% 30% 55% 55% 64%
Average commission rate (f) $.0564 $.0612 -- -- --
</TABLE>
See footnote summary on page 18.
16
ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------------------------
JANUARY 1, MAY 3,
YEAR ENDED NOVEMBER 30, 1994 TO 1993(G) TO
---------------------------------------- NOVEMBER 30, DECEMBER 31,
1997 1996 1995 1994(A) 1993
----------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $49.76 $45.77 $31.61 $25.98 $27.44
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.88)(b) (.70)(b) (.58)(b) (.24) (.13)
Net realized and unrealized gain
on investment transactions 4.11 7.07 17.91 5.87 6.85
Net increase in net asset value
from operations 3.23 6.37 17.33 5.63 6.72
LESS: DISTRIBUTIONS
Distributions from net realized gains (.42) (2.38) (3.17) -0- (8.18)
Net asset value, end of period $52.57 $49.76 $45.77 $31.61 $25.98
TOTAL RETURN
Total investment return based
on net asset value (c) 6.55% 15.17% 60.98% 21.67% 24.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $184,194 $108,488 $43,161 $7,470 $1,096
Ratio of expenses to average net assets 2.38%(d) 2.44% 2.48% 2.41%(e) 2.52%(e)
Ratio of net investment loss to
average net assets (1.70)% (1.60)% (1.47)% (1.94)%(e) (2.25)%(e)
Portfolio turnover rate 51% 30% 55% 55% 64%
Average commission rate (f) $.0564 $.0612 -- -- --
</TABLE>
See footnote summary on page 18.
17
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
a ADVISOR CLASS
------------------------------
OCT. 2,1996(G)
YEAR ENDED TO
NOVEMBER 30, NOVEMBER 30,
1997 1996
------------- ---------------
Net asset value, beginning of period $51.17 $47.32
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (b) (.45) (.05)
Net realized and unrealized gain on
investment transactions 4.33 3.90
Net increase in net asset value
from operations 3.88 3.85
LESS: DISTRIBUTIONS
Distributions from net realized gains (.42) -0-
Net asset value, end of period $54.63 $51.17
TOTAL RETURN
Total investment return based on
net asset value (c) 7.65% 8.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $167,120 $566
Ratio of expenses to average net assets 1.39%(d) 1.75%(e)
Ratio of net investment loss to
average net assets (.81)% (1.21)%(e)
Portfolio turnover rate 51% 30%
Average commission rate $.0564 $.0612
(a) The 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 charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(d) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended November 30, 1997, the ratios of expenses to
average net assets were 1.66%, 2.36%, 2.37% and 1.38% for Class A, B, C and
Advisor Class shares, respectively.
(e) Annualized.
(f) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged.
(g) Commencement of distribution.
18
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE TECHNOLOGY FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
ALLIANCE TECHNOLOGY FUND, INC.
We have audited the accompanying statement of assets and liabilities of
Alliance Technology Fund, Inc. (the "Fund"), including the portfolio of
investments, as of November 30, 1997, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Technology Fund, Inc. at November 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
New York, New York
December 31, 1997
19
<PAGE>
____________________________________________________________
APPENDIX A:
CERTAIN EMPLOYEE BENEFIT PLANS
____________________________________________________________
Employee benefit plans described below which are intended to
be tax-qualified under section 401(a) of the Internal Revenue
Code of 1986, as amended ("Tax Qualified Plans"), for which
Merrill Lynch, Pierce, Fenner & Smith Incorporated or an
affiliate thereof ("Merrill Lynch") is recordkeeper (or with
respect to which recordkeeping services are provided pursuant to
certain arrangements as described in paragraph (ii) below)
("Merrill Lynch Plans") are subject to specific requirements as
to the Fund shares which they may purchase. Notwithstanding
anything to the contrary contained elsewhere in this Statement of
Additional Information, the following Merrill Lynch Plans are not
eligible to purchase Class A shares and are eligible to purchase
Class B shares of the Fund at net asset value without being
subject to a contingent deferred sales charge:
(i) Plans for which Merrill Lynch is the recordkeeper on a
daily valuation basis, if when the plan is established
as an active plan on Merrill Lynch's recordkeeping
system:
(a) the plan is one which is not already
investing in shares of mutual funds or
interests in other commingled investment
vehicles of which Merrill Lynch Asset
Management, L.P. is investment adviser or
manager ("MLAM Funds"), and either (A) the
aggregate assets of the plan are less than
$3 million or (B) the total of the sum of
(x) the employees eligible to participate in
the plan and (y) those persons, not
including any such employees, for whom a
plan account having a balance therein is
maintained, is less than 500, each of (A)
and (B) to be determined by Merrill Lynch in
the normal course prior to the date the plan
is established as an active plan on Merrill
Lynch's recordkeeping system (an "Active
Plan"); or
(b) the plan is one which is already investing
in shares of or interests in MLAM Funds and
the assets of the plan have an aggregate
value of less than $5 million, as determined
A-1
<PAGE>
by Merrill Lynch as of the date the plan
becomes an Active Plan.
For purposes of applying (a) and (b), there
are to be aggregated all assets of any Tax-
Qualified Plan maintained by the sponsor of
the Merrill Lynch Plan (or any of the
sponsor's affiliates) (determined to be such
by Merrill Lynch) which are being invested
in shares of or interests in MLAM Funds,
Alliance Mutual Funds or other mutual funds
made available pursuant to an agreement
between Merrill Lynch and the principal
underwriter thereof (or one of its
affiliates) and which are being held in a
Merrill Lynch account.
(ii) Plans for which the recordkeeper is not Merrill Lynch,
but which are recordkept on a daily valuation basis by
a recordkeeper with which Merrill Lynch has a
subcontracting or other alliance arrangement for the
performance of recordkeeping services, if the plan is
determined by Merrill Lynch to be so eligible and the
assets of the plan are less than $3 million.
Class B shares of the Fund held by any of the
above-described Merrill Lynch Plans are to be replaced at
Merrill Lynch's direction through conversion, exchange or
otherwise by Class A shares of the Fund on the earlier of
the date that the value of the plan's aggregate assets first
equals or exceeds $5 million or the date on which any Class
B share of the Fund held by the plan would convert to a
Class A share of the Fund as described under "Purchase of
Shares" and "Redemption and Repurchase of Shares."
Any Tax Qualified Plan, including any Merrill Lynch
Plan, which does not purchase Class B shares of the Fund
without being subject to a contingent deferred sales charge
under the above criteria is eligible to purchase Class B
shares subject to a contingent deferred sales charge as well
as other classes of shares of the Fund as set forth above
under "Purchase of Shares" and "Redemption and Repurchase of
Shares."
A-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information:
Portfolio of Investments, November 30,1997.
Statement of Assets and Liabilities,
November 30, 1997.
Statement of Operations for the fiscal year
ended November 30, 1997.
Statement of Changes in Net Assets, years ended
November 30, 1997 and November 30, 1996.
Notes to Financial Statements, November 30, 1997.
Financial Highlights - Selected Data for a Share
of Capital Stock Outstanding for the years ended
December 31, 1993 through November 30, 1997 for
Class A shares and for the period May 3, 1993
(commencement of distribution) to November 30,
1997 for Class B shares and Class C shares and for
the period October 2, 1996 (commencement of
distribution) to November 30, 1997 for Advisor
Class Shares.
Report of Independent Auditors.
Portfolio of Investments, May 31, 1998
(unaudited).
Statement of Assets and Liabilities,
May 31, 1998 (unaudited).
Statement of Operations for the six months
ended May 31, 1998 (unaudited).
Statement of Changes in Net Assets, year ended
November 30, 1997 and six months ended
May 31, 1998 (unaudited).
Notes to Financial Statements, May 31, 1998
(unaudited).
Financial Highlights - Selected Data for a Share
of Capital Stock Outstanding for the years ended
December 31, 1993 through November 30, 1997 and
for the six months ended May 31, 1998 (unaudited)
for Class A shares and for the period May 3, 1993
(commencement of distribution) to November 30,
1997 and for the six months ended May 31, 1998
(unaudited) for Class B shares and Class C shares
and for the period October 2, 1996 (commencement
C-1
<PAGE>
of distribution) to November 30, 1997 and for the
six months ended May 31, 1998 (unaudited) for the
Advisor Class.
Included in Part C of the Registration Statement
All other schedules are either omitted because
they are not required under the related
instructions, they are inapplicable, or the
required information is presented in the financial
statements or notes which are included in the
Statement of Additional Information of the
Registration Statement.
(b) Exhibits:
(1)(a) Articles of Incorporation of the Registrant -
Incorporated by reference to Exhibit 1(a) to
Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form N-
1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(b) Articles of Amendment of Articles of
Incorporation of the Registrant dated
December 21, 1981 and filed January 5, 1982 -
Incorporated by reference to Exhibit 1(b) to
Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form N-
1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(c) Articles of Amendment of Articles of
Incorporation of the Registrant dated October
16, 1989 and filed December 5, 1989 -
Incorporated by reference to Exhibit 1(c) to
Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form N-
1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(d) Articles Supplementary to Articles of
Incorporation of the Registrant dated April
29, 1993 and filed April 30, 1993 -
Incorporated by reference to Exhibit 1(c) to
Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form N-
1A, (File Nos. 2-70427 and 811-03131) filed
C-2
<PAGE>
with the Securities and Exchange Commission
on October 31, 1997.
(e) Articles Supplementary to Articles of
Incorporation of the Registrant dated
September 30, 1996 and filed October 1, 1996
- Incorporated by reference to Exhibit 1(d)
to Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form N-
1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(f) Articles Supplementary to Articles of
Incorporation of the Registrant dated May 21,
1998 and filed July 6, 1998 - Filed herewith.
(2) By-Laws of the Registrant - Incorporated by
reference to Exhibit 2 to Post-Effective
Amendment No. 29 of Registrants Registration
Statement on Form N-1A (File Nos. 2-70427 and
811-03131) filed with the Securities and
Exchange Commission on October 31, 1997
(3) Not applicable.
(4) Not applicable.
(5) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. -
Incorporated by reference to Exhibit 5 to
Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997
(6)(a) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors,
Inc. - Incorporated by reference to Exhibit
6(a) to Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(b) Amendment to Distribution Services Agreement
dated July 11, 1996 - Incorporated by
reference to Exhibit 6(b) to Post-Effective
Amendment No. 29 of Registrants Registration
Statement on Form N-1A (File Nos. 2-70427 and
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811-03131) filed with the Securities and
Exchange Commission on October 31, 1997.
(c) Form of Selected Dealer Agreement to be
between Alliance Fund Distributors, Inc. and
selected dealers offering shares of
Registrant - Incorporated by reference to
Exhibit 6(c) to Post-Effective Amendment No.
29 of Registrants Registration Statement on
Form N-1A (File Nos. 2-70427 and 811-03131)
filed with the Securities and Exchange
Commission on October 31, 1997.
(d) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected
agents making available shares of Registrant
- Incorporated by reference to Exhibit 6(d)
to Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(7) Not applicable.
(8)(a) Custodian Contract between the Registrant and
State Street Bank and Trust Company -
Incorporated by reference to Exhibit 8(a) to
Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(b) Amendment to Custodian Contract dated May 23,
1989 - Incorporated by reference to Exhibit
8(b) to Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form
N-1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
(9) Transfer Agency Agreement between the
Registrant and Alliance Fund Services, Inc. -
Incorporated herein by reference to Exhibit 9
to Post-Effective Amendment No. 29 of
Registrants Registration Statement on Form N-
1A (File Nos. 2-70427 and 811-03131) filed
with the Securities and Exchange Commission
on October 31, 1997.
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(10) Not applicable..
(11) Consent of Independent Auditors - Filed
herewith.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6(a) hereto.
(16) Not applicable.
(17) Financial Data Schedule - Filed herewith.
(18)(a) Rule 18f-3 Plan - Incorporated by reference
to Exhibit 18 to Post-Effective Amendment No.
25 of Registrants Registration Statement on
Form N-1A (File Nos. 2-70427 and 811-03131)
filed with the Securities and Exchange
Commission on January 31, 1996.
(b) Amended and Restated Rule 18f-3 Plan dated
September 30, 1996 - Incorporated by
reference to Exhibit 18 to Post-Effective
Amendment No. 28 of Registrants Registration
Statement on Form N-1A (File Nos. 2-70427 and
811-03131) filed with the Securities and
Exchange Commission on February 3, 1997.
Other Exhibits:
Power of Attorney of Robert C. Alexander,
John D. Carifa, David H. Dievler, Dr. Charles
H. Ferguson, William H. Foulk, Jr., D. James
Guzy, Peter J. Powers and Marshall C. Turner,
Jr. - Filed herewith.
ITEM 25. Persons Controlled by or under Common Control with
Registrant.
None.
ITEM 26. Holders of Securities.
Not Applicable
ITEM 27. Indemnification
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It is the Registrants policy to indemnify its directors
and officers, employees and other agents to the maximum
extent permitted by Section 2-418 of the General
Corporation Law of the State of Maryland and as set
forth in Article ELEVENTH of Registrants Articles of
Incorporation, filed as Exhibit 1, and Section 10 of
the Distribution Services Agreement filed as
Exhibit 6(a), all as set forth below. The liability of
the Registrants directors and officers is dealt with in
Article ELEVENTH of Registrants Articles of
Incorporation, as set forth below. The Advisers
liability for any loss suffered by the Registrant or
its shareholders is set forth in Section 4 of the
Advisory Agreement filed as Exhibit 5 to this
Registration Statement, as set forth below.
Section 2-418 of the Maryland General Corporation Law
reads as follows:
"2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS.--(a) In this section the
following words have the meaning indicated.
(1) "Director" means any person who is or was a
director of a corporation and any person who,
while a director of a corporation, is or was
serving at the request of the corporation as
a director, officer, partner, trustee,
employee, or agent of another foreign or
domestic corporation, partnership, joint
venture, trust, other enterprise, or employee
benefit plan.
(2) "Corporation" includes any domestic or
foreign predecessor entity of a corporation
in a merger, consolidation, or other
transaction in which the predecessors
existence ceased upon consummation of the
transaction.
(3) "Expenses" include attorneys fees.
(4) "Official capacity" means the following:
(i) When used with respect to a
director, the office of director in the
corporation; and
(ii) When used with respect to a person
other than a director as contemplated in
subsection (j), the elective or appointive
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office in the corporation held by the
officer, or the employment or agency
relationship undertaken by the employee or
agent in behalf of the corporation.
(iii) Official capacity does not
include service for any other foreign or
domestic corporation or any partnership,
joint venture, trust, other enterprise, or
employee benefit plan.
(5) "Party" includes a person who was, is, or is
threatened to be made a named defendant or
respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether
civil, criminal, administrative, or
investigative.
(b)(1) A corporation may indemnify any
director made a party to any proceeding by
reason of service in that capacity unless it
is established that:
(i) The act or omission of the
director was material to the matter giving
rise to the proceeding; and
1. Was committed in bad faith;
or
2. Was the result of active and
deliberate dishonesty; or
(ii) The director actually received an
improper personal benefit in money, property,
or services; or
(iii) In the case of any criminal
proceeding, the director had reasonable cause
to believe that the act or omission was
unlawful.
(2) (i) Indemnification may be
against judgments, penalties, fines,
settlements, and reasonable expenses actually
incurred by the director in connection with
the proceeding.
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(ii) However, if the proceeding
was one by or in the right of the
corporation, indemnification may not be made
in respect of any proceeding in which the
director shall have been adjudged to be
liable to the corporation.
(3) (i) The termination of any
proceeding by judgment, order or settlement
does not create a presumption that the
director did not meet the requisite standard
of conduct set forth in this subsection.
(ii) The termination of any
proceeding by conviction, or a plea of nolo
contendere or its equivalent, or an entry of
an order of probation prior to judgment,
creates a rebuttable presumption that the
director did not meet that standard of
conduct.
(c) A director may not be indemnified
under subsection (b) of this section in
respect of any proceeding charging improper
personal benefit to the director, whether or
not involving action in the directors
official capacity, in which the director was
adjudged to be liable on the basis that
personal benefit was improperly received.
(d) Unless limited by the charter:
(1) A director who has been
successful, on the merits or otherwise, in
the defense of any proceeding referred to in
subsection (b) of this section shall be
indemnified against reasonable expenses
incurred by the director in connection with
the proceeding.
(2) A court of appropriate
jurisdiction upon application of a director
and such notice as the court shall require,
may order indemnification in the following
circumstances:
(i) If it determines a director is
entitled to reimbursement under paragraph (1)
of this subsection, the court shall order
indemnification, in which case the director
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shall be entitled to recover the expenses of
securing such reimbursement; or
(ii) If it determines that the director
is fairly and reasonably entitled to
indemnification in view of all the relevant
circumstances, whether or not the director
has met the standards of conduct set forth in
subsection (b) of this section or has been
adjudged liable under the circumstances
described in subsection (c) of this section,
the court may order such indemnification as
the court shall deem proper. However,
indemnification with respect to any
proceeding by or in the right of the
corporation or in which liability shall have
been adjudged in the circumstances described
in subsection (c) shall be limited to
expenses.
(3) A court of appropriate
jurisdiction may be the same court in which
the proceeding involving the directors
liability took place.
(e)(1) Indemnification under subsection
(b) of this section may not be made by the
corporation unless authorized for a specific
proceeding after a determination has been
made that indemnification of the director is
permissible in the circumstances because the
director has met the standard of conduct set
forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a
majority vote of a quorum consisting of
directors not, at the time, parties to the
proceeding, or, if such a quorum cannot be
obtained, then by a majority vote of a
committee of the board consisting solely of
two or more directors not, at the time,
parties to such proceeding and who were duly
designated to act in the matter by a majority
vote of the full board in which the
designated directors who are parties may
participate;
(ii) By special legal counsel selected
by the board or a committee of the board by
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vote as set forth in subparagraph (I) of this
paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and
the committee cannot be established, by a
majority vote of the full board in which
director who are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification
and determination as to reasonableness of
expenses shall be made in the same manner as
the determination that indemnification is
permissible. However, if the determination
that indemnification is permissible is made
by special legal counsel, authorization of
indemnification and determination as to
reasonableness of expenses shall be made in
the manner specified in subparagraph (ii) of
paragraph (2) of this subsection for
selection of such counsel.
(4) Shares held by directors who are
parties to the proceeding may not be voted on
the subject matter under this subsection.
(f)(1) Reasonable expenses incurred by
a director who is a party to a proceeding may
be paid or reimbursed by the corporation in
advance of the final disposition of the
proceeding, upon receipt by the corporation
of:
(i) A written affirmation by the
director of the director's good faith belief
that the standard of conduct necessary for
indemnification by the corporation as
authorized in this section has been met; and
(ii) A written undertaking by or on
behalf of the director to repay the amount if
it shall ultimately be determined that the
standard of conduct has not been met.
(2) The undertaking required by
subparagraph (ii) of paragraph (1) of this
subsection shall be an unlimited general
obligation of the director but need not be
secured and may be accepted without reference
to financial ability to make the repayment.
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(3) Payments under this subsection
shall be made as provided by the charter,
bylaws, or contract or as specified in
subsection (e) of this section.
(g) The indemnification and
advancement of expenses provided or
authorized by this section may not be deemed
exclusive of any other rights, by
indemnification or otherwise, to which a
director may be entitled under the charter,
the bylaws, a resolution of stockholders or
directors, an agreement or otherwise, both as
to action in an official capacity and as to
action in another capacity while holding such
office.
(h) This section does not limit the
corporations power to pay or reimburse
expenses incurred by a director in connection
with an appearance as a witness in a
proceeding at a time when the director has
not been made a named defendant or respondent
in the proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed
to have requested a director to serve an
employee benefit plan where the performance
of the director's duties to the corporation
also imposes duties on, or otherwise involves
services by, the director to the plan or
participants or beneficiaries of the plan:
(2) Excise taxes assessed on a
director with respect to an employee benefit
plan pursuant to applicable law shall be
deemed fines; and
(3) Action taken or omitted by the
director with respect to an employee benefit
plan in the performance of the director's
duties for a purpose reasonably believed by
the director to be in the interest of the
participants and beneficiaries of the plan
shall be deemed to be for a purpose which is
not opposed to the best interests of the
corporation.
(j) Unless limited by the charter:
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(1) An officer of the corporation
shall be indemnified as and to the extent
provided in subsection (d) of this section
for a director and shall be entitled, to the
same extent as a director, to seek
indemnification pursuant to the provisions of
subsection (d);
(2) A corporation may indemnify and
advance expenses to an officer, employee, or
agent of the corporation to the same extent
that it may indemnify directors under this
section; and
(3) A corporation, in addition, may
indemnify and advance expenses to an officer,
employee, or agent who is not a director to
such further extent, consistent with law, as
may be provided by its charter, bylaws,
general or specific action of its board of
directors or contract.
(k)(1) A corporation may purchase and
maintain insurance on behalf of any person
who is or was a director, officer, employee,
or agent of the corporation, or who, while a
director, officer, employee, or agent of the
corporation, is or was serving at the
request, of the corporation as a director,
officer, partner, trustee, employee, or agent
of another foreign or domestic corporation,
partnership, joint venture, trust, other
enterprise, or employee benefit plan against
any liability asserted against and incurred
by such person in any such capacity or
arising out of such person's position,
whether or not the corporation would have the
power to indemnify against liability under
the provisions of this section.
(2) A corporation may provide similar
protection, including a trust fund, letter of
credit, or surety bond, not inconsistent with
this section.
(3) The insurance or similar
protection may be provided by a subsidiary or
an affiliate of the corporation.
(l) Any indemnification of, or
advance of expenses to, a director in
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accordance with this section, if arising out
of a proceeding by or in the right of the
corporation, shall be reported in writing to
the stockholders with the notice of the next
stockholders' meeting or prior to the
meeting.
"Article ELEVENTH of the Registrants Articles of
Incorporation reads as follows: A director or
officer of the Corporation shall not be liable to
the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director
or officer, except to the extent such exemption
from liability or limitation thereof is not
permitted by law (including the Investment Company
Act of 1940) as currently in effect or as the same
may hereafter be amended. No amendment,
modification or repeal of this Article ELEVENTH
shall adversely affect any right or protection of
a director or officer that exists at the time of
such amendment, modification or repeal."
The Advisory Agreement between the Registrant and
Alliance Capital Management L.P. provides that
Alliance Capital Management L.P. will not be
liable under such agreement for any mistake of
judgment or in any event whatsoever except for
lack of good faith and that nothing therein shall
be deemed to protect Alliance Capital Management
L.P. against any liability to the Registrant or
its security holders to which it would otherwise
be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of
its duties thereunder, or by reason of reckless
disregard of its duties or obligations thereunder.
The Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.
provides that the Registrant will indemnify,
defend and hold Alliance Fund Distributors, Inc.,
and any person who controls it within the meaning
of Section 15 of the Investment Company Act of
1940, free and harmless from and against any and
all claims, demands, liabilities and expenses
which Alliance Fund Distributors, Inc. or any
controlling person may incur arising out of or
based upon any alleged untrue statement of a
material fact contained in Registrants
Registration Statement or Prospectus or arising
out of, or based upon any alleged omission to
state a material fact required to be stated in
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either of the foregoing or necessary to make the
statements in either of the foregoing not
misleading, provided that nothing therein shall be
so construed as to protect Alliance Fund
Distributors, Inc. against any liability to the
Registrant or its security holders to which it
would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the
performance of its duties thereunder or by reason
of reckless disregard of its obligations and
duties thereunder.
The foregoing summaries are qualified by the
entire text of Registrant's Articles of
Incorporation, the Advisory Agreement between the
Registrant and Alliance Capital Management L.P.
and the Distribution Services Agreement between
the Registrant and Alliance Fund Distributors,
Inc. which are filed herewith as Exhibits 5, and
6, respectively, in response to Item 24 and each
of which are incorporated by reference herein.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Securities
Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion
of the Securities and Exchange Commission, such
indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the Registrant of expenses
incurred or paid by a director, officer or
controlling person of the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question of whether such indemnification by it is
against public policy as expressed in the
Securities Act and will be governed by the final
adjudication of such issue.
The Registrant participates in a joint directors
and officers liability insurance policy issued by
the ICI Mutual Insurance Company. Coverage under
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this policy has been extended to directors,
trustees and officers of the investment companies
managed by Alliance Capital Management L.P. Under
this policy, outside trustees and directors are
covered up to the limits specified for any claim
against them for acts committed in their
capacities as trustee or director. A pro rata
share of the premium for this coverage is charged
to each investment company and to the Adviser.
ITEM 28. Business and Other Connections of Investment
Adviser.
The descriptions of Alliance Capital Management
L.P. under the caption The Adviser in the
Prospectus and Management of the Fund in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B,
respectively, of this Registration Statement are
incorporated by reference herein.
The information as to the directors and executive
officers of Alliance Capital Management
Corporation, the general partner of Alliance
Capital Management L.P., set forth in Alliance
Capital Management L.P.'s Form ADV filed with the
Securities and Exchange Commission on April 21,
1988 (File No. 801-32361) and amended through the
date hereof, is incorporated by reference.
ITEM 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as
Principal Underwriter for the following registered
investment companies:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
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Alliance Institutional Funds, Inc.
Alliance Institutional Reserves, Inc.
Alliance International Fund
Alliance International Premier Growth
Fund, Inc.
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust,
Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance Select Investor Series, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME UNDERWRITER REGISTRANT
Michael J. Laughlin Director & Chairman
John D. Carifa Director
Robert L. Errico Director & President
Geoffrey L. Hyde Director & Senior
Vice President
Dave H. Williams Director
David D. Conine Executive Vice
President
Richard K. Saccullo Executive Vice
President
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Edmund P. Bergan, Jr. Senior Vice Secretary
President, General
Counsel & Secretary
Richard A. Davies Senior Vice President
& Managing Director
Robert H. Joseph, Jr. Senior Vice President
& Chief Financial Officer
Anne S. Drennan Senior Vice President
& Treasurer
Karen J. Bullot Senior Vice President
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Mark J. Dunbar Senior Vice President
Donald N. Fritts Senior Vice President
Bradley F. Hanson Senior Vice President
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Susan L. Matteson-King Senior Vice President
Daniel D. McGinley Senior Vice President
Ryne A. Nishimi Senior Vice President
Antonios G. Poleondakis Senior Vice President
Robert E. Powers Senior Vice President
Raymond S. Sclafani Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
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Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Gerard J. Friscia Vice President & Controller
Jamie A. Atkinson Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Michael E. Brannan Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
Stephen J. Demetrovits Vice President
John F. Dolan Vice President
John C. Endahl Vice President
Sohaila S. Farsheed Vice President
Shawn C. Gage Vice President
Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
Counsel
Mark D. Gersten Vice President Treasurer and
Chief
Financial
Officer
Joseph W. Gibson Vice President
John Grambone Vice President
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George C. Grant Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Scott F. Heyer Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Scott Hutton Vice President
Richard D. Keppler Vice President
Gwenn M. Kessler Vice President
Donna M. Lamback Vice President
Henry Michael Lesmeister Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Jerry W. Lynn Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Shawn P. McClain Vice President
Jeffrey P. Mellas Vice President
Thomas F. Monnerat Vice President
Christopher W. Moore Vice President
Timothy S. Mulloy Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
John C. O'Connell Vice President
John J. O'Connor Vice President
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James J. Posch Vice President
Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel
Bruce W. Reitz Vice President
Karen C. Satterberg Vice President
John P. Schmidt Vice President
Robert C. Schultz Vice President
Richard J. Sidell Vice President
Teris A. Sinclair Vice President
Scott C. Sipple Vice President
Elizabeth Smith Vice President
Martine H. Stansbery, Jr. Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Thomas J. Vaughn Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
Mark E. Westmoreland Vice President
William C. White Vice President
David E. Willis Vice President
Emilie D. Wrapp Vice President and Assistant
Assistant General Secretary
Counsel
Patrick Look Assistant Vice
President & Assistant
Treasurer
Michael W. Alexander Assistant Vice President
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Richard J. Appaluccio Assistant Vice President
Charles M. Barrett Assistant Vice President
Robert F. Brendli Assistant Vice President
Maria L. Carreras Assistant Vice President
John P. Chase Assistant Vice President
Russell R. Corby Assistant Vice President
Jean A. Cronin Assistant Vice President
John W. Cronin Assistant Vice President
Terri J. Daly Assistant Vice President
Ralph A. DiMeglio Assistant Vice President
Faith C. Deutsch Assistant Vice President
John E. English Assistant Vice President
Duff C. Ferguson Assistant Vice President
James J. Hill Assistant Vice President
Theresa Iosca Assistant Vice President
Erik A. Jorgensen Assistant Vice President
Eric G. Kalender Assistant Vice President
Edward W. Kelly Assistant Vice President
Michael Laino Assistant Vice President
Nicholas J. Lapi Assistant Vice President
Kristine J. Luisi Assistant Vice President
Kathryn Austin Masters Assistant Vice President
Richard F. Meier Assistant Vice President
Mary K. Moore Assistant Vice President
Richard J. Olszewski Assistant Vice President
Catherine N. Peterson Assistant Vice President
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Rizwan A. Raja Assistant Vice President
Carol H. Rappa Assistant Vice President
Clara Sierra Assistant Vice President
Gayle S. Stamer Assistant Vice President
Eileen Stauber Assistant Vice President
Vincent T. Strangio Assistant Vice President
Marie R. Vogel Assistant Vice President
Wesley S. Williams Assistant Vice President
Matthew Witschel Assistant Vice President
Christopher J. Zingaro Assistant Vice President
Mark R. Manley Assistant Secretary
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other
documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the
Rules thereunder are maintained as follows:
journals, ledgers, securities records and other
original records are maintained principally at the
offices of Alliance Fund Services, Inc. 500 Plaza
Drive, Secaucus, New Jersey 07094-1520 and at the
offices of State Street Bank and Trust Company, the
Registrant's Custodian, 225 Franklin Street,
Boston, Massachusetts 02110. All other records so
required to be maintained are maintained at the
offices of Alliance Capital Management L.P., 1345
Avenue of the Americas, New York, New York 10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings
The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrants latest report to shareholders, upon
request and without charge.
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The Registrant undertakes to provide assistance to
shareholders in communications concerning the
removal of any Director of the Fund in accordance
with Section 16 of the Investment Company Act of
1940.
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SIGNATURE
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 30th day of October, 1998.
ALLIANCE TECHNOLOGY FUND, INC.
By /s/ John D. Carifa
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of
1933 this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated:
Signature Title Date
1) Principal
Executive Officer
/s/ John D. Carifa Chairman and
John D. Carifa President October 30, 1998
2) Principal Financial
and Accounting Officer
/s/ Mark D. Gersten Treasurer and
Mark D. Gersten Chief Financial
Officer October 30, 1998
3) All of the Directors
Robert C. Alexander
John D. Carifa
David H. Dievler
Dr. Charles H. Ferguson
William H. Foulk, Jr.
D. James Guzy
Peter J. Powers
Marshall C. Turner, Jr.
C-24
<PAGE>
By (Attorney-in-fact)
/s/ Edmund P. Bergan, Jr. October 30, 1998
Edmund P. Bergan, Jr.
C-25
<PAGE>
Index to Exhibits
(1)(f) Articles Supplementary to Articles of
Incorporation dated May 21, 1998
(11) Consent of Independent Auditors
(17) Financial Data Schedule
Other Exhibits: Powers of Attorney
C-26
00250200.AQ0
<PAGE>
ALLIANCE TECHNOLOGY FUND, INC.
ARTICLES SUPPLEMENTARY
Alliance Technology Fund, Inc., a Maryland corporation
having its principal office in the City of Baltimore (hereinafter
called the "Corporation"), certifies that:
FIRST: The Board of Directors of the Corporation hereby
increases the aggregate number of shares of capital stock that
the Corporation has authority to issue by 11,700,000,000 shares
and hereby classifies 2,900,000,000 of such shares as Class A
Common Stock, 2,950,000,000 of such shares as Class B Common
Stock, 2,950,000,000 of such shares as Class C Common Stock and
2,900,000,000 of such shares as Advisor Class Common Stock of the
Corporation.
SECOND: The Class A Common Stock, Class B Common Stock,
Class C Common Stock and Advisor Class Common Stock,
respectively, of the Corporation, as so classified herein, shall
have the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption as currently set forth in the
Charter of the Corporation with respect to the Class A Common
Stock, Class B Common Stock, Class C Common Stock and Advisor
Class Common Stock, respectively, of the Corporation.
THIRD: A. Immediately before the increase in
authorized capital stock provided for herein, the total number of
shares of stock of all classes which the Corporation had
authority to issue was 300,000,000 shares, the par value of each
class of stock being $.01 per share, with an aggregate par value
of $3,000,000.
B. Immediately after the increase in
authorized capital stock provided for herein, the total number of
shares of stock of all classes which the Corporation has
authority to issue is 12,000,000,000 the par value of each class
of stock being $.01 per share, with an aggregate par value of
$120,000,000.
FOURTH: The Corporation is registered as an open-end
company under the Investment Company Act of 1940.
FIFTH: The total number of shares that the Corporation
has authority to issue has been increased by the Board of
Directors of the Corporation in accordance with Section 2-105(c)
of the Maryland General Corporation Law.
<PAGE>
SIXTH: The shares aforesaid have been duly classified
by the Corporation's Board of Directors pursuant to authority and
power contained in the Corporation's Charter.
IN WITNESS WHEREOF, Alliance Technology Fund, Inc. has
caused these Articles Supplementary to be executed by the
Chairman of the Board of Directors of the Corporation and
witnessed by its Secretary as of this 21st day of May, 1998. The
Chairman of the Board of Directors of the Corporation who signed
these Articles Supplementary acknowledges them to be the act of
the Corporation and states under the penalties of perjury that,
to the best of his knowledge, information and belief, the matters
and facts set forth herein relating to authorization and approval
hereof are true in all material respects.
ALLIANCE TECHNOLOGY FUND, INC.
By:/s/ John D. Carifa
__________________________
John D. Carifa
Chairman
WITNESS: /s/ Edmund P. Bergan, Jr.
__________________________
Edmund P. Bergan, Jr.
Secretary
2
00250200.AQ2
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights," "Shareholders Services - Statements and
Reports" and "General Information - Independent Auditors" and to
the use of our report dated December 31, 1997 included in this
Registration Statement (Form N-1A No. 2-70427) of Alliance
Technology Fund, Inc.
/s/ERNST & YOUNG LLP
New York, New York
October 27, 1998
00250200.AQ4
<PAGE>
[ARTICLE] 6
[CIK] 0000350181
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
[SERIES]
[NUMBER] 001
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] NOV-30-1998
[PERIOD-START] DEC-01-1997
[PERIOD-END] MAY-31-1998
[INVESTMENTS-AT-COST] 1,705,086,260
[INVESTMENTS-AT-VALUE] 2,332,449,497
[RECEIVABLES] 41,976,835
[ASSETS-OTHER] 85,868
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,374,512,200
[PAYABLE-FOR-SECURITIES] 3,763,249
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 13,126,945
[TOTAL-LIABILITIES] 16,890,194
[SENIOR-EQUITY] 399,385
[PAID-IN-CAPITAL-COMMON] 1,573,244,873
[SHARES-COMMON-STOCK] 11,919,729
[SHARES-COMMON-PRIOR] 11,474,685
[ACCUMULATED-NII-CURRENT] (16,165,131)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 172,779,642
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 627,363,237
[NET-ASSETS] 2,357,622,006
[DIVIDEND-INCOME] 1,718,052
[INTEREST-INCOME] 4,527,265
[OTHER-INCOME] 0
[EXPENSES-NET] (22,410,448)
[NET-INVESTMENT-INCOME] (16,165,131)
[REALIZED-GAINS-CURRENT] 180,343,918
[APPREC-INCREASE-CURRENT] 91,954,204
[NET-CHANGE-FROM-OPS] 256,132,991
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (6,722,769)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7,852,720
[NUMBER-OF-SHARES-REDEEMED] (7,518,671)
[SHARES-REINVESTED] 110,995
[NET-CHANGE-IN-ASSETS] 328,156,301
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 14,590,559
[OVERDISTRIB-NII-PRIOR] 0
<PAGE>
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 11,789,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 22,609,000
[AVERAGE-NET-ASSETS] 680,843,571
[PER-SHARE-NAV-BEGIN] 54.44
[PER-SHARE-NII] (0.30)
[PER-SHARE-GAIN-APPREC] 6.90
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.58)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 60.46
[EXPENSE-RATIO] 1.61
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250200.AP6
<PAGE>
[ARTICLE] 6
[CIK] 0000350181
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
[SERIES]
[NUMBER] 002
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] NOV-30-1998
[PERIOD-START] DEC-01-1997
[PERIOD-END] MAY-31-1998
[INVESTMENTS-AT-COST] 1,705,086,260
[INVESTMENTS-AT-VALUE] 2,332,449,497
[RECEIVABLES] 41,976,835
[ASSETS-OTHER] 85,868
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,374,512,200
[PAYABLE-FOR-SECURITIES] 3,763,249
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 13,126,945
[TOTAL-LIABILITIES] 16,890,194
[SENIOR-EQUITY] 399,385
[PAID-IN-CAPITAL-COMMON] 1,573,244,873
[SHARES-COMMON-STOCK] 21,461,230
[SHARES-COMMON-PRIOR] 20,034,755
[ACCUMULATED-NII-CURRENT] (16,165,131)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 172,779,642
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 627,363,237
[NET-ASSETS] 2,357,622,006
[DIVIDEND-INCOME] 1,718,052
[INTEREST-INCOME] 4,527,265
[OTHER-INCOME] 0
[EXPENSES-NET] (22,410,448)
[NET-INVESTMENT-INCOME] (16,165,131)
[REALIZED-GAINS-CURRENT] 180,343,918
[APPREC-INCREASE-CURRENT] 91,954,204
[NET-CHANGE-FROM-OPS] 256,132,991
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (11,607,315)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,507,048
[NUMBER-OF-SHARES-REDEEMED] (2,289,924)
[SHARES-REINVESTED] 209,351
[NET-CHANGE-IN-ASSETS] 328,156,301
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 14,590,559
[OVERDISTRIB-NII-PRIOR] 0
<PAGE>
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 11,789,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 22,609,000
[AVERAGE-NET-ASSETS] 1,164,084,565
[PER-SHARE-NAV-BEGIN] 52.58
[PER-SHARE-NII] (0.49)
[PER-SHARE-GAIN-APPREC] 6.66
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.58)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 58.17
[EXPENSE-RATIO] 2.33
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250200.AP7
<PAGE>
[ARTICLE] 6
[CIK] 0000350181
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
[SERIES]
[NUMBER] 003
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] NOV-30-1998
[PERIOD-START] DEC-01-1997
[PERIOD-END] MAY-31-1998
[INVESTMENTS-AT-COST] 1,705,086,260
[INVESTMENTS-AT-VALUE] 2,332,449,497
[RECEIVABLES] 41,976,835
[ASSETS-OTHER] 85,868
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,374,512,200
[PAYABLE-FOR-SECURITIES] 3,763,249
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 13,126,945
[TOTAL-LIABILITIES] 16,890,194
[SENIOR-EQUITY] 399,385
[PAID-IN-CAPITAL-COMMON] 1,573,244,873
[SHARES-COMMON-STOCK] 3,767,545
[SHARES-COMMON-PRIOR] 3,503,625
[ACCUMULATED-NII-CURRENT] (16,165,131)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 172,779,642
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 627,363,237
[NET-ASSETS] 2,357,622,006
[DIVIDEND-INCOME] 1,718,052
[INTEREST-INCOME] 4,527,265
[OTHER-INCOME] 0
[EXPENSES-NET] (22,410,448)
[NET-INVESTMENT-INCOME] (16,165,131)
[REALIZED-GAINS-CURRENT] 180,343,918
[APPREC-INCREASE-CURRENT] 91,954,204
[NET-CHANGE-FROM-OPS] 256,132,991
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (2,036,454)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 6,144,106
[NUMBER-OF-SHARES-REDEEMED] (5,915,297)
[SHARES-REINVESTED] 35,111
[NET-CHANGE-IN-ASSETS] 328,156,301
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 14,590,559
[OVERDISTRIB-NII-PRIOR] 0
<PAGE>
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 11,789,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 22,609,000
[AVERAGE-NET-ASSETS] 202,004,935
[PER-SHARE-NAV-BEGIN] 52.57
[PER-SHARE-NII] (0.48)
[PER-SHARE-GAIN-APPREC] 6.65
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.58)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 58.16
[EXPENSE-RATIO] 2.33
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250200.AP8
<PAGE>
[ARTICLE] 6
[CIK] 0000350181
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
[SERIES]
[NUMBER] 004
[NAME] ALLIANCE TECHNOLOGY FUND, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] NOV-30-1998
[PERIOD-START] DEC-01-1997
[PERIOD-END] MAY-31-1998
[INVESTMENTS-AT-COST] 1,705,086,260
[INVESTMENTS-AT-VALUE] 2,332,449,497
[RECEIVABLES] 41,976,835
[ASSETS-OTHER] 85,868
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 2,374,512,200
[PAYABLE-FOR-SECURITIES] 3,763,249
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 13,126,945
[TOTAL-LIABILITIES] 16,890,194
[SENIOR-EQUITY] 399,385
[PAID-IN-CAPITAL-COMMON] 1,573,244,873
[SHARES-COMMON-STOCK] 2,789,903
[SHARES-COMMON-PRIOR] 3,058,990
[ACCUMULATED-NII-CURRENT] (16,165,131)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 172,779,642
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 627,363,237
[NET-ASSETS] 2,357,622,006
[DIVIDEND-INCOME] 1,718,052
[INTEREST-INCOME] 4,527,265
[OTHER-INCOME] 0
[EXPENSES-NET] (22,410,448)
[NET-INVESTMENT-INCOME] (16,165,131)
[REALIZED-GAINS-CURRENT] 180,343,918
[APPREC-INCREASE-CURRENT] 91,954,204
[NET-CHANGE-FROM-OPS] 256,132,991
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (1,788,297)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,102,826
[NUMBER-OF-SHARES-REDEEMED] (1,404,313)
[SHARES-REINVESTED] 32,400
[NET-CHANGE-IN-ASSETS] 328,156,301
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 14,590,559
[OVERDISTRIB-NII-PRIOR] 0
<PAGE>
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 11,789,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 22,609,000
[AVERAGE-NET-ASSETS] 164,940,657
[PER-SHARE-NAV-BEGIN] 54.63
[PER-SHARE-NII] (0.21)
[PER-SHARE-GAIN-APPREC] 6.92
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.58)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 60.76
[EXPENSE-RATIO] 1.31
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250200.AP9
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital
Reserves, Alliance Developing Markets Fund, Inc. Alliance
Global Dollar Government Fund, Inc., Alliance Global
Environment Fund, Inc., Alliance Global Small Cap Fund,
Inc., Alliance Global Strategic Income Trust, Inc., Alliance
Government Reserves, Alliance Greater China 97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance
New Europe Fund, Inc., Alliance North American Government
Income Trust, Inc., Alliance Premier Growth Fund, Inc.,
Alliance Quasar Fund, Inc., Alliance Real Estate Investment
Fund, Inc., Alliance/Regent Sector Opportunity Fund, Inc.,
Alliance Short-Term Multi-Market Trust, Inc., Alliance
Technology Fund, Inc., Alliance Utility Income Fund, Inc.,
Alliance Variable Products Series Fund, Inc., Alliance World
Income Trust, Inc., Alliance Worldwide Privatization Fund,
Inc., Fiduciary Management Associates, The Alliance Fund,
Inc., The Alliance Portfolios, and The Hudson River Trust,
and filing the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all
that said attorneys-in-fact, or their substitute or
substitutes, may do or cause to be done by virtue hereof.
/s/ John D. Carifa
___________________________
John D. Carifa
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of Alliance Technology Fund, Inc., and filing the same,
with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ Robert C. Alexander
___________________________
Robert C. Alexander
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance All-Asia Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Developing
Markets Fund, Inc. Alliance Global Dollar Government Fund,
Inc., Alliance Global Environment Fund, Inc., Alliance
Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Greater China 97 Fund, Inc.,
Alliance Growth and Income Fund, Inc., Alliance High Yield
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Mortgage Securities Income Fund, Inc.,
Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund
II, Alliance New Europe Fund, Inc., Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate
Investment Fund, Inc., Alliance/Regent Sector Opportunity
Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc.,
Alliance Technology Fund, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates
and The Alliance Fund, Inc. and filing the same, with
exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ David H. Dievler
___________________________
David H. Dievler
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of Alliance Technology Fund, Inc., and filing the same,
with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ Dr. Charles H. Ferguson
______________________________
Dr. Charles H. Ferguson
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the respective
Registration Statements, and any amendments thereto, on Form
N-1A of ACM Institutional Reserves, Inc., AFD Exchange
Reserves, Alliance Balanced Shares, Inc., Alliance Bond
Fund, Inc., Alliance Capital Reserves, Alliance Global
Dollar Government Fund, Inc., Alliance Global Small Cap
Fund, Inc., Alliance Global Strategic Income Trust, Inc.,
Alliance Government Reserves, Alliance Greater China 97
Fund, Inc., Alliance Growth and Income Fund, Inc., Alliance
High Yield Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance Limited Maturity Government Fund, Inc., Alliance
Money Market Fund, Alliance Mortgage Securities Income Fund,
Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund
II, Alliance Municipal Trust, Alliance North American
Government Income Trust, Inc., Alliance Premier Growth Fund,
Inc., Alliance Quasar Fund, Inc., Alliance Real Estate
Investment Fund, Inc., Alliance/Regent Sector Opportunity
Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc.,
Alliance Technology Fund, Inc., Alliance Utility Income
Fund, Inc., Alliance Variable Products Series Fund, Inc.,
Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., Fiduciary Management Associates,
The Alliance Fund, Inc., The Alliance Portfolios and the
Hudson River Trust, and filing the same, with exhibits
thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact, or their
substitute or substitutes, may do or cause to be done by
virtue hereof.
/s/ William H. Foulk, Jr.
___________________________
William H. Foulk, Jr.
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of Alliance Technology Fund, Inc., and filing the same,
with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ Dr. James Guzy
___________________________
Dr. James Guzy
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of Alliance Technology Fund, Inc., and filing the same,
with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ Peter J. Powers
___________________________
Peter J. Powers
Dated: October 8, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person
whose signature appears below hereby revokes all prior
powers granted by the undersigned to the extent inconsistent
herewith and constitutes and appoints John D. Carifa, Edmund
P. Bergan, Jr., Domenick Pugliese, Andrew L. Gangolf and
Emilie D. Wrapp and each of them, to act severally as
attorneys-in-fact and agents, with power of substitution and
resubstitution, for the undersigned in any and all
capacities, solely for the purpose of signing the
Registration Statement, and any amendments thereto, on Form
N-1A of Alliance Technology Fund, Inc., and filing the same,
with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-
fact, or their substitute or substitutes, may do or cause to
be done by virtue hereof.
/s/ Marshall C. Turner, Jr.
_____________________________
Marshall C. Turner, Jr.
Dated: October 8, 1998
00250200.AN8
