ALLIANCE INTERNATIONAL FUND, 497, 1995-06-19

ALLIANCE INTERNATIONAL FUND
497, 1995-06-19

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<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 2-70428 and 811-03130.

<PAGE>

Alliance Capital [Logo] The Alliance Stock Funds
____________________________________________________________
June 1, 1995

Supplement to Prospectus dated February 1, 1995

This supplement sets forth unaudited per share income
and capital change information for the periods indicated for
Alliance All-Asia Investment Fund, Inc. ("All-Asia Fund"),
pursuant to the requirements of the Securities and Exchange
Commission applicable to registered investment companies in
their first year of operations and for Alliance
International Fund ("International Fund"), Alliance
Worldwide Privatization Fund, Inc. ("Worldwide Privatization
Fund"), Alliance New Europe Fund, Inc. ("New Europe Fund"),
Alliance Global Small Cap Fund, Inc. ("Global Small Cap
Fund"), Alliance Strategic Balanced Fund ("Strategic
Balanced Fund") and Alliance Balanced Shares, Inc.
("Balanced Shares") (collectively, the "Funds"). Unaudited
financial statements and related notes as of the same dates
for the respective Funds have also been added to the
Statement of Additional Information for each Fund.

The following information supplements the information
under the heading "Financial Information" on pages 7 through
15 of the Prospectus.

<PAGE>

Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ _____________ ___________ ____________ ___________ _____________

International Fund

Class A
Six months
ended 12/31/94.... $18.38 $(.05) $(.26) $(.31) $0.00 $(1.62)
Class B
Six months
ended 12/31/94.... $17.90 $(.06)(b) $(.31) $(.37) $0.00 $(1.62)
Class C
Six months
ended 12/31/94.... $17.91 $(.03) $(.34) $(.37) $0.00 $(1.62)

Worldwide
Privatization Fund

Class A
Six months
ended 12/31/94.... $9.75 $(.01) $.24 $.23 $0.00 $0.00
Class B
Six months
ended 12/31/94.... $9.74 $(.03) $.23 $.20 $0.00 $0.00

New Europe Fund

Class A
Six months
ended 1/31/95..... $12.66 $(.07) $.23 $.16 $(.09) $0.00
Class B
Six months
ended 1/31/95..... $12.41 $(.11) $.22 $.11 $(.09) $0.00
Class C
Six months

<PAGE>

ended 1/31/95..... $12.42 $(.12) $.23 $.11 $(.09) $0.00

All Asia Fund

Class A
11/28/94**
- 4/30/95......... $10.00 $.11(c) $.13 $.24 $0.00 $0.00
Class B
11/18/94**
- 4/30/95......... $10.00 $.09(c) $.13 $.22 $0.00 $0.00
Class C
11/28/94**
- 4/30/95......... $10.00 $.08(c) $.16 $.24 $0.00 $0.00

</TABLE>

<PAGE>

Total Net Assets Ratio of Net
Total Net Asset Investment At End of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of On Net Asset (000's) To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
_____________ _________ _____________ ____________ ____________ ___________ _____________

$(1.62) $16.45 (1.57)% $176,845 1.77%* (.46)%* 57%

$(1.62) $15.91 (1.94)% $49,532 2.56%* (1.32)%* 57%

$(1.62) $15.92 (1.94)% $29,173 2.56%* (1.29)%* 57%

$0.00 $9.98 2.36% $14,226 2.30%* (.04)%* 16%

$0.00 $9.94 2.05% $81,181 2.99%* (.75)%* 16%

$(.09) $12.73 1.29% $76,095 2.04%* (.89)%* 39%

$(.09) $12.43 .91% $29,978 2.74%* (1.59)%* 39%

$(.09) $12.44 .91% $8,863 2.73%* (1.59)%* 39%

<PAGE>

$0.00 $10.24 2.40% $1,917 .19%*(d) 3.44%* 51%

$0.00 $10.22 2.20% $3,019 .90%*(d) 2.73%* 51%

$0.00 $10.24 2.40% $185 .71%*(d) 2.87%* 51%

</TABLE>

<PAGE>

Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ ____________ ____________ ____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>

Global Small
Cap Fund

Class A
Six months
ended 1/31/95..... $11.08 $(.04)(b) $(.23) $(.27) $(2.11) $0.00
Class B
Six months
ended 1/31/95..... $10.78 $(.02) $(.28) $(.30) $(2.11) $0.00
Class C
Six months
ended 1/31/95..... $10.79 $(.09) $(.22) $(.31) $(2.11) $0.00

Strategic
Balanced Fund

Class A
Six months
ended 1/31/95..... $16.26 $.18(c) $(.47) $(.29) $(.22) $(.04)
Class B
Six months
ended 1/31/95..... $14.10 $.11(c) $(.40) $(.29) $(.12) $(.04)
Class C
Six months
ended 1/31/95..... $14.11 $.10(c) $(.39) $(.29) $(.12) $(.04)

Balanced Shares

Class A
Six months
ended 1/31/95..... $13.38 $.23 $(.23) $0.00 $(.20) $(.02)
Class B
Six months
ended 1/31/95..... $13.23 $.16 $(.21) $(.05) $(.16) $(.02)
Class C
Six months

<PAGE>

ended 1/31/95..... $13.24 $.16 $(.21) $(.05) $(.16) $(.02)

</TABLE>

<PAGE>

$(2.11) $8.70 (2.26)% $53,830 2.52%* (1.24)%* 65%

$(2.11) $8.37 (2.61)% $4,574 3.24%* (2.00)%* 65%

$(2.11) $8.37 (2.73)% $1,131 3.21%* (1.96)%* 65%

$(.26) $15.71 (1.79)% $9,102 1.40%*(d) 2.14%* 34%

$(.16) $13.65 (2.07)% $39,008 2.10%*(d) 1.44%* 34%

$(.16) $13.66 (2.07)% $4,119 2.10%*(d) 1.45%* 34%

$(.22) $13.16 .09% $146,840 1.26%* 3.36%* 61%

$(.18) $13.00 (.32)% $13,350 2.04%* 2.58%* 61%

$(.18) $13.01 (.32)% $4,690 2.03%* 2.56%* 61%

___________________________________________

<PAGE>

* Annualized
** Commencement of operations
(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 charge or
contingent deferred sales charge is 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 waived and expenses reimbursed by Alliance
(d) Net of expenses waived/reimbursed. If All-Asia Fund had borne all expenses, the expense ratios
would have been, with respect to Class A shares 11.71% (annualized), with respect to Class B shares
12.35% (annualized) and with respect to Class C shares 11.80% (annualized). If Strategic Balanced
Fund had borne all expenses, the expense ratios would have been, with respect to Class A shares
1.59% (annualized) and with respect to Class B and Class C shares 2.29% (annualized).
</TABLE>

Additionally, as of May 1, 1995, the portfolio manager of
Strategic Balanced Fund is Bruce W. Calvert. Mr. Calvert is a
Vice Chairman and the Chief Investment Officer of Alliance
Capital Management Corporation, the sole general partner of
Alliance Capital Management L.P., with which he has been
associated since prior to 1990.

9
00250157.BA7

<PAGE>

The Alliance
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Stock Funds
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P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618

Prospectus and Application

February 1, 1995

Domestic Stock Funds Global Stock Funds
- -The Alliance Fund -Alliance International Fund
- -Alliance Growth Fund -Alliance Worldwide Privatization Fund
- -Alliance Premier Growth Fund -Alliance New Europe Fund
- -Alliance Counterpoint Fund -Alliance All-Asia Investment Fund
- -Alliance Technology Fund -Alliance Global Small Cap Fund
- -Alliance Quasar Fund

Total Return Funds
-Alliance Strategic Balanced Fund
-Alliance Balanced Shares
-Alliance Income Builder Fund
-Alliance Utility Income Fund
-Alliance Growth and Income Fund

Table of Contents Page
The Funds at a Glance................................................. 2
Expense Information................................................... 4
Financial Highlights.................................................. 7
Glossary.............................................................. 16
Description of the Funds.............................................. 17
Investment Objectives and Policies................................ 17
Additional Investment Practices................................... 26
Certain Fundamental Investment Policies........................... 33
Risk Considerations............................................... 36
Purchase and Sale of Shares........................................... 39
Management of the Funds............................................... 42
Dividends, Distributions and Taxes.................................... 44
General Information................................................... 46

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 "Literature" telephone number.

Each Fund offers three classes of shares which 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 (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.

Alliance(R)
Mutual funds without the Mystery/TM/

(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 Manager 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 102 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world with over $123
billion in assets under management. Alliance provides investment management
services to 28 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 of a relatively small number of intensively researched companies.

Invests Principally in . . . A non-diversified portfolio of equity securities
that, in the judgment of Alliance, are likely to achieve superior earnings
growth. Normally, approximately 40 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.

Counterpoint Fund

Seeks . . . Long-term capital growth, primarily, and current income,
secondarily.

Invests Principally in . . . A diversified portfolio of price-depressed,
undervalued or out-of-favor equity securities.

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.

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 Fund

Seeks . . . Long-term capital appreciation.

Invests Principally in . . . A non-diversified portfolio of equity securities
of Asian 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.

2
<PAGE>

Total Return Funds

Strategic Balanced Fund

Seeks . . . A high long-term total return by investing in a combination of
equity and debt securities.

Invests Principally in . . . A diversified portfolio of dividend-paying
common stocks and fixed-income securities, and also in equity-type securities
such as warrants, preferred stocks and convertible debt instruments.

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.

Income Builder Fund

Seeks . . . Both an attractive level of current income and long-term growth
of income and capital.

Invests Principally in . . . A non-diversified portfolio of fixed-income
securities and dividend-paying common stocks. Alliance currently expects to
continue to maintain approximately 60% of the Fund's net assets in
fixed-income securities and 40% in equity 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.

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. 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:

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Automatic Reinvestment
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Automatic Investment Program
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Retirement Plans
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Shareholder Communications
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Dividend Direction Plans
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Auto Exchange
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Systematic Withdrawals
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A Choice of Purchase Plans
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Telephone Transactions
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24 Hour Information
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Alliance(R)
Mutual funds without the Mystery/TM/

(R)/SM These are registered marks used under licenses from the owner,
Alliance Capital Management L.P.

3
<PAGE>

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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.

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% None
during the
first year,
decreasing 1.0%
annually to 0%
after the
fourth year (b)
Exchange fee........................................................... None None None
</TABLE>

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(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1% deferred sales
charge on redemptions within one year of purchase. See "Purchase and Sale of
Shares--How to Buy Shares" -pages 39 and 40.

(b) Class B shares of each Fund other than Premier Growth Fund automatically
convert to Class A shares after eight years and the Class B shares of
Premier Growth Fund convert to Class A shares after six years. See "Purchase
and Sale of Shares--How to Buy Shares" -pages 39 and 40.

- --------------------------------------------------------------------------------

Please refer to the footnotes on page 6.

4
<PAGE>

<TABLE>
<CAPTION>
Operating Expenses Examples
- ------------------------------------------------------------------ ------------------------------------------------------------
Technology Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 65 $ 25 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 96 $ 76 $ 75
Other expenses (a) .36% .43% .41% After 5 years $129 $130 $130 $129
---- ---- ----
Total fund After 10 years $231 $258(b) $258(b) $275
operating expenses 1.66% 2.43% 2.41%
==== ==== ====
<CAPTION>
Quasar Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 65 $ 25 $ 25
12b-1 fees .21% 1.00% 1.00% After 3 years $ 93 $ 98 $ 78 $ 77
Other expenses (a) .46% .50% .48% After 5 years $129 $133 $133 $132
---- ---- ----
Total fund After 10 years $232 $263(b) $263(b) $282
operating expenses 1.67% 2.50% 2.48%
==== ==== ====
<CAPTION>
International Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 61 $ 68 $ 28 $ 28
12b-1 fees .18% 1.00% 1.00% After 3 years $100 $106 $ 86 $ 86
Other expenses (a) .72% .78% .78% After 5 years $141 $147 $147 $147
---- ---- ----
Total fund After 10 years $255 $290(b) $290(b) $311
operating expenses 1.90% 2.78% 2.78%
==== ==== ====
<CAPTION>
Worldwide Privatization Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 69 $ 75 $ 35 $ 35
12b-1 fees .30% 1.00% 1.00% After 3 years $124 $126 $106 $106
Other expenses (a) 1.45% 1.45% 1.45% After 5 years $182 $179 $179 $179
---- ---- ----
Total fund After 10 years $337 $357(b) $357(b) $373
operating expenses 2.75% 3.45% 3.45%
==== ==== ====
<CAPTION>
New Europe Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.07% 1.07% 1.07% After 1 year $ 63 $ 68 $ 28 $ 28
12b-1 fees .30% 1.00% 1.00% After 3 years $104 $106 $ 86 $ 86
Other expenses (a) .69% .69% .69% After 5 years $149 $146 $146 $146
---- ---- ----
Total fund After 10 years $271 $292(b) $292(b) $309
operating expenses 2.06% 2.76% 2.76%
==== ==== ====
<CAPTION>
All-Asia Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 64 $ 69 $ 29 $ 29
12b-1 fees .30% 1.00% 1.00% After 3 years $108 $109 $ 89 $ 89
Other expenses After 5 years $154 $152 $152 $152
Administration fees (f) .15% .15% .15% After 10 years $283 $304(b) $304(b) $320
Other operating expenses (a) .73% .73% .73%
---- ---- ----
Total other expenses .88% .88% .88%
---- ---- ----
Total fund
operating expenses 2.18% 2.88% 2.88%
==== ==== ====
<CAPTION>
Global Small Cap Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 66 $ 72 $ 32 $ 32
12b-1 fees .30% 1.00% 1.00% After 3 years $115 $117 $ 97 $ 97
Other expenses (a) 1.12% 1.15% 1.13% After 5 years $166 $165 $165 $164
---- ---- ----
Total fund After 10 years $306 $329(b) $329(b) $344
operating expenses 2.42% 3.15% 3.13%
==== ==== ====
<CAPTION>
Strategic Balanced Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees
(after waiver) (c) .45% .45% .45% After 1 year $ 56 $ 61 $ 21 $ 21
12b-1 fees .30% 1.00% 1.00% After 3 years $ 85 $ 86 $ 66 $ 66
Other expenses (a) After 5 years $116 $113 $113 $113
(after reimbursement) (d) .65% .65% .65% After 10 years $203 $225(b) $225(b) $243
---- ---- ----
Total fund
operating expenses (d) 1.40% 2.10% 2.10%
==== ==== ====
</TABLE>

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Please refer to the footnotes on page 6.

5
<PAGE>

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+ Assumes redemption at end of period.

++ Assumes no redemption at end of period.

(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance, based on a fixed dollar amount
charged to the Fund for each shareholder's account.

(b) Assumes Class B shares converted to Class A shares after eight years, or
six years with respect to Premier Growth Fund.

(c) Net of voluntary fee waiver. In the absence of such waiver, management
fees would be .75% for Strategic Balanced Fund.

(d) Net of voluntary fee waiver and expense reimbursement. In the absence of
such waiver and reimbursement, annualized other expenses for Strategic
Balanced Fund would have been 1.19%, 1.19% and 1.19%, respectively, for
Class A, Class B and Class C shares, and annualized total fund operating
expenses for Strategic Balanced Fund would have been 1.94%, 2.64% and 2.64%,
respectively, for Class A, Class B and Class C shares.

(e) Net of expense reimbursements. Absent expense reimbursements, total fund
operating expenses for Utility Income Fund would be 27.21%, 14.42% and
14.42%, respectively, for Class A, Class B and Class C shares.

(f) Reflects the fees payable by All-Asia Fund to Alliance pursuant to an
administration agreement.

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 Rules of Fair Practice 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. The information shown in the table for Alliance
Fund, Growth Fund, Technology Fund, New Europe Fund, Global Small Cap Fund,
Strategic Balanced Fund, Balanced Shares and Income Builder Fund reflects
annualized expenses based on the Funds' most recent fiscal periods. "Total Fund
Operating Expenses" for Utility Income Fund are based on estimated amounts for
the Funds' current fiscal year. See "Management of the Funds." "Other Expenses"
for Class A, Class B and Class C shares of All-Asia Fund and Class C shares of
Worldwide Privatization Fund are based on estimated amounts for each Fund's
current fiscal year. The management fee rates of Growth Fund, Premier Growth
Fund, Counterpoint Fund, Strategic Balanced Fund, Technology Fund, International
Fund, Worldwide Privatization Fund, New Europe Fund, All-Asia Fund, Income
Builder Fund and Utility Income Fund are higher than those paid by most other
investment companies, but Alliance believes the fees are comparable to those
paid by investment companies of similar investment orientation. The expense
ratios for Class B and Class C shares of Counterpoint Fund, Technology Fund and
Quasar Fund, and for each Class of shares of Global Small Cap Fund and Worldwide
Privatization Fund, are higher than the expense ratios of most other mutual
funds, but are comparable to the expense ratios of mutual funds whose shares are
similarly priced. 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.

6
<PAGE>

- --------------------------------------------------------------------------------
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. The
information in the tables for Alliance Fund, Growth Fund, Premier Growth Fund,
Strategic Balanced Fund, Balanced Shares, Utility Income Fund, Worldwide
Privatization Fund and Growth and Income Fund has, except as noted otherwise,
been audited by Price Waterhouse LLP, the independent accountants for each Fund,
and for Counterpoint Fund, Technology Fund, Quasar Fund, International Fund, New
Europe Fund, Global Small Cap Fund and Income Builder Fund by Ernst & Young LLP,
the independent auditors for each Fund. A report of Price Waterhouse 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. Per share data and ratios are not presented for Class C
shares of Worldwide Privatization Fund since no such shares were outstanding
during the period presented below for that Fund. No information is presented for
All-Asia Fund since it commenced operations on November 23, 1994.

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 "Literature" telephone number
shown on the cover of this Prospectus.

7
<PAGE>

<TABLE>
<CAPTION>
Net Asset Net Realized Net Increase
Value and 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>
Alliance Fund
Class A
1/1/94 to 11/30/94**... $ 6.85 $ .01 $ (.23) $ (.22) $0.00 $ 0.00
Year ended 12/31/93.... 6.68 .02 .93 .95 (.02) (.76)
Year ended 12/31/92.... 6.29 .05 .87 .92 (.05) (.48)
Year ended 12/31/91.... 5.22 .07 1.70 1.77 (.07) (.63)
Year ended 12/31/90.... 6.87 .09 (.32) (.23) (.18) (1.24)
Year ended 12/31/89.... 5.60 .12 1.19 1.31 (.04) 0.00
Year ended 12/31/88.... 5.15 .08 .80 .88 (.08) (.35)
Year ended 12/31/87.... 6.87 .08 .27 .35 (.13) (1.94)
Year ended 12/31/86.... 11.15 .11 .87 .98 (.10) (5.16)
Year ended 12/31/85.... 9.18 .20 2.51 2.71 (.23) (.51)
Year ended 12/31/84.... 11.48 .24 (.84) (.60) (.24) (1.46)
Class B
1/1/94 to 11/30/94**... $ 6.76 $ (.03) $ (.23) $ (.26) $0.00 $ 0.00
Year ended 12/31/93.... 6.64 (.03) .91 .88 0.00 (.76)
Year ended 12/31/92.... 6.27 (.01)(b) .87 .86 (.01) (.48)
3/4/91++ to 12/31/91... 6.14 .01 (b) .79 .80 (.04) (.63)
Class C
1/1/94 to 11/30/94**... $ 6.77 $ (.03) $ (.24) $ (.27) $0.00 $ 0.00
5/3/93++ to 12/31/93... 6.67 (.02) .88 .86 0.00 (.76)

Growth Fund (i)
Class A
5/1/94 to 10/31/94**... $ 23.89 $ .09 $ 1.10 $ 1.19 $0.00 $ 0.00
Year ended 4/30/94..... 22.67 (.01)(c) 3.55 3.54 0.00 (2.32)
Year ended 4/30/93..... 20.31 .05 (c) 3.68 3.73 (.14) (1.23)
Year ended 4/30/92..... 17.94 .29 (c) 3.95 4.24 (.26) (1.61)
9/4/90++ to 4/30/91.... 13.61 .17 (c) 4.22 4.39 (.06) 0.00
Class B
5/1/94 to 10/31/94**... $ 20.27 $ .01 $ .93 $ .94 $0.00 $ 0.00
Year ended 4/30/94..... 19.68 (.07)(c) 2.98 2.91 0.00 (2.32)
Year ended 4/30/93..... 18.16 (.06)(c) 3.23 3.17 (.03) (1.62)
Year ended 4/30/92..... 16.88 .17 (c) 3.67 3.84 (.21) (2.35)
Year ended 4/30/91..... 14.38 .08 (c) 3.22 3.30 (.09) (.71)
Year ended 4/30/90..... 14.13 .01 (b)(c) 1.26 1.27 0.00 (1.02)
Year ended 4/30/89..... 12.76 (.01)(c) 2.44 2.43 0.00 (1.06)
10/23/87+ to 4/30/88... 10.00 (.02)(c) 2.78 2.76 0.00 0.00
Class C
5/1/94 to 10/31/94**... $ 20.28 $ .01 $ .93 $ .94 $0.00 $ 0.00
8/2/93++ to 4/30/94.... 21.47 (.02)(c) 1.15 1.13 0.00 (2.32)

Premier Growth Fund
Class A
Year ended 11/30/94.... $ 11.78 $ (.09) $ (.28) $ (.37) $0.00 $ 0.00
Year ended 11/30/93.... 10.79 (.05) 1.05 1.00 (.01) 0.00
9/28/92+ to 11/30/92... 10.00 .01 .78 .79 0.00 0.00
Class B
Year ended 11/30/94.... $ 11.72 $ (.15) $ (.28) $ (.43) $0.00 $ 0.00
Year ended 11/30/93.... 10.79 (.10) 1.03 .93 0.00 0.00
9/28/92+ to 11/30/92... 10.00 0.00 .79 .79 0.00 0.00
Class C
Year ended 11/30/94.... $ 11.72 $ (.09) $ (.33) $ (.42) $0.00 $ 0.00
5/3/93++ to 11/30/93... 10.48 (.05) 1.29 1.24 0.00 0.00

Counterpoint Fund
Class A
Year ended 9/30/94..... $ 20.89 $ (.10) $ (.82) $ (.92) $0.00 $(2.83)
Year ended 9/30/93..... 19.45 (.01) 2.60 2.59 (.04) (1.11)
Year ended 9/30/92..... 19.08 .13 1.76 1.89 (.16) (1.36)
Year ended 9/30/91..... 15.18 .17 4.92 5.09 (.20) (.99)
Year ended 9/30/90..... 19.86 .23 (3.63) (3.40) (.20) (1.08)
Year ended 9/30/89..... 15.02 .21 5.30 5.51 (.23) (.44)
Year ended 9/30/88..... 18.05 .27 (2.09) (1.82) (.26) (.95)
Year ended 9/30/87..... 14.26 .26 4.20 4.46 (.36) (.31)
Year ended 9/30/86..... 10.98 .37 3.31 3.68 (.35) (.09)
2/28/85+ to 9/30/85.... 10.00 .13 .85 .98 0.00 0.00
Class B
Year ended 9/30/94..... $ 20.82 $ (.08) $ (.97) $(1.05) $0.00 $(2.83)
5/3/93++ to 9/30/93.... 18.51 (.07) 2.38 2.31 0.00 0.00
Class C
Year ended 9/30/94..... $ 20.83 $ (.14) $ (.91) $(1.05) $0.00 $(2.83)
5/3/93++ to 9/30/93...... 18.51 (.05) 2.37 2.32 0.00 0.00
</TABLE>
- -------------------------------------------------------------------------------
Please refer to the footnotes on pages 14 and 15.

8
<PAGE>

Growth Fund (i)
Class A
5/1/94 to 10/31/94**... $ 0.00 $25.08 4.98% $167,800 1.35%* .86%* 24%
Year ended 4/30/94..... (2.32) 23.89 15.66 102,406 1.40 (f) .32 87
Year ended 4/30/93..... (1.37) 22.67 18.89 13,889 1.40 (f) .20 124
Year ended 4/30/92..... (1.87) 20.31 23.61 8,228 1.40 (f) 1.44 137
9/4/90++ to 4/30/91.... (.06) 17.94 32.40 713 1.40*(f) 1.99* 130
Class B
5/1/94 to 10/31/94**... $ 0.00 $21.21 4.64% $751,521 2.05%* .16%* 24%
Year ended 4/30/94..... (2.32) 20.27 14.79 394,227 2.10 (f) (.36) 87
Year ended 4/30/93..... (1.65) 19.68 18.16 56,704 2.15 (f) (.53) 124
Year ended 4/30/92..... (2.56) 18.16 22.75 37,845 2.15 (f) .78 137
Year ended 4/30/91..... (.80) 16.88 24.72 22,710 2.10 (f) .56 130
Year ended 4/30/90..... (1.02) 14.38 8.81 15,800 2.00 (f) .07 165
Year ended 4/30/89..... (1.06) 14.13 20.31 7,672 2.00 (f) (.03) 139
10/23/87+ to 4/30/88... 0.00 12.76 27.60 1,938 2.00*(f) (.40)* 52
Class C
5/1/94 to 10/31/94**... $ 0.00 $21.22 4.64% $114,455 2.05%* .16%* 24%
8/2/93++ to 4/30/94.... (2.32) 20.28 5.27 64,030 2.10*(f) (.31)* 87

Premier Growth Fund
Class A
Year ended 11/30/94.... $ 0.00 $11.41 (3.14)% $ 35,146 1.96% (.67)% 98%
Year ended 11/30/93.... (.01) 11.78 9.26 40,415 2.18 (.61) 68
9/28/92+ to 11/30/92... 0.00 10.79 7.90 4,893 2.17*(f) .91*(f) 0
Class B
Year ended 11/30/94.... $0.00 $11.29 (3.67)% $139,988 2.47% (1.19)% 98%
Year ended 11/30/93.... 0.00 11.72 8.64 151,600 2.70 (1.14) 68
9/28/92+ to 11/30/92... 0.00 10.79 7.90 19,941 2.68*(f) .35*(f) 0
Class C
Year ended 11/30/94.... $0.00 $11.30 (3.58)% $ 7,332 2.47% (1.16)% 98%
5/3/93++ to 11/30/93... 0.00 11.72 11.83 3,899 2.79* (1.35)* 68

Counterpoint Fund
Class A
Year ended 9/30/94..... $(2.83) $17.14 (4.91)% $ 42,712 1.94% (.43)% 25%
Year ended 9/30/93..... (1.15) 20.89 13.76 67,356 1.79 (.04) 48
Year ended 9/30/92..... (1.52) 19.45 10.76 70,876 1.62 .79 39
Year ended 9/30/91..... (1.19) 19.08 35.39 59,690 1.64 1.02 38
Year ended 9/30/90..... (1.28) 15.18 (17.91) 49,198 1.72 1.38 57
Year ended 9/30/89..... (.67) 19.86 38.25 60,478 1.69 1.28 37
Year ended 9/30/88..... (1.21) 15.02 (8.94) 44,789 1.76 1.93 33
Year ended 9/30/87..... (.67) 18.05 32.24 57,752 1.64 (f) 1.68(f) 24
Year ended 9/30/86..... (.40) 14.26 34.00 36,713 1.55 (f) 2.88(f) 17
2/28/85+ to 9/30/85.... 0.00 10.98 9.80 22,365 1.50*(f) 3.20*(f) 6
Class B
Year ended 9/30/94..... $(2.83) $16.94 (5.63)% $ 527 2.73% (1.17)% 25%
5/3/93++ to 9/30/93.... 0.00 20.82 12.48 120 3.35* (1.60)* 48
Class C
Year ended 9/30/94..... $(2.83) $16.95 (5.62)% $ 418 2.66% (1.11)% 25%
5/3/93++ to 9/30/93.... 0.00 20.83 12.53 242 3.22* (1.34)* 48
</TABLE>
- -------------------------------------------------------------------------------

9
<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>
Technology Fund
Class A
1/1/94 to 11/30/94**...... $26.12 $(.32) $ 6.18 $ 5.86 $0.00 $ 0.00
Year ended 12/31/93....... 28.20 (.29) 6.39 6.10 0.00 (8.18)
Year ended 12/31/92....... 26.38 (.22) (b) 4.31 4.09 0.00 (2.27)
Year ended 12/31/91....... 19.44 (.02) 10.57 10.55 0.00 (3.61)
Year ended 12/31/90....... 21.57 (.03) (.56) (.59) 0.00 (1.54)
Year ended 12/31/89....... 20.35 0.00 1.22 1.22 0.00 0.00
Year ended 12/31/88....... 20.22 (.03) .16 .13 0.00 0.00
Year ended 12/31/87....... 23.11 (.10) 4.54 4.44 0.00 (7.33)
Year ended 12/31/86....... 20.64 (.14) 2.62 2.48 (.01) 0.00
Year ended 12/31/85....... 16.52 .02 4.30 4.32 (.20) 0.00
Year ended 12/31/84....... 21.44 .20 (3.72) (3.52) (.01) (1.39)
Class B
1/1/94 to 11/30/94**...... $25.98 $(.23) $ 5.86 $ 5.63 $0.00 $ 0.00
5/3/93++ to 12/31/93...... 27.44 (.12) 6.84 6.72 0.00 (8.18)
Class C
1/1/94 to 11/30/94**...... $25.98 $(.24) $ 5.87 $ 5.63 $0.00 $ 0.00
5/3/93++ to 12/31/93...... 27.44 (.13) 6.85 6.72 0.00 (8.18)
Quasar Fund
Class A
Year ended 9/30/94........ $24.43 $(.60) $ (.36) $ (.96) $0.00 $ (.82)
Year ended 9/30/93........ 19.34 (.41) 6.38 5.97 0.00 (.88)
Year ended 9/30/92........ 21.27 (.24) (1.53) (1.77) 0.00 (.16)
Year ended 9/30/91........ 15.67 (.05) 5.71 5.66 (.06) 0.00
Year ended 9/30/90........ 24.84 .03 (b) (7.18) (7.15) 0.00 (2.02)
Year ended 9/30/89........ 17.60 .02 (b) 7.40 7.42 0.00 (.18)
Year ended 9/30/88........ 24.47 (.08) (2.08) (2.16) 0.00 (4.71)
Year ended 9/30/87(d)..... 21.80 (.14) 5.88 5.74 0.00 (3.07)
Year ended 9/30/86(d)..... 17.25 0.00 5.54 5.54 (.03) (.96)
Year ended 9/30/85(d)..... 14.67 .04 2.87 2.91 (.11) (.22)
Year ended 9/30/84(d)..... 20.73 .12 (2.24) (2.12) (.05) (3.89)
Class B
Year ended 9/30/94........ $23.88 $(.53) $ (.61) $(1.14) $0.00 $ (.82)
Year ended 9/30/93........ 19.07 (.18) 5.87 5.69 0.00 (.88)
Year ended 9/30/92........ 21.14 (.39) (1.52) (1.91) 0.00 (.16)
Year ended 9/30/91........ 15.66 (.13) 5.67 5.54 (.06) 0.00
9/17/90++ to 9/30/90...... 17.17 (.01) (1.50) (1.51) 0.00 0.00
Class C
Year ended 9/30/94........ $23.88 $(.36) $ (.78) $(1.14) $0.00 $ (.82)
5/3/93++ to 9/30/93....... 20.33 (.10) 3.65 3.55 0.00 0.00
International Fund
Class A
Year ended 6/30/94........ $16.01 $(.09) $ 3.02 $ 2.93 $0.00 $ (.56)
Year ended 6/30/93........ 14.98 (.01) 1.17 1.16 (.04) (.09)
Year ended 6/30/92........ 14.00 .01 (b) 1.04 1.05 (.07) 0.00
Year ended 6/30/91........ 17.99 .05 (3.54) (3.49) (.03) (.47)
Year ended 6/30/90........ 17.24 .03 2.87 2.90 (.04) (2.11)
Year ended 6/30/89........ 16.09 .05 3.73 3.78 (.13) (2.50)
Year ended 6/30/88........ 23.70 .17 (1.22) (1.05) (.21) (6.35)
Year ended 6/30/87........ 22.02 .15 4.31 4.46 (.03) (2.75)
Year ended 6/30/86........ 11.94 .02 10.50 10.52 (.03) (.41)
Year ended 6/30/85........ 10.77 .06 (c) 1.79 1.85 (.10) (.58)
Class B
Year ended 6/30/94........ $15.74 $(.19) (b) $ 2.91 $ 2.72 $0.00 $ (.56)
Year ended 6/30/93........ 14.81 (.12) 1.14 1.02 0.00 (.09)
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) (.47)
Class C
Year ended 6/30/94........ $15.74 $(.11) $ 2.84 $ 2.73 $0.00 $ (.56)
4/30/93++ to 6/30/93...... 15.93 0.00 (.19) (.19) 0.00 0.00
Worldwide Privatization Fund
Class A
6/2/94+ to 6/30/94........ $10.00 $ .01 $ (.26) $ (.25) $0.00 $ 0.00
Class B
6/2/94+ to 6/30/94........ $10.00 $ .00 $ (.26) $ (.26) $0.00 $ 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on pages 14 and 15.

10
<PAGE>

<TABLE>
<CAPTION>
Total Net Assets Ratio of
Total Net Asset Investment At End Of Ratio Of Net Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of on Net Asset (000's To Average To Average Portfolio
Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- --------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Technology Fund
Class A
1/1/94 to 11/30/94**...... $ 0.00 $31.98 22.44% $202,929 1.66%* (1.22)%* 55%
Year ended 12/31/93....... (8.18) 26.12 21.63 173,732 1.73 (1.32) 64
Year ended 12/31/92....... (2.27) 28.20 15.50 173,566 1.61 (.90) 73
Year ended 12/31/91....... (3.61) 26.38 54.24 191,693 1.71 (.20) 134
Year ended 12/31/90....... (1.54) 19.44 (3.08) 131,843 1.77 (.18) 147
Year ended 12/31/89....... 0.00 21.57 6.00 141,730 1.66 .02 139
Year ended 12/31/88....... 0.00 20.35 0.64 169,856 1.42(f) (.16)(f) 139
Year ended 12/31/87....... (7.33) 20.22 19.16 167,608 1.31(f) (.56)(f) 248
Year ended 12/31/86....... (.01) 23.11 12.03 147,733 1.13(f) (.57)(f) 141
Year ended 12/31/85....... (.20) 20.64 26.24 147,114 1.14(f) .07(f) 259
Year ended 12/31/84....... (1.40) 16.52 (16.44) 140,227 1.13(f) 1.13(f) 242
Class B
1/1/94 to 11/30/94**...... $ 0.00 $31.61 21.67% $ 18,397 2.43%* (1.95)%* 55%
5/3/93++ to 12/31/93...... (8.18) 25.98 24.49 1,645 2.57* (2.30)* 64
Class C
1/1/94 to 11/30/94**...... $ 0.00 $31.61 21.67% $ 7,470 2.41%* (1.94)%* 55%
5/3/93++ to 12/31/93...... (8.18) 25.98 24.49 1,096 2.52* (2.25)* 64
Quasar Fund
Class A
Year ended 9/30/94........ $ (.82) $22.65 (4.05)% $155,470 1.67% (1.15)% 110%
Year ended 9/30/93........ (.88) 24.43 31.58 228,874 1.65 (1.00) 102
Year ended 9/30/92........ (.16) 19.34 (8.34) 252,140 1.62 (.89) 128
Year ended 9/30/91........ (.06) 21.27 36.28 333,806 1.64 (.22) 118
Year ended 9/30/90........ (2.02) 15.67 (30.81) 251,102 1.66 .16 90
Year ended 9/30/89........ (.18) 24.84 42.68 263,099 1.73 .10 90
Year ended 9/30/88........ (4.71) 17.60 (8.61) 90,713 1.28(f) (.40)(f) 58
Year ended 9/30/87(d)..... (3.07) 24.47 29.61 134,676 1.18(f) (.56)(f) 76
Year ended 9/30/86(d)..... (.99) 21.80 33.79 144,959 1.18(f) .02 (f) 84
Year ended 9/30/85(d)..... (.33) 17.25 20.29 77,067 1.18 .22 77
Year ended 9/30/84(d)..... (3.94) 14.67 (12.55) 48,654 1.18 .83 47
Class B
Year ended 9/30/94........ $ (.82) $21.92 (4.92)% $ 13,901 2.50% (1.98)% 110%
Year ended 9/30/93........ (.88) 23.88 30.53 16,779 2.46 (1.81) 102
Year ended 9/30/92........ (.16) 19.07 (9.05) 9,454 2.42 (1.67) 128
Year ended 9/30/91........ (.06) 21.14 35.54 7,346 2.41 (1.28) 118
9/17/90++ to 9/30/90...... 0.00 15.66 (8.79) 71 2.09* (.26)* 90
Class C
Year ended 9/30/94........ $ (.82) $21.92 (4.92)% $ 1,220 2.48% (1.96)% 110%
5/3/93++ to 9/30/93....... 0.00 23.88 17.46 118 2.49* (1.90)* 102
International Fund
Class A
Year ended 6/30/94........ $ (.56) $18.38 18.68% $201,916 1.90% (.50)% 97%
Year ended 6/30/93........ (.13) 16.01 7.86 161,048 1.88 (.14) 94
Year ended 6/30/92........ (.07) 14.98 7.52 179,807 1.82 .07 72
Year ended 6/30/91........ (.50) 14.00 (19.34) 214,442 1.73 .37 71
Year ended 6/30/90........ (2.15) 17.99 16.98 265,999 1.45 .33 37
Year ended 6/30/89........ (2.63) 17.24 27.65 166,003 1.41 .39 87
Year ended 6/30/88........ (6.56) 16.09 (4.20) 132,319 1.41 .84 55
Year ended 6/30/87........ (2.78) 23.70 23.05 194,716 1.30 .77 58
Year ended 6/30/86........ (.44) 22.02 90.87 139,326 1.29 .16 62
Year ended 6/30/85........ (.68) 11.94 18.28 71,707 1.35(c) .73(c) 40
Class B
Year ended 6/30/94........ $ (.56) $17.90 17.65% $ 29,943 2.78% (1.15)% 97%
Year ended 6/30/93........ (.09) 15.74 6.98 6,363 2.70 (.96) 94
Year ended 6/30/92........ (.03) 14.81 6.54 5,585 2.68 (.70) 72
9/17/90++ to 6/30/91...... (.50) 13.93 (6.97) 3,515 3.39* .84* 71
Class C
Year ended 6/30/94........ $ (.56) $17.91 17.72% $ 13,503 2.78% (1.12)% 97%
4/30/93++ to 6/30/93...... 0.00 15.74 (1.19) 229 2.57* .08* 94
Worldwide Privatization Fund
Class A
6/2/94+ to 6/30/94........
Class B $ 0.00 $ 9.75 (2.50)% $ 4,990 2.75%* 1.03%* 0%
6/2/94+ to 6/30/94........ $ 0.00 $ 9.74 (2.60)% $ 22,859 3.45%* .33%* 0%
</TABLE>
- --------------------------------------------------------------------------------

11
<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>
New Europe Fund
Class A
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) (.44)
Class B
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
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
Global Small Cap Fund
Class A
Period ended 7/31/94**.... $11.24 $(.15) $ (.01) $ (.16) $0.00 $ 0.00
Year ended 9/30/93........ 9.33 (.15) 2.49 2.34 0.00 (.43)
Year ended 9/30/92........ 10.55 (.16) (1.03) (1.19) 0.00 (.03)
Year ended 9/30/91........ 8.26 (.06) 2.35 2.29 0.00 0.00
Year ended 9/30/90........ 15.54 (.05) (b) (4.12) (4.17) 0.00 (3.11)
Year ended 9/30/89........ 11.41 (.03) 4.25 4.22 0.00 (.09)
Year ended 9/30/88........ 15.07 (.05) (1.83) (1.88) 0.00 (1.78)
Year ended 9/30/87........ 15.47 (.07) 4.19 4.12 (.04) (4.48)
Year ended 9/30/86........ 12.94 .05 3.74 3.79 (.04) (1.22)
Year ended 9/30/85........ 13.75 .07 .25 .32 (.12) (1.01)
Class B
Period ended 7/31/94**.... $11.00 $(.17)(b) $ (.05) $ (.22) $0.00 $ 0.00
Year ended 9/30/93........ 9.20 (.15) 2.38 2.23 0.00 (.43)
Year ended 9/30/92........ 10.49 (.20) (1.06) (1.26) 0.00 (.03)
Year ended 9/30/91........ 8.26 (.07) 2.30 2.23 0.00 0.00
9/17/90++ to 9/30/90...... 9.12 (.01) (.85) (.86) 0.00 0.00
Class C
Period ended 7/31/94**.... $11.00 $(.17)(b) $ (.04) $ (.21) $0.00 $ 0.00
5/3/93++ to 9/30/93....... 9.86 (.05) 1.19 1.14 0.00 0.00
Strategic Balanced Fund (i)
Class A
Period ended 7/31/94**.... $16.46 $ .07 (c) $ (.27) $ (.20) $0.00 $ 0.00
Year ended 4/30/94........ 16.97 .16 (c) .74 .90 (.24) (1.17)
Year ended 4/30/93........ 17.06 .39 (c) .59 .98 (.42) (.65)
Year ended 4/30/92........ 14.48 .27 (c) 2.80 3.07 (.17) (.32)
9/4/90++ to 4/30/91....... 12.51 .34 (c) 1.66 2.00 (.03) 0.00
Class B
Period ended 7/31/94**.... $14.30 $ .03 (c) $ (.23) $ (.20) $0.00 $ 0.00
Year ended 4/30/94........ 14.92 .06 (c) .63 .69 (.14) (1.17)
Year ended 4/30/93........ 15.51 .23 (c) .53 .76 (.25) (1.10)
Year ended 4/30/92........ 13.96 .22 (c) 2.70 2.92 (.29) (1.08)
Year ended 4/30/91........ 12.40 .43 (c) 1.60 2.03 (.47) 0.00
Year ended 4/30/90........ 11.97 .50 (b)(c) .60 1.10 (.25) (.42)
Year ended 4/30/89........ 11.45 .48 (c) 1.11 1.59 (.30) (.77)
10/23/87+ to 4/30/88...... 10.00 .13 (c) 1.38 1.51 (.06) 0.00
Class C
Period ended 7/31/94**.... $14.31 $ .03 (c) $ (.23) $ (.20) $0.00 $ 0.00
8/2/93++ to 4/30/94....... 15.64 .15 (c) (.17) (.02) (.14) (1.17)
Balanced Shares
Class A
Period ended 7/31/94**.... $14.40 $ .29 $ (.74) $ (.45) $(.28) $ (.29)
Year ended 9/30/93........ 13.20 .34 1.29 1.63 (.43) 0.00
Year ended 9/30/92........ 12.64 .44 .57 1.01 (.45) 0.00
Year ended 9/30/91........ 10.41 .46 2.17 2.63 (.40) 0.00
Year ended 9/30/90........ 14.13 .45 (2.14) (1.69) (.40) (1.63)
Year ended 9/30/89........ 12.53 .42 2.18 2.60 (.46) (.54)
Year ended 9/30/88........ 16.33 .46 (1.07) (.61) (.44) (2.75)
Year ended 9/30/87........ 14.64 .67 1.62 2.29 (.60) 0.00
Year ended 9/30/86........ 11.74 .68 3.40 4.08 (.65) (.53)
Year ended 9/30/85........ 10.41 .68 1.67 2.35 (.81) (.21)(j)
Class B
Period ended 7/31/94**.... $14.27 $ .22 $ (.75) $ (.53) $(.22) $ (.29)
Year ended 9/30/93........ 13.13 .29 1.22 1.51 (.37) 0.00
Year ended 9/30/92........ 12.61 .37 .54 .91 (.39) 0.00
2/4/91++ to 9/30/91....... 11.84 .25 .80 1.05 (.28) 0.00
Class C
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
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on pages 14 and 15.

12
<PAGE>

<TABLE>
<CAPTION>
Total Net Assets Ratio of
Total Net Asset Investment At End Of Ratio Of Net Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of on Net Asset (000's To Average To Average Portfolio
Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- --------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
New Europe Fund
Class A
Period ended 7/31/94**.... $ 0.00 $12.66 1.04% $ 86,739 2.06%* 1.85%* 35%
Year ended 2/28/94........ 0.00 12.53 33.73 90,372 2.30 .17 94
Year ended 2/28/93........ (.15) 9.37 (2.82) 79,285 2.25 .47 125
Year ended 2/29/92........ (.02) 9.81 .74 108,510 2.24 .16 34
4/2/90+ to 2/28/91........ (.70) 9.76 (5.63) 188,016 1.52* 2.71* 48
Class B
Period ended 7/31/94**.... $ 0.00 $12.41 .73% $ 31,404 2.76%* 1.15%* 35%
Year ended 2/28/94........ 0.00 12.32 32.76 20,729 3.02 (.52) 94
Year ended 2/28/93........ (.11) 9.28 (3.49) 1,732 3.00 (.50) 125
3/5/91++ to 2/29/92....... (.02) 9.74 .03 1,423 3.02* (.71)* 34
Class C
Period ended 7/31/94**.... $ 0.00 $12.42 .73% $ 11,875 2.76%* 1.15%* 35%
5/3/93++ to 2/28/94....... 0.00 12.33 20.77 10,886 3.00* (.52)* 94
Global Small Cap Fund
Class A
Period ended 7/31/94**.... $ 0.00 $11.08 (1.42)% $ 61,372 2.42%* (1.26)%* 78%
Year ended 9/30/93........ (.43) 11.24 25.83 65,713 2.53 (1.13) 97
Year ended 9/30/92........ (.03) 9.33 (11.30) 58,491 2.34 (.85) 108
Year ended 9/30/91........ 0.00 10.55 27.72 84,370 2.29 (.55) 104
Year ended 9/30/90........ (3.11) 8.26 (31.90) 68,316 1.73 (.46) 89
Year ended 9/30/89........ (.09) 15.54 37.34 113,583 1.56 (.17) 106
Year ended 9/30/88........ (1.78) 11.41 (8.11) 90,071 1.54(f) (.50)(f) 74
Year ended 9/30/87........ (4.52) 15.07 34.11 113,305 1.41(f) (.44)(f) 98
Year ended 9/30/86........ (1.26) 15.47 31.76 90,354 1.22(f) .30(f) 107
Year ended 9/30/85........ (1.13) 12.94 2.74 76,220 1.27(f) .51(f) 72
Class B
Period ended 7/31/94**.... $ 0.00 $10.78 (2.00)% $ 3,889 3.15%* (1.93)%* 78%
Year ended 9/30/93........ (.43) 11.00 24.97 1,150 3.26 (1.85) 97
Year ended 9/30/92........ (.03) 9.20 (12.03) 819 3.11 (1.31) 108
Year ended 9/30/91........ 0.00 10.49 27.00 121 2.98 (1.39) 104
9/17/90++ to 9/30/90...... 0.00 8.26 (9.43) 183 2.61* (1.30)* 89
Class C
Period ended 7/31/94**.... $ 0.00 $10.79 (1.91)% $ 1,330 3.13%* (1.92)%* 78%
5/3/93++ to 9/30/93....... 0.00 11.00 11.56 261 3.75* (2.51)* 97
Strategic Balanced Fund (i)
Class A
Period ended 7/31/94**.... $ 0.00 $16.26 (1.22)% $ 9,640 1.40%*(f) 1.63%* 21%
Year ended 4/30/94........ (1.41) 16.46 5.06 9,822 1.40 (f) 1.67 139
Year ended 4/30/93........ (1.07) 16.97 5.85 8,637 1.40 (f) 2.29 98
Year ended 4/30/92........ (.49) 17.06 20.96 6,843 1.40 (f) 1.92 103
9/4/90++ to 4/30/91....... (.03) 14.48 16.00 443 1.40*(f) 3.54* 137
Class B
Period ended 7/31/94**.... $ 0.00 $14.10 (1.40)% $ 43,578 2.10%*(f) .92%* 21%
Year ended 4/30/94........ (1.31) 14.30 4.29 43,616 2.10 (f) .93 139
Year ended 4/30/93........ (1.35) 14.92 4.96 36,155 2.15 (f) 1.55 98
Year ended 4/30/92........ (1.37) 15.51 20.14 31,842 2.15 (f) 1.34 103
Year ended 4/30/91........ (.47) 13.96 16.73 22,552 2.10 (f) 3.23 137
Year ended 4/30/90........ (.67) 12.40 8.85 19,523 2.00 (f) 3.85 120
Year ended 4/30/89........ (1.07) 11.97 14.66 5,128 2.00 (f) 4.31 103
10/23/87+ to 4/30/88...... (.06) 11.45 15.10 2,344 2.00*(f) 2.44* 72
Class C
Period ended 7/31/94**.... $ 0.00 $14.11 (1.40)% $ 4,317 2.10%*(f) .93%* 21%
8/2/93++ to 4/30/94....... (1.31) 14.31 .45 4,289 2.10 (f) .69 139
Balanced Shares
Class A
Period ended 7/31/94**.... $ (.57) $13.38 (3.21)% $157,637 1.27%* 2.50%* 116%
Year ended 9/30/93........ (.43) 14.40 12.52 172,484 1.35 2.50 188
Year ended 9/30/92........ (.45) 13.20 8.14 143,883 1.40 3.26 204
Year ended 9/30/91........ (.40) 12.64 25.52 154,230 1.44 3.75 70
Year ended 9/30/90........ (2.03) 10.41 (13.12) 140,913 1.36 4.01 169
Year ended 9/30/89........ (1.00) 14.13 22.27 159,290 1.42 3.29 132
Year ended 9/30/88........ (3.19) 12.53 (1.10) 111,515 1.42 3.74 190
Year ended 9/30/87........ (.60) 16.33 15.80 129,786 1.17 4.14 136
Year ended 9/30/86........ (1.18) 14.64 35.01 78,900 .99 4.78 26
Year ended 9/30/85........ (1.02) 11.74 22.91 40,502 1.15 5.85 19
Class B
Period ended 7/31/94**.... $ (.51) $13.23 (3.80)% $ 14,347 2.05%* 1.73%* 116%
Year ended 9/30/93........ (.37) 14.27 11.65 12,789 2.13 1.72 188
Year ended 9/30/92........ (.39) 13.13 7.32 6,499 2.16 2.46 204
2/4/91++ to 9/30/91....... (.28) 12.61 8.96 1,830 2.13* 3.19* 70
Class C
Period ended 7/31/94**.... $ (.51) $13.24 (3.80)% $ 6,254 2.03%* 1.81%* 116%
5/3/93++ to 9/30/93....... (.17) 14.28 6.01 1,487 2.29* 1.47* 188
</TABLE>
- --------------------------------------------------------------------------------

13
<PAGE>

Class A
3/25/94++ to 10/31/94.... $10.00 $ .96 $(1.02) $ (.06) $(.05)(g) $ (.20)

Class B
3/25/94++ to 10/31/94.... $10.00 $ .88 $ (.98) $ (.10) $(.06)(g) $ (.16)

Class C
Year ended 10/31/94...... $10.47 $ .50 $ (.85) $ (.35) $(.11)(g) $ (.35)
Year ended 10/31/93...... 9.80 .52 .51 1.03 (.36) 0.00
Year ended 10/31/92...... 10.00 .55 (.28) .27 (.47) 0.00
10/25/91+ to 10/31/91.... 10.00 .01 0.00 .01 (.01) 0.00

Utility Income Fund

Class A
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
Year ended 11/30/94...... $ 9.91 $ .37 (c) $ (.91) $ (.54) $(.41) $ 0.00
10/18/93+ to 11/30/93.... 10.00 .01 (c) (.10) (.09) 0.00 0.00

Class C
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
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)
Year ended 10/31/87...... 3.52 .11 (.03) .08 (.12) 0.00
Year ended 10/31/86...... 3.01 .12 .92 1.04 (.13) (.40)
Year ended 10/31/85...... 2.93 .14 .42 .56 (.15) (.33)
Year ended 10/31/84...... 3.20 .14 .03 .17 (.13) (.31)

Class B
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
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
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

+ Commencement of operations.
++ Commencement of distribution.
* Annualized.
** Reflects newly adopted 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 charge or
contingent deferred sales charge is 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 expense reimbursement.
(d) Adjusted for a 200% stock dividend paid to shareholders of record on
January 15, 1988.
(e) Net of offering costs of ($.05).
(f) Net of expenses assumed and/or waived/reimbursed. If GROWTH FUND had borne
all expenses, the expense ratios would have been, with respect to Class A
shares, 8.79% (annualized) for 1991, 1.94% for 1992, 1.84% for 1993 and
1.46% for the fiscal period ended April 30, 1994; with respect to Class B
shares, 13.92% (annualized) for 1988, 7.03% for 1989, 3.62% for 1990, 3.06%
for 1991, 2.65% for 1992, 2.52% for 1993 and 2.13% for the fiscal period
ended April 30, 1994; and with respect to Class C shares, 2.13% (annualized
for the fiscal period ended April 30, 1994. If PREMIER GROWTH FUND had
borne all expenses, the expense ratios would have been 3.33% and 3.78% for
Class A and Class B shares, respectively; and net investment income ratios
would have been (.25)% and (.75)% for Class A and Class B shares,
respectively. If COUNTERPOINT FUND had borne all expenses, the expense
ratios for Class A shares would have been 1.77%, 1.60% and 1.73% for the
periods ended in 1985, 1986 and 1987, respectively; and the investment
income ratios for Class A shares would have been 2.93% for 1985, 2.83% for
1986 and 1.51% for 1987. If TECHNOLOGY FUND had borne all expenses, the
expense ratios would have been 1.39%, 1.43%, 1.40%, 1.59% and 1.73% for the
periods ended in 1984, 1985, 1986, 1987, and 1988, respectively; and the
investment income ratios would have been .87% for

14
<PAGE>

<TABLE>
<CAPTION>
Total Net Assets Ratio Of
Total Net Asset Investment At End Of Ratio Of Net Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of on Net Asset (000's To Average To Average Portfolio
Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- --------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>

Income Builder Fund (h)

Class A
3/25/94++ to 10/31/94.... $ (.25) $ 9.69 (.54)% $ 600 2.52%* 6.11%* 126%

Class B
3/25/94++ to 10/31/94.... $ (.22) $ 9.68 (.99)% $ 1,998 3.09%* 5.07%* 126%

Class C
Year ended 10/31/94...... $ (.46) $ 9.66 (3.44)% $ 64,027 2.67% 3.82% 126%
Year ended 10/31/93...... (.36) 10.47 10.65 106,034 2.32 6.85 101
Year ended 10/31/92...... (.47) 9.80 2.70 152,617 2.33 5.47 108
10/25/91+ to 10/31/91.... (.01) 10.00 .11 41,813 0.00* (f) .94* 0

Utility Income Fund

Class A
Year ended 11/30/94...... $ (.48) $ 8.97 (4.86)% $ 1,068 1.50%(f) 4.13%(f) 30%
10/18/93+ to 11/30/93.... 0.00 9.92 (.80) 229 1.50*(f) 2.35*(f) 11

Class B
Year ended 11/30/94...... $ (.41) $ 8.96 (5.59)% $ 2,352 2.20%(f) 3.53%(f) 30%
10/18/93+ to 11/30/93.... 0.00 9.91 (.90) 244 2.20*(f) 2.84*(f) 11

Class C
Year ended 11/30/94...... $ (.41) $ 8.97 (5.58)% $ 2,651 2.20%(f) 3.60%(f) 30%
10/27/93+ to 11/30/93.... 0.00 9.92 (.80) 18 2.20*(f) 3.08*(f) 11

Growth and Income Fund

Class A
Year ended 10/31/94...... $ (.24) $ 2.35 (.67)% $414,386 1.03% 2.36% 68%
Year ended 10/31/93...... (.22) 2.61 14.98 459,372 1.07 2.38 91
Year ended 10/31/92...... (.21) 2.48 7.23 417,018 1.09 2.63 104
Year ended 10/31/91...... (.39) 2.52 31.03 409,597 1.14 2.74 84
Year ended 10/31/90...... (.53) 2.28 (8.55) 314,670 1.09 3.40 76
Year ended 10/31/89...... (.56) 3.02 21.59 377,168 1.08 3.49 79
Year ended 10/31/88...... (.86) 3.05 16.45 350,510 1.09 3.09 66
Year ended 10/31/87...... (.12) 3.48 2.04 348,375 .86 2.77 60
Year ended 10/31/86...... (.53) 3.52 34.92 347,679 .81 3.31 11
Year ended 10/31/85...... (.48) 3.01 19.53 275,681 .95 3.78 15
Year ended 10/31/84...... (.44) 2.93 5.41 258,428 .99 4.54 14

Class B
Year ended 10/31/94...... $ (.22) $ 2.34 (1.50)% $102,546 1.85% 1.56% 68%
Year ended 10/31/93...... (.20) 2.60 14.22 76,633 1.90 1.58 91
Year ended 10/31/92...... (.20) 2.47 6.22 29,656 1.90 1.69 104
2/8/91++ to 10/31/91..... (.04) 2.52 6.83 10,221 1.99* 1.67* 84

Class C
Year ended 10/31/94...... $ (.22) $ 2.34 (1.50)% $ 19,395 1.84% 1.61% 68%
5/3/93 ++ to 10/31/93.... (.02) 2.60 7.85 7,774 1.96* 1.45* 91

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1984, (.23)% for 1985, (.85)% for 1986, (.84)% for 1987, and (.46)% for
1988. If QUASAR FUND had borne all expenses, the expense ratios would have
been 1.37% for 1987 and 1.64% for 1988; and the investment income ratios
would have been (.75)% for 1987 and (.75)% for 1988. If GLOBAL SMALL CAP
FUND had borne all expenses, the expense ratios would have been 1.46% for
1985, 1.33% for 1986, 1.61% for 1987 and 1.86% for 1988; and the investment
income ratios would have been .32% for 1985, .19% for 1986, (.63)% for 1987
and (.82)% for 1988. If STRATEGIC BALANCED FUND had borne all expenses, the
expense ratios would have been, with respect to Class A Shares, 11.59%
(annualized) for 1991, 2.05% for 1992, 1.85% for 1993 and 1.70% for the
fiscal year ended April 30, 1994 and 1.94% (annualized) for the fiscal
period ended July 31, 1994; with respect to Class B Shares, 10.61%
(annualized) for 1988, 7.82% for 1989, 3.59% for 1990, 2.93% for 1991,
2.70% for 1992, 2.56% for 1993 and 2.42% for the fiscal year ended April
30, 1994 and 2.64% (annualized) for the fiscal period ended July 31, 1994;
and with respect to Class C shares, 2.07% (annualized) for the fiscal
period ended April 30, 1994 and 2.64% (annualized) for the fiscal period
ended July 31, 1994. If INCOME BUILDER FUND had borne all expenses, the
expense ratio would have been 1.99% (annualized). If UTILITY INCOME FUND
had borne all expenses, the expense ratios would have been 145.63%, 133.62%
and 148.03% for Class A, Class B and Class C shares, respectively, for the
fiscal period ended April 30, 1993 and 13.72%, 14.42% and 14.42% for Class
A, Class B, and Class C shares, respectively, for 1994.
(g) "Dividends from Net Investment Income" includes a return of capital. INCOME
BUILDER FUND had a return of capital with respect to Class A shares, for
the period ended October 31, 1994, of $(.01); with respect to Class B
shares, $(.01); and with respect to Class C shares, for the year ended
October 31, 1994, $.02).
(h) On March 25, 1994, all existing shares of INCOME BUILDER FUND, previously
known as Alliance Multi-Market Income and Growth Trust, were converted into
Class C shares.
(i) 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 and STRATEGIC BALANCED
FUND are series. On July 22, 1993, Alliance acquired the business and
substantially all assets of Equitable Capital and became investment adviser
to the Funds.
(j) Includes $(.08) distribution from paid-in capital.

15
<PAGE>

- --------------------------------------------------------------------------------
Glossary
- --------------------------------------------------------------------------------

The following terms are frequently used in this Prospectus.

Equity securities 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, 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.

Moody's is Moody's Investors Service, Inc.

S&P is Standard & Poor's Corporation.

Duff & Phelps is Duff & Phelps Credit Rating Co.

Fitch is Fitch Investors Service, 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.

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- --------------------------------------------------------------------------------
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 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. 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 with ratings 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. For the fiscal period ended
October 31, 1994, the Fund did not invest in any lower-rated 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 on 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 non-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 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.

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

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<PAGE>

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 or invest in illiquid securities if as a result more than 15% of its net
assets would be so invested.

Alliance Counterpoint Fund

Alliance Counterpoint Fund ("Counterpoint Fund") is a diversified investment
company that seeks long-term capital growth by investing principally in price-
depressed, undervalued or out-of-favor equity securities. Secondarily, the Fund
seeks current income. The Fund follows a flexible investment policy which allows
it to shift among equity alternatives depending on such factors as relative
growth rates, normalized price-earnings ratios and yields. It selects securities
based on fundamental business and financial factors (e.g., financial strength,
book values, asset values, earnings and dividends) and reasonable current
valuations (weighing the factors against market prices) and focuses on the
relationship of a company's earning power and dividend payout to the price of
its stock. The Fund's investment strategy can be characterized as unconventional
or "contrarian" in that its holdings often have relatively low normalized price-
earnings ratios and, when purchased, are often believed by Alliance to be
overlooked or undervalued in the marketplace. (A "normalized" price-earnings
ratio is one that has been adjusted to eliminate the effects of the economic
cycle. Alliance may conclude that a company's normalized price-earnings ratio is
low in comparison to either the company's price-earnings history or the price-
earnings ratios of comparable companies.)

Because it evaluates securities based on their long-term potential, the Fund
is best suited for investors who understand and can accept the risk that the
securities held by the Fund may not appreciate or yield significant income
over the shorter term. The Fund invests in companies experiencing poor
operating results, which may include companies whose earnings have been
severely depressed by unfavorable operating conditions or special competitive
or product obsolescence problems, if it believes that they will react
positively to changing economic conditions or will restructure or take other
actions to overcome adversity. The Fund invests in listed and unlisted
securities, and will invest in any company and industry and in any type of
security that may help it achieve its objectives. While its strategy normally
emphasizes equity securities, the Fund also invests in fixed-income
securities when such investments can provide capital growth, such as when
interest rates decline, and to generate income.

The Fund may also: (i) invest up to 5% of its total assets in warrants; (ii)
invest up to 15% of its total assets in foreign securities; (iii) invest in
restricted securities and in other assets having no ready market if as a
result no more than 5% of its net assets would be invested in such securities
and assets; (iv) write exchange-listed covered call options, unless as a
result the amount of its securities subject to call options would exceed 5%
of its total assets; (v) lend portfolio securities equal in value to not more
than 15% of its total assets; (vi) purchase and sell stock index futures
contracts; and (vii) enter into repurchase agreements on U.S. Government
securities with member banks of the Federal Reserve System or primary dealers
in such securities. For additional information on the use, risks and costs of
these policies and practices see "Additional Investment Practices."

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

18
<PAGE>

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,
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% 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, 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. At July
31, 1994, approximately 50% 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,

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<PAGE>

provided that 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 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"). 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. Although the Fund will invest in
any country believed to present attractive investment opportunities,
currently approximately 70% of the Fund's total assets are invested in
countries with established economies.

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

20
<PAGE>

foreign currencies for hedging purposes; (v) purchase or sell forward
contracts; (vi) enter in 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 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 smaller, emerging companies, but will also
invest in larger, established companies in such growing economic sectors as
capital goods, telecommunications, pollution control and consumer services.

The Fund will emphasize investment in companies believed to be the likely
beneficiaries of a program, originally known as the "1992 Program," to remove
substantially all barriers to the free movement of goods, persons, services
and capital within the European Community. Alliance believes that the
beneficial effects of this program upon economies, sectors and companies may
be most pronounced in the decade following 1992. The European Community is a
Western European economic cooperative organization consisting of Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain and the United Kingdom.

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. At July 31, 1994, approximately 32% 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 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

21
<PAGE>

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, but less than 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.

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" and "--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 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 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

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<PAGE>

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."

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 Strategic Balanced Fund

Alliance Strategic Balanced Fund ("Strategic Balanced Fund") is a diversified
investment company that seeks a high long-term total return by investing in a
combination of equity and debt securities. The portion of the Fund's assets
invested in each type of security varies in accordance with economic
conditions, the general level of common stock prices, interest rates and
other relevant considerations, including the risks associated with each
investment medium. The Fund's investment objective is not fundamental.

The Fund's equity securities will generally consist of dividend-paying common
stocks and other equity securities of companies with favorable earnings outlooks
and long-term growth rates that Alliance expects will exceed that of the U.S.
economy. The Fund's debt securities may include U.S. Government securities and
securities issued by private corporations. The Fund may also invest in mortgage-
backed securities, adjustable rate securities, asset-backed securities and so-
called "zero-coupon" bonds and "payment-in-kind" bonds.

As a fundamental policy, the Fund will invest at least 25% of its total
assets in fixed-income securities, which for this purpose include debt
securities, preferred stocks and that portion of the value of convertible
securities that is attributable to the fixed-income characteristics of those
securities.

The Fund's debt securities will generally be of investment grade. See "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." In the event that the rating of any debt securities
held by the Fund falls below investment grade, the Fund will not be obligated
to dispose of such obligations and may continue to hold them if considered
appropriate under the circumstances.

The Fund may also: (i) invest in foreign securities, although the Fund will
not generally invest more than 15% of its total assets in foreign securities;
(ii) invest, without regard to this 15% limit, in Eurodollar CDs, which are
dollar-denominated certificates of deposit issued by foreign branches of U.S.
banks that are not insured by any agency or instrumentality of the U.S.
Government; (iii) write covered call and put options on securities it owns or
in which it may invest; (iv) buy and sell put and call options and buy and
sell combinations of put and call options on the same underlying securities;
(v) lend portfolio securities amounting to not more than 25% of its total
assets; (vi) enter into repurchase agreements on up to 25% of its total
assets; (vii) purchase and sell securities on a forward commitment basis;
(viii) buy or sell foreign currencies, options on foreign currencies, foreign
currency futures contracts (and related options) and deal in forward foreign
exchange contracts; (ix) buy and sell stock index futures contracts and buy
and sell options on those contracts and on stock indices; (x) purchase and
sell futures contracts, options thereon and options with respect to U.S.
Treasury securities; and (xi) invest in securities that are not publicly
traded, including Rule 144A securities. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices."

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,

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<PAGE>

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 Income Builder Fund

Alliance Income Builder Fund, Inc. ("Income Builder Fund") is a non-diversified
investment company that seeks an attractive level of current income and long-
term growth of income and capital by investing principally in fixed-income
securities and dividend-paying common stocks. Its investments in equity
securities emphasize common stocks of companies with a historical or projected
pattern of paying rising dividends. Normally, at least 65% of the Fund's total
assets are invested in income-producing securities. The Fund may vary the
percentage of assets invested in any one type of security based upon Alliance's
evaluation as to the appropriate portfolio structure for achieving the Fund's
investment objective, although Alliance currently maintains approximately 60% of
the Fund's net assets in fixed-income securities and 40% in equity securities.

The Fund may invest in fixed-income securities of domestic and foreign issuers,
including U.S. Government securities and repurchase agreements pertaining
thereto, corporate fixed-income securities of U.S. issuers, qualifying bank
deposits and prime commercial paper.

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 non-convertible security
that is downgraded below CCC or determined by Alliance to have undergone similar
credit quality deterioration following purchase.

Foreign securities in which the Fund invests may include fixed-income
securities of foreign corporate and governmental issuers, denominated in U.S.
Dollars, and equity securities of foreign corporate issuers, denominated in
foreign currencies or in U.S. Dollars. The Fund will not invest more than 10%
of its net assets in equity securities of foreign issuers nor more than 15%
of its total assets in issuers of any one foreign country. See "Risk
Considerations--Foreign Investment."

The Fund may also: (i) invest up to 5% of its net assets in rights or
warrants; (ii) invest in depositary receipts and U.S. Dollar denominated
securities issued by supranational entities: (iii) 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; (iv) purchase and sell
exchange-traded options on any securities index composed of the types of
securities in which it may invest; (v) 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, corporate fixed income
securities, or common stock, and purchase and write options on future
contracts; (vi) purchase and write put and call options on foreign currencies
and enter into forward contracts for hedging purposes; (vii) enter into
interest rate swaps and purchase or sell interest rate caps and floors;
(viii) enter into forward commitments for the purchase or sale of securities;
(ix) enter into standby commitment agreements; (x) enter into repurchase
agreements pertaining to U.S. Government securities with member banks of the
Federal Reserve System or primary dealers in such securities; (xi) make short
sales of securities or maintain a short position as described below under
"Additional Investment Policies and Practices--Short Sales;" and (xii) 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 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

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<PAGE>

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 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 Investments."

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

25
<PAGE>

rate swaps and purchase or sell interest rate caps and floors; (x) enter in
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, risk 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. See "Additional Investment Practices
- --Options." 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. See "Risk Considerations--Foreign Investment."

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
provide a stable stream of income with generally higher yields than those of
equity securities of the same or similar issuers. The price of a convertible
security will normally vary with changes in the price of the underlying
stock, although the higher yield tends to make the convertible security less
volatile than the underlying common stock. As with debt securities, the
market value of convertible securities tends to decline as interest rates
increase 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 enable investors 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. The investments of Growth Fund, Strategic
Balanced Fund and Income Builder Fund 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.
The investments of All-Asia Fund in 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.

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<PAGE>

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. 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 the Fund. Furthermore, as with any debt
securities, the values of equity-linked debt securities will generally vary
inversely with changes in interest rates. The 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, the 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 owned 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 the 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 the 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 the Fund does not receive scheduled interest or principal payments
on such indebtedness, the Fund's share price and yield could

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be adversely affected. Loans that are fully secured offer the 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. Indebtedness of 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 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 the Fund.
For example, if a loan is foreclosed, the 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, the 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 the 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 the Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the Fund to pay additional cash on demand. These commitments may
have the effect of requiring the 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 by repaid.
The Fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing commitments.

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 each of Growth Fund and
Strategic Balanced 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. 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 resale of securities.

Options. An option gives the purchaser of the option, upon payment of a
premium, the right to deliver to (in the case of a put) or receive from (in
the case of a call) the writer 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 Fund, Income Builder 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 such circumstances, the Fund collateralizes its obligation under
the option by maintaining segregated account assets in an amount not less
than the market value of the underlying security, marked to market daily.

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In purchasing a call 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."

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
and Income Builder Fund will also not do so if immediately thereafter the
aggregate of initial margin deposits on all the outstanding futures contracts
of the Fund and premiums paid on outstanding options on futures contracts
would exceed 5% of the market value of the total assets of the Fund. Neither
Premier Growth Fund nor Counterpoint Fund may purchase or sell a stock index
future if immediately thereafter more than 30% of its total assets would be
hedged by stock index futures. In connection with the purchase of stock index
futures contracts, a Fund will deposit in a segregated account with its
custodian an amount of cash, U.S. Government securities or other liquid
high-quality debt securities equal to the market value of the futures
contracts less any amounts maintained in a margin account with the Fund's
broker. Premier Growth Fund and Counterpoint 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

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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 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 the currency of a particular country 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
particular foreign 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"). To the extent required by applicable law, each
Fund's custodian will place cash not available for investment, U.S.
Government securities or other liquid high-grade debt securities in a
segregated account of the Fund having a value equal to the aggregate amount
of the Fund's commitments under forward contracts entered into with respect
to transaction and position hedges and cross-hedges. If the value of the
securities placed in a segregated account declines, additional cash or
securities will be placed in the account on a daily basis so that the value
of the account will equal the amount of the Fund's commitments with respect
to such contracts. As an alternative to maintaining all or part of the
segregated account, a Fund may purchase a call option permitting the Fund to
purchase the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price or the Fund may
purchase a put option permitting the Fund to sell the amount of foreign
currency subject to a forward purchase contract at a price as high or higher
than the forward contract price. In addition, the Fund may use such other
methods of "cover" as are permitted by applicable law. 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 and Strategic Balanced 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

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<PAGE>

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, All-Asia Fund, Worldwide
Privatization Fund, Income Builder 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. To facilitate these transactions,
each Fund's custodian maintains in a segregated account of the Fund cash
and/or liquid high grade debt securities, denominated in U.S. dollars (or
non-U.S. currencies in the case of New Europe Fund) having a value equal to,
or greater than, any commitments to purchase securities on a forward
commitment basis and, with respect to forward commitments to sell portfolio
securities, the portfolio securities themselves. 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. Each Fund, other than Income Builder Fund, will not enter
into a standby commitment with a remaining term in excess of 45 days and will
limit its investment in such commitments so that the aggregate purchase price
of the securities subject to the commitments will not exceed 25% with respect
to New Europe Fund, 50% with respect to Worldwide Privatization Fund and
All-Asia Fund, and 20% with respect to Utility Income Fund, of its assets
taken at the time of making the commitment. Each Fund at all times maintains
a segregated account with its custodian of cash and/or liquid high grade debt
securities, denominated in U.S. dollars (or non-U.S. currencies in the case
of New Europe Fund and Utility Income Fund) in an aggregate amount equal to
the purchase price of the securities underlying the commitment.

There is no guarantee that the securities subject to a standby commitment
will be issued and the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the
security underlying the commitment is at the option of the issuer, 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 and, to the extent required by applicable
law, an amount of cash or high-grade liquid debt securities having an
aggregate value at least equal to the accrued excess will be maintained in a
segregated account by the Fund's custodian. 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 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

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<PAGE>

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, and an amount of cash or liquid high-grade
debt securities having an aggregate value at least equal to the accrued
excess is maintained in a segregated account by the Fund's custodian. 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. To the extent a Fund sells (i.e., writes) caps
and floors it will maintain segregated account assets having an aggregate
value at least equal to the full amount, accrued daily, of the Fund's
obligations with respect to any caps or floors.

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 incorrectly
forecasted 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. A Fund requires
continual maintenance by its custodian of collateral in an amount equal to,
or in excess of, the resale price. 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 Fund, Income Builder 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 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 risks in lending portfolio securities, as
with other extensions of credit, consist of 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 to exercise beneficial rights
such as voting rights, subscription rights and rights to dividends, interest or

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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. 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 invest 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. A 100%, 150%, 200% and 300% annual turnover rate would
occur, for example, when all of the securities in a Fund's portfolio are
replaced once, one and one-half times, twice and three times, respectively,
in a period of one year. A 100% portfolio turnover rate is greater than that
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.

Growth Fund and Strategic Balanced 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
the Fund's total assets may be invested without regard to this restriction;

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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.

Counterpoint 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 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 a particular
industry; (iii) borrow money except for temporary or emergency purposes,
including meeting redemption requests which 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
its total assets at the time the borrowing is made; (iv) invest more than 10%
of its net assets in the aggregate in restricted and not readily marketable
securities; (v) invest more than 10% 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 (vi) invest more than 10% of
the value of its total assets in the aggregate in illiquid securities or
repurchase agreements not terminable within seven days.

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.

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

34
<PAGE>

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 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.

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.

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.

Income Builder Fund may not: (i) invest 25% or more of its total assets in
securities of companies engaged principally in any one industry, except that
this restriction does not apply to U.S. Government securities; (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 borrowing is made; securities will not be
purchased while borrowings in excess of 5% of the Fund's total assets are
outstanding; or (iii) pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings.

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

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<PAGE>

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.

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
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, New Europe Fund, All-Asia Fund, Global Small Cap Fund and Worldwide
Privatization 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 United States 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

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<PAGE>

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 of the 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 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 U.S.

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 by New Europe Fund. 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. Since 1972, when the pound
sterling was allowed to float against other currencies, it has generally
depreciated against most major currencies, including the U.S. dollar. From
1988 through 1993, the pound sterling declined at an average annual rate of
approximately 15% against 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 continued to fall in early 1993,
but recovered due to interest rate cuts throughout Europe and an upturn in
the economy of the United Kingdom.

The United Kingdom's largest stock exchange is the International Stock
Exchange of the United Kingdom and the Republic of Ireland (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 a record high of 3462.0 on December 29, 1993, up 20%
from the end of 1992. At the end of the second quarter of 1994, the FT-SE 100
was down approximately 16% from its all-time high. As of December 30, 1994,
the FT-SE 100 had risen approximately 5% from the end of the second quarter
of 1994.

The public sector borrowing requirement, a mandated measure of the amount
required to balance the budget, is not expected to be exceeded this fiscal
year. This should have the effect of lowering the requirement for the next
fiscal year. This prospect, coupled with political infighting, has led to the
repeal of the scheduled second stage of a value-added tax ("VAT") on domestic
fuel. This repeal will force the government to generate revenues from other
sources.

Since 1979, the Conservative Party has controlled Parliament. However, in
recent years, this dominance has been called into question. In 1990, due to
an internal challenge for leadership the Conservative Party chose John Major
to replace Margaret Thatcher as Prime Minister. Although Mr. Major generally
has the support of his party, there remains the possibility that he could
face a challenge for leadership of the Conservative Party. Unless the
Conservative Party calls for an earlier election, the next general election
will take place in April 1997. For further information regarding the United
Kingdom, see the Fund's Statement of Additional Information.

Investment in Japanese Issuers by All-Asia Fund and International Fund.
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. The Japanese yen has generally been appreciating
against the U.S. dollar for the past decade and is currently trading at or about
a post-World War II high against the U.S. dollar.

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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 46% through the beginning
of 1993. In 1993, the TOPIX increased by approximately 9% from the end of
1992, and by the end of the third quarter of 1994 increased by approximately
8% from the end of 1993. 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. The average price/earnings ratio of Japanese companies, however, are
high in comparison with other major stock 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. The two countries failed to agree, however,
with respect to Japanese imports of American automobiles and automotive
parts. In response to this failure, the U.S. has initiated the process of
imposing limited trade sanctions on Japan. It is unlikely that any such
sanctions will be imposed before late 1995, and it is expected that the
continuing friction between the U.S. and Japan with respect to trade issues
will thus continue for the foreseeable future.

Each Fund's investments in Japanese issuers also 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. In August 1993, following a split in that party, a coalition
government was formed. That coalition government collapsed in April 1994, and
was replaced by a minority coalition that, in turn, collapsed in June 1994.
The stability of the current ruling coalition, the third since 1993, and the
first in 47 years led by a socialist, is not assured. For further information
regarding Japan, see each Fund's Statement of Additional Information.

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 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. 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.

U.S. and Foreign Taxes. 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 Fund, between eight and 15
years in the case of Income Builder 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.

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

38
<PAGE>

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,
although the market values of securities rated below investment grade and
comparable unrated securities tend to react less to fluctuations in interest
rate levels than do those of higher-rated 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, Income Builder 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 Premier Growth Fund, Worldwide Privatization
Fund, New Europe Fund, All-Asia Fund and Income Builder 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 are not
subject to these limitations. Because Premier Growth Fund, Worldwide
Privatization Fund, New Europe Fund, All-Asia Fund and Income Builder Fund is
each 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.

- --------------------------------------------------------------------------------
Purchase And Sale
- --------------------------------------------------------------------------------
Of Shares
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

You can purchase shares of any of the Funds through broker-dealers, banks or
other financial intermediaries, or directly through Alliance Fund
Distributors ("AFD"), each Fund's principal underwriter. The minimum initial
investment in each Fund is $250. The minimum for subsequent investments in
each Fund is

39
<PAGE>

$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 Statement of Additional Information for more
information.

Each Fund offers three classes of shares, Class A, Class B and Class C.

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 Statement
of Additional Information.

Class B Shares--Deferred Sales Charge Alternative

You can purchase Class B shares at net asset value without an initial sales
charge. However, you may pay a CDSC if you redeem shares within four years
after purchase. The amount of the CDSC (expressed as a percentage of the
lesser of the current net asset value or original cost) will vary according
to the number of years from the purchase of Class B shares until the
redemption of those shares.

The amount of the CDSC 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, or
six years with respect to Premier Growth Fund. The higher fees mean a higher
expense ratio, so Class B shares pay correspondingly lower dividends and may
have a lower net asset value than Class A shares.

Class C Shares--Asset-Based Sales Charge Alternative

You can purchase Class C shares without any initial sales charge or a CDSC. A
Fund will thus receive the full amount of your purchase, and 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.

Application of the CDSC

Shares obtained from dividend or distribution reinvestment are not subject to
the CDSC on Class A and Class B shares. 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 or to meet the
requirements of certain qualified retirement plans. 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 New York
Stock Exchange (the "Exchange") is open as of the close of regular trading
(currently 4:00 p.m. Eastern time). The securities in 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 would accurately reflect fair market value.

General

The decision as to which Class of shares is more beneficial to you depends on
the amount and intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might consider
Class A shares. If you are making a smaller investment, you might consider
Class B shares because 100% of your purchase is invested immediately. If you
are unsure of the length of your investment, you might consider Class C
shares because there are no initial or contingent deferred sales charges.
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 C shares
is $5,000,000. The maximum purchase of Class B shares is $250,000. The Funds
may refuse any order to purchase shares.

In addition to the discount or commission paid to dealers or agents, AFD from
time to time pays additional cash or other incentive to dealers or agents,
including Equico Securities, Inc., an affiliate of AFD, 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

40
<PAGE>

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 and their
immediate family members to urban or resort locations within or outside the
United States. Such dealer or agent may elect to receive cash incentives of
equivalent amount in lieu of such payments.

HOW TO SELL SHARES

You may "redeem", i.e., sell your shares in 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 for
Class A and Class B shares) 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

A Fund must receive your broker's request before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class
A and Class B shares). 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 Alliance Fund
Services ("AFS"), each Fund's registrar, transfer agent and
dividend-disbursing agent, 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
1-800-221-5672

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
by a shareholder who has completed the Subscription Application or an
"Autosell" application obtained from AFS. Telephone redemption requests must
be for at least $500 and may not exceed $100,000, and must be made between 9
a.m. and 4 p.m. New York time on a Fund business day. Proceeds of telephone
redemptions will be sent by electronic funds transfer. Proceeds of telephone
redemptions also may be sent by check to a shareholder's address of record,
but only once in any 30-day period and in amount not exceeding $25,000.
Telephone redemption by check is not available for shares purchased within 15
calendar days prior to the redemption request, 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.

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 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 (which include 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.

Class A and Class B 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.

41
<PAGE>

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 Alfred Harrison since 1989-- Associated with
Vice Chairman of Alliance Capital Alliance
Management Corporation
("ACMC")*

Paul H. Jenkel since 1985-- Associated with
Senior Vice President of ACMC Alliance

Growth Fund Tyler Smith since inception-- Associated with
Senior Vice President of ACMC Alliance since
July 1993; prior
thereto,
associated with
Equitable Capital
Management
Corporation
("Equitable
Capital")**

Premier Growth Fund Alfred Harrison since inception-- (see above)
(see above)

Counterpoint Fund Jon H. Outcalt since inception-- Associated with
Senior Vice President of ACMC Alliance

David P. Handke, Jr. since Associated with
inception--Vice President of ACMC Alliance

Technology Fund Peter Anastos since 1992-- Associated with
Senior Vice President of ACMC Alliance

Gerald T. Malone since 1992-- Associated with
Vice President of ACMC Alliance since
1992; prior
thereto
associated with
College
Retirement
Equities Fund

Quasar Fund Alden M. Stewart since 1994-- Associated with
Executive Vice President of ACMC Alliance since
1993; prior
thereto,
associated with
Equitable Capital

Randall E. Haase since 1994 -- Associated with
Vice President of ACMC Alliance since July
1993; prior
thereto,
associated with
Equitable Capital

International Fund A. Rama Krishna since 1993 -- Associated with
Senior Vice President of ACMC Alliance since
1993, prior
thereto,
Chief Investment
Strategist and
Director of Equity
Research for First
Boston
Corporation

Worldwide
Privatization Mark H. Breedon since inception--- Associated with
Vice President of ACMC and Alliance
Director and Vice President of
Alliance Capital Limited ("ACL")***

New Europe Fund Eric N. Perkins since 1992 -- Associated with
Senior Vice President of ACMC Alliance

All-Asia Fund A. Rama Krishna since (see above)
inception (see above)

Global Small Cap Ronald L. Simcoe since 1993-- Associated with
Fund Vice President of ACMC Alliance since
1993; prior thereto,
associated with
Equitable Capital

Alden Stewart since 1994-- (see above)
(see above)

Randall E. Haase since 1994-- (see above)
(see above)

Strategic Balanced Judith Taylor since inception-- Associated with
Fund Senior Vice President of ACMC Alliance since
July 1993; prior
thereto,
associated with
Equitable Capital

Balanced Shares Bruce W. Calvert since 1990-- Associated with
Vice Chairman and the Chief Alliance
Investment Officer of ACMC

Income Builder Fund Andrew M. Aran since 1994-- Associated with
Senior Vice President of ACMC Alliance since
March 1991; prior
thereto, a Vice
President of
PaineWebber, Inc.
since June 1990
and a Vice
President of
Citicorp since
prior to 1990

Utility Income Fund Alan Levi since 1994-- Associated with
Senior Vice President and Alliance
Director of Research of ACMC

Growth and Income Paul Rissman since 1995-- Associated with
Fund Vice President of ACMC Alliance
</TABLE>

- --------------------------------------------------------------------------------

* The sole general partner of Alliance.

** Equitable Capital was, prior to Alliance's acquisition of it, a management
firm under common control with Alliance.

*** An indirect wholly-owned subsidiary of Alliance.

42
<PAGE>

Alliance is a leading international investment manager supervising client
accounts with assets as of September 30, 1994 totaling more than $123 billion
(of which approximately $40 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 50 registered investment companies managed by
Alliance comprising 102 separate investment portfolios currently have over
one million shareholders. As of September 30, 1994, Alliance was retained as
an investment manager for 28 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, a French insurance holding company. Certain
information concerning the ownership and control of Equitable by AXA is set
forth in each Fund's Statement of Additional Information under "Management of
the Fund."

ADMINISTRATOR AND CONSULTANT TO ALL-ASIA FUND

Alliance has been retained by All-Asia 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.

In connection with its provision of advisory services to All-Asia Fund,
Alliance has retained at its expense OCBC Asset Management Limited ("OAM") as
a consultant to provide to Alliance such statistical and other factual
information, research and assistance with respect to economic, financial,
political, technological and social conditions and trends in Asian countries,
including information on markets and industries, as Alliance shall from time
to time request. OAM will not furnish investment 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.

OAM is one of the largest Singapore-based investment management companies
specializing in investment in Asia-Pacific markets. OAM provides consulting
and advisory services to institutions and individuals, including mutual
funds. As of June 30, 1994, OAM had approximately $1 billion in assets under
management.

OAM is a wholly-owned subsidiary of Oversea-Chinese Banking Corporation
Limited ("OCBC Bank"), which is based in Singapore. The OCBC Bank Group has
an extensive network of banking offices in the Asian Pacific region. The OCBC
Bank Group engages in a wide variety of activities including commercial
banking, investment banking, and property and hotel investment and
management. OCBC Bank is the third largest company listed on the Stock
Exchange of Singapore with a market capitalization as of June 30, 1994 of
$6.3 billion.

EXPENSES OF WORLDWIDE PRIVATIZATION FUND AND ALL-ASIA FUND

In addition to the payments to Alliance under the Advisory Agreement with
Worldwide Privatization Fund and the Advisory Agreement and Administration
Agreement with All-Asia Fund, all as described above, each such Fund pays
certain other costs, including (i) custody, transfer and dividend disbursing
expenses, (ii) fees of the Directors who are not affiliated with Alliance,
(iii) legal and auditing expenses (iv) clerical, accounting and other office
costs, (v) costs of printing each Fund's prospectuses and shareholder
reports, (vi) costs of maintaining each Fund's existence, (vii) interest
charges, taxes, brokerage fees and commissions, (viii) costs of stationery
and supplies, (ix) expenses and fees related to registration and filings with
the Commission and with state regulatory authorities, (x) upon the approval
of the Board of Directors, costs of personnel of Alliance or its affiliates
rendering clerical, accounting and other office services, and (xi) such
promotional expenses as may be contemplated by the Distribution Services
Agreement, described below.

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, Premier Growth Fund
and Strategic Balanced 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 assets attributable to the Class C shares, for
distribution expenses. The Directors of Growth Fund and Strategic Balanced
Fund currently limit payments with respect to Class A shares under the Plan
to .30% of each Fund's aggregate average daily net assets attributable to
Class A shares. 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 class of 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

43
<PAGE>

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 and Strategic Balanced 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 and Strategic Balanced 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 and Strategic Balanced 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 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
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 and Strategic Balanced 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
(except Growth Fund and Strategic Balanced Fund) 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............................................. $ 1,442,425 (7.95%) $ 399,204 (6.41%)
Growth Fund............................................... $24,134,216 (3.21%) $ 529,804 (0.46%)
Premier Growth Fund....................................... $ 3,230,541 (2.31%) $ 165,741 (2.26%)
Counterpoint Fund......................................... $ 119,047 (22.58%) $ 125,891 (30.08%)
Technology Fund........................................... $ 698,886 (3.80%) $ 221,888 (2.97%)
Quasar Fund............................................... $ 557,782 (4.01%) $ 87,823 (7.20%)
International Fund........................................ $ 1,043,557 (3.49%) $ 251,661 (1.86%)
Worldwide Privatization Fund.............................. $ 994,925 (4.35%) ** **
New Europe Fund........................................... $ 1,373,204 (4.37%) $ 225,921 (1.90%)
All-Asia Fund............................................. * * * *
Global Small Cap Fund..................................... $ 642,361 (16.52%) $ 201,251 (15.13%)
Income Builder Fund....................................... $ 224,734 (11.25%) $1,507,457 (2.35%)
Strategic Balanced Fund................................... $ 523,532 (1.20%) $ 127,615 (2.96%)
Balanced Shares........................................... $ 844,835 (5.89%) $ 180,501 (2.89%)
Utility Income Fund....................................... $ 248,868 (10.58%) $ 236,172 (8.91%)
Growth and Income Fund.................................... $ 2,607,181 (2.54%) $ 355,256 (1.83%)
</TABLE>

- --------------------------------------------------------------------------------

* This Fund has not yet completed a fiscal period.

** No Class C shares were outstanding during this Fund's fiscal period.

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 30 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. 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

44
<PAGE>

same day and will be in the same amount, except that the higher distribution
services fees applicable to Class B and C shares, and any incremental transfer
agency costs relating to Class B shares, will be borne exclusively by the class
to which they relate.

While it is the intention of 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.

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, but there can be no assurance that any Fund will be able to do so.

U.S. FEDERAL INCOME TAXES

Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. To the extent that a Fund distributes its taxable income and
net capital gain to its shareholders, qualification as a regulated investment
company relieves that Fund of federal income and excise taxes on that part of
its taxable income including net capital gains which it pays out to its
shareholders. Dividends out of net ordinary income and distributions of net
short-term capital gains are taxable to the recipient shareholders as
ordinary income. In the case of corporate shareholders, such dividends may be
eligible for the dividends-received deduction, except that the amount
eligible for the deduction is limited to the amount of qualifying dividends
received by the Fund. A corporation's dividends-received deduction will be
disallowed unless the corporation holds shares in the Fund at least 46 days.
Furthermore, the dividends-received deduction will be disallowed to the
extent a corporation's investment in shares of a Fund is financed with
indebtedness.

The excess of net long-term capital gains over the net short-term capital
losses realized and distributed by each Fund to its shareholders as capital
gains distributions is taxable to the shareholders as long-term capital
gains, irrespective of the length of time a shareholder may have held his or
her stock. Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.

Under the current federal tax law the amount of an income dividend or capital
gains distribution declared by 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 taxable to such
shareholder as long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term capital loss to the
extent of such distribution.

A dividend or capital gains distribution with respect to shares of 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, 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.

Distributions by a Fund may be subject to state and local taxes. Alliance
Fund, Premier Growth Fund, Technology Fund, Quasar Fund, New Europe Fund,
Balanced Shares and Growth and Income Fund are qualified to do business in
the Commonwealth of Pennsylvania and, therefore, are subject to the
Pennsylvania foreign franchise and corporate net income tax in respect of
their business activities in Pennsylvania. Accordingly, shares of such Funds
are exempt from Pennsylvania personal property taxes. These Funds anticipate
continuing such business activities but reserve the right to suspend them at
any time, resulting in the termination of the exemptions.

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.

Shareholders will be advised annually as to the federal tax status of
dividends and capital gains distributions made by a Fund for the preceding
year. Shareholders are urged to consult their tax advisers regarding their
own tax situation.

45
<PAGE>

- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------

PORTFOLIO TRANSACTIONS

Consistent with the Rules of Fair Practice 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. (1989), Alliance Worldwide
Privatization Fund, Inc. (1994), Alliance New Europe Fund, Inc. (1990),
Alliance All-Asia Investment Fund, Inc. (1994), Alliance Global Small Cap Fund,
Inc. (1966), Alliance Income Builder Fund, Inc. (1991), Alliance Utility
Income Fund, Inc. (1993), and Alliance Growth and Income Fund, Inc. (1932).
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 and Alliance Strategic Balanced Fund (each a series of The
Alliance Portfolios) (1987), Alliance Counterpoint Fund (1984) and Alliance
International Fund (1980). Prior to August 2, 1993, The Alliance Portfolios
was known as The Equitable Funds, Growth Fund was known as The Equitable
Growth Fund and Strategic Balanced Fund was known as The Equitable Balanced
Fund. Prior to March 22, 1994, Income Builder Fund was known as Alliance
Multi-Market Income and Growth Trust, Inc.

It is anticipated that annual shareholder meetings will not be held;
shareholder meetings will be held only when required by federal, or in the
case of the Funds organized as Maryland corporations, state law. Shareholders
have available certain procedures for the removal of Directors.

A shareholder in a Fund will be entitled to his or her pro rata share of 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 additional classes of
shares. 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 and C shares have identical voting, dividend, liquidation and other
rights, except that each class bears its own distribution and transfer agency
expenses. Each class of shares 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.

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 Fund, Growth and Income Fund, Income Builder Fund, Strategic
Balanced 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

46
<PAGE>

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.

Strategic Balanced Fund, Balanced Shares, Income Builder Fund, 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 will include performance data for each class of shares in any
advertisement or sales literature using performance data of that Fund. These
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."

47
<PAGE>

- --------------------------------------------------------------------------------
Subscription Application
- --------------------------------------------------------------------------------

Alliance Stock Funds

(see instructions at the front of the application)

- --------------------------------------------------------------------------------
1. Your Account Registration (Please Print)
- --------------------------------------------------------------------------------

[ ] Individual or Joint Account

- --------------------------------------------------------------------------------
Owner's Name (First Name) (MI) (Last Name)

- -
- -------------------------------------------------
Social Security Number (Required to open account)

- --------------------------------------------------------------------------------
Joint Owner's Name* (First Name) (MI) (Last Name)
*Joint Tenants with right of survivorship unless otherwise indicated

[ ] Gift/Transfer To A Minor

- --------------------------------------------------------------------------------
Custodian - One Name Only (First Name) (MI) (Last Name)

- --------------------------------------------------------------------------------
Minor (First Name) (MI) (Last Name)

- -
- ---------------------------------------------------------
Minor's Social Security Number (Required to open account)

Under the State of ___ (Minor's Residence) Uniform Gifts/Transfer to Minor's Act

[ ] Trust Account

- --------------------------------------------------------------------------------
Name of Trustee

- --------------------------------------------------------------------------------
Name of Trust

- --------------------------------------------------------------------------------
Name of Trust (cont'd)

- ------------------ -----------------------------------------------------------
Trust Dated Tax ID or Social Security Number (Required to open account)

[ ] Other

- --------------------------------------------------------------------------------
Name of Corporation, Partnership or other Entity

- --------------------------
Tax ID Number

- --------------------------------------------------------------------------------
2. Address
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Street

- --------------------------------------------------------------------------------
City State Zip Code

- --------------------------------------------------------------------------------
If Non-U.S., Specify Country

- - - -
- --------------------------------------------------------------------------------
Daytime Phone Evening Phone

I am a: [ ] U.S. Citizen [ ] Non-Resident Alien [ ] Resident Alien [ ] Other

- -- --

For Alliance Use Only

- -- --
<PAGE>

- --------------------------------------------------------------------------------
3. Initial Investment
- --------------------------------------------------------------------------------

Minimum: $250; Maximum: Class B only - $250,000; Class C only - $5,000,000.
Make all checks payable to The Alliance Stock Fund in which you are investing.

I hereby subscribe for shares of the following Alliance Stock Fund(s):

<TABLE>
<CAPTION>
Class A Class B Class C
(Initial Dollar (Contingent Deferred Dollar (Asset-based Sales Dollar
Sales Charge) Amount Sales Charge) Amount Charge) Amount
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
[ ] Alliance Fund [ ](44) ---------- [ ] (43) ---------- [ ] (344) ----------
[ ] Growth Fund [ ](31) ---------- [ ] (01) ---------- [ ] (331) ----------
[ ] Premier Growth Fund [ ](78) ---------- [ ] (79) ---------- [ ] (378) ----------
[ ] Counterpoint Fund [ ](19) ---------- [ ] (219) ---------- [ ] (319) ----------
[ ] Technology Fund [ ](82) ---------- [ ] (282) ---------- [ ] (382) ----------
[ ] Quasar Fund [ ](26) ---------- [ ] (29) ---------- [ ] (326) ----------
[ ] International Fund [ ](40) ---------- [ ] (41) ---------- [ ] (340) ----------
[ ] Worldwide Privatization Fund [ ](112) ---------- [ ] (212) ---------- [ ] (312) ----------
[ ] New Europe Fund [ ](62) ---------- [ ] (58) ---------- [ ] (362) ----------
[ ] All-Asia Fund [ ](118) ---------- [ ] (218) ---------- [ ] (318) ----------
[ ] Global Small Cap Fund [ ](45) ---------- [ ] (48) ---------- [ ] (345) ----------
[ ] Strategic Balanced Fund [ ](32) ---------- [ ] (02) ---------- [ ] (332) ----------
[ ] Balanced Shares [ ](96) ---------- [ ] (75) ---------- [ ] (396) ----------
[ ] Income Builder Fund [ ](111) ---------- [ ] (211) ---------- [ ] (311) ----------
[ ] Utility Income Fund [ ](9) ---------- [ ] (209) ---------- [ ] (309) ----------
[ ] Growth & Income Fund [ ](94) ---------- [ ] (74) ---------- [ ] (394) ----------
</TABLE>

to be purchased with the enclosed check or draft for $_______________

-------------------------
Dealer Use Only
Wire Confirm No.:
-------------------------

- --------------------------------------------------------------------------------
4. 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 list below any existing
accounts to be considered and complete the Right of Accumulation section or
the Statement of Intent section.

- --------------------------------------------------------------------------------
Fund Account Number Fund Account Number

A. Right of Accumulation
[ ] Please link the accounts listed above for Right of Accumulation privileges,
so that this and future purchases will receive any discount for which they
are eligible.

B. Statement of Intent
[ ] I want to reduce my sales charge by agreeing to invest the following amount
over a 13-month period:
[ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000

If the full amount indicated is not purchased within 13 months, I understand
an additional sales charge must be paid from my account.

- --------------------------------------------------------------------------------
Name on Account Account Number Name on Account Account Number

- --------------------------------------------------------------------------------
5. Distribution Options
- --------------------------------------------------------------------------------

If no box is checked, all distributions will be reinvested in
additional shares of the Fund

Income Dividends: (elect one) [ ] Reinvest dividends
[ ] Pay dividends in cash
[ ] Use Dividend Direction Plan

Capital Gains Distribution: (elect one) [ ] Reinvest capital gains
[ ] Pay capital gains in cash
[ ] Use Dividend Direction Plan

If you elect to receive your income dividends or capital gains distributions
in cash, please enclose a preprinted voided check from the bank account you
wish to have your dividends deposited into.**

If you wish to utilize the Dividend Direction Plan, please designate the
Alliance account you wish to have your dividends reinvested in:

- --------------------------------------------------------------------------------
Fund Name Existing Account No.

Special Distribution Instructions:

[ ] Please pay my distributions via check and send to the address
indicated in Section 2.

[ ] Please mail my distributions to the person and/or address designated below:

- --------------------------------------------------------------------------------
Name Address

- --------------------------------------------------------------------------------
City State Zip

- --------------------------------------------------------------------------------
6. Shareholder Options
- --------------------------------------------------------------------------------

A. Automatic Investment Program (AIP) **

I hereby authorize Alliance Fund Services, Inc. to draw on my bank account,
on or about the ______ day of each month for a monthly investment in my Fund
account in the amount of $____________ (minimum $25 per month). Please attach
a preprinted voided check from the bank account you wish to use.
NOTE: If your bank is not a member of the NACHA, your Alliance account will
be credited on or about the 20th of each month.

The Fund requires signatures of bank account owners exactly as they
appear on bank records.

- --------------------------------------------------------------------------------
Individual Account Date Joint Account Date

** Your bank must be a member of the National Automated Clearing House
Association (NACHA).
<PAGE>

B. Telephone Transactions

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.

* Check the box next to the telephone transaction service(s)
you desire.

* 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 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.

The fund requires signatures of bank account owners exactly as they
appear on bank records.

- --------------------------------------------------------------------------------
Individual Account Owner Date Joint Account Owner Date

Telephone Exchanges and Redemptions by Check

Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an
authorized employee of an investment dealer or agent requesting a redemption
or exchange on my behalf. (NOTE: Telephone exchanges may only be processed
between accounts that have identical registrations.) Telephone redemption
checks will only be mailed to the name and address of record; and the address
must have no change within the last 30 days. The maximum telephone redemption
amount is $25,000. This service can be enacted once every 30 days.

[ ] I do not elect the telephone exchange service.
---
[ ] I do not elect the telephone redemption by check service.
---
C. Systematic Withdrawal Plan (SWP) **

In order to establish a SWP, an investor must own or purchase shares of
the Fund having a current net asset value of at least:

* $10,000 for monthly payments;
* $5,000 for bi-monthly payments;
* $4,000 for quarterly or less frequent payments

[ ] I authorize this service to begin in _________ , 19__ , for the amount
Month
of $_______________ ($50.00 minimum)

Frequency: (Please select one)
[ ] Monthly
[ ] Bi-Monthly
[ ] Quarterly
[ ] Annually
[ ] In the months circled: J F M A M J J A S O N D

Please send payments to: (please select one)

[ ] My checking account. Select the date of the month on or about which
you wish the EFT payments to be made: _______________. Please enclose a
preprinted voided check to ensure accuracy. EFT not available to Class B
shareowners other than retirement plans.

[ ] My address of record designated in Section 2.

[ ] The payee and address specified below:

- --------------------------------------------------------------------------------
Name of Payee Address

- --------------------------------------------------------------------------------
City State Zip

D. Auto Exchange

[ ] I authorize Alliance Fund Services, Inc. to initiate a monthly exchange
for $____________ ($25.00 minimum) on the _________ day of the month,
into the Alliance Fund noted below:

Fund Name: ___________________________________________________

[ ] Existing account number:______________________________________

[ ] New account

Shares exchanged will be redeemed at net asset value computed on the date
of the month selected. (If the date selected is not a fund business day
the transaction will be processed on the prior fund business day.)
Certificates must remain unissued.

- --------------------------------------------------------------------------------
7. Shareholder Authorization This section MUST be completed
- --------------------------------------------------------------------------------

I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and
that I have not been notified that this account is subject to backup
withholding.

By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or
expense as a result of acting upon telephone instructions purporting to be on
my behalf, that the Fund reasonably believes to be genuine, and that neither
the Fund nor any such party will be responsible for the authenticity of such
telephone instructions. I understand that any or all of these privileges may
be discontinued by me or the Fund at any time. I understand and agree that
the Fund reserves the right to refuse any telephone instructions and that my
investment dealer or agent reserves the right to refuse to issue any telephone
instructions I may request.

For non-residents only: Under penalties of perjury, I certify that to the
best of my knowledge and belief, I qualify as a foreign person as indicated
in Section 2.

I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.

- --------------------------------------------------------------------------------
Signature Date

- --------------------------------------------------------------------------------
Acceptance Date:

- --------------------------------------------------------------------------------
Dealer/Agent Authorization For selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------

We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee
the signature(s) set forth in Section 7, as well as the legal capacity of the
shareholder.

Dealer/Agent Firm Authorized Signature
---------------------------- -----------

Representative First Name MI Last Name
--------------- ---- ----------------------

Representative Number
-----------------------------------------------------------

Branch Office Address
-----------------------------------------------------------

City State Zip Code
-------------------------------- ------------- -----------

Branch Number Branch Phone ( )
-------------------------------- ---------------------

** Your bank must be a member of the National Automated
Clearing House Association (NACHA). 50074GEN-EQTYApp
<PAGE>

- --------------------------------------------------------------------------------
Alliance Subscription Application
- --------------------------------------------------------------------------------

The Alliance Stock Funds

Alliance Fund
Growth Fund
Premier Growth Fund
Counterpoint Fund
Technology Fund
Quasar Fund
International Fund
Worldwide Privatization Fund
New Europe Fund
All-Asia Fund
Global Small Cap Fund
Strategic Balanced Fund
Balanced Shares
Income Builder Fund
Utility Income Fund
Growth & Income Fund

- --------------------------------------------------------------------------------
Information And Instructions
- --------------------------------------------------------------------------------

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

Signatures - Please Be Sure To Sign the Application (Section 7)

If shares are registered in the name of:

. an individual, the individual should sign.

. joint tenants, both should sign.

. a custodian for a minor, the custodian should sign.

. a corporation or other organization, an authorized officer should sign
(please indicate corporate office or title).

. a trustee or other fiduciary, the fiduciary or fiduciaries should sign
(please indicate capacity).

Registration

To ensure proper tax reporting to the IRS:

. Individuals, Joint Tenants and Gift/Transfer to a Minor:
- Indicate your name exactly as it appears on your social security card.

. Trust/Other:

- Indicate the name of the entity exactly as it appeared on the
notice you received from the IRS when your Employer Identification number
was assigned.

Please Note:

. Certain legal documents will be required from corporations or other
organizations, executors and trustees, or if a redemption is requested by
anyone other than the shareholder of record. If you have any questions
concerning a redemption, contact the Fund at the number below.

. In the case of redemptions or repurchases of shares recently purchased by
check, redemption proceeds will not be made available until the Fund is
reasonably assured that the check has cleared, normally up to 15 calendar
days following the purchase date.

If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At:
1-(800) 221-5672.

<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 2-70428 and 811-03130.

<PAGE>

(LOGO)(R)

ALLIANCE INTERNATIONAL FUND

_________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 221-5672
_________________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION
November 1, 1994 (amended June 1, 1995)

_________________________________________________________________

This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Fund's current Prospectus.
A copy of the Prospectus may be obtained by contacting Alliance
Fund Services, Inc. at the address or telephone numbers listed
above.

TABLE OF CONTENTS

PAGE

Description of the Fund.................................... 2

Management of the Fund..................................... 17

Expenses of the Fund....................................... 24

Purchase of Shares......................................... 28

Redemption and Repurchase of Shares........................ 43

Shareholder Services....................................... 47

Net Asset Value............................................ 52

Dividends, Distributions and Taxes......................... 54

Portfolio Transactions..................................... 59

General Information........................................ 61

<PAGE>

Report of Independent Auditors and
Financial Statements....................................... 65

Appendix A (Futures Contracts and Options on
Futures Contracts and Foreign Currencies)............... A-1

Appendix B: Japan.......................................... B-1
_________________________________________________________________

(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

_________________________________________________________________

DESCRIPTION OF THE FUND

_________________________________________________________________

GENERAL

During the period since World War II, foreign securities have
generally offered a higher return than similar investments in the
United States. Moreover, there has normally been a wide
variation in performance between international equity markets
over that period. Although there can be no assurance that these
conditions will continue in the future or that Alliance Capital
Management L.P., the Fund's Adviser (the "Adviser"), will be able
to identify and invest in companies participating in the faster
growing foreign economies and markets, management of Alliance
International Fund (the "Fund") believes that investment in
foreign securities offers significant potential for prospective
long-term capital appreciation. The investment objective and
policies of the Fund have been developed in light of these
beliefs with the objective of providing investors with an
opportunity to participate in the ownership of a broad portfolio
of securities of foreign companies.

INVESTMENT OBJECTIVE AND POLICIES

The fundamental investment objective of the Fund is to seek
to obtain a total return on its assets from long-term growth of
capital and from income principally through a broad portfolio of
marketable securities of established non-United States companies
(e.g., incorporated outside the United States), companies
participating in foreign economies with prospects for growth, and
foreign government securities. The management of the Fund
considers it consistent with this objective to acquire securities
of companies incorporated in the United States and having their
principal activities and interests outside of the United States.
The Fund intends to be invested primarily in such issuers and
under normal circumstances more than 80% of its assets will be so
invested. The foregoing investment objective is a fundamental
policy of the Fund and cannot be changed without shareholder
approval.

In seeking its objective, the Fund expects to invest its
assets primarily in common stocks of established non-United
States companies which in the opinion of the Adviser have
potential for growth of capital or income or both. However,
there is no requirement that the Fund invest exclusively in
common stocks or other equity securities, and, if deemed
advisable, the Fund may invest in any other type of investment
grade security including, but not limited to, convertible

<PAGE>

securities, preferred stocks, bonds, notes and other debt
securities of foreign issuers (Euro-dollar securities), warrants,
or obligations of the United States or foreign governments and
their political subdivisions.

Investments may be made for capital appreciation or for
income or any combination of both for the purpose of achieving a
higher overall return than might otherwise be obtained solely
from investing for growth of capital or for income. There is no
limitation on the percent or amount of the Fund's assets which
may be invested for growth or income, and therefore, at any point
in time, the investment emphasis may be placed solely or
primarily on growth of capital or solely or primarily on income.
There can be no assurance, of course, that the Fund will achieve
its objective.

In determining whether the Fund will be invested for capital
appreciation or for income or any combination of both, the
Adviser regularly analyzes a broad range of international equity
and fixed income markets in order to assess the degree of risk
and level of return that can be expected from each market. Based
upon the current assessment of the Adviser, the Fund expects that
its objective will, over the long term, be met principally
through investing in the equity securities of established non-
United States companies which, in the opinion of the Adviser,
have potential for growth of capital. However, the Fund can be
expected during certain periods to place substantial emphasis on
income through investment in foreign debt securities when it
appears that the total return from such securities will equal or
exceed the return on equity securities.

When management believes that the total return on debt
securities will equal or exceed the return on common stocks, the
Fund may, in seeking its objective of total return, substantially
increase its holdings in such debt securities. The Fund may
establish and maintain temporary cash balances for defensive
purposes or to enable it to take advantage of buying
opportunities.

The Adviser believes a portfolio of investments solely in
issuers located in the United States or in any other single
country ties the performance of such a portfolio to the economic
and market swings of one country, and that diversification by
country, as well as by industry, can alleviate the impact of
downturns in any one country. The Fund intends to diversify
investments broadly among countries and normally to have
represented in the portfolio business activities of not less than
three different countries, excluding the United States. The Fund
may invest all or a substantial portion of its assets in one or
more of such countries. At July 31, 1994, approximately 50% of
the Fund's assets were invested in securities of Japanese

<PAGE>

issuers. For a description of Japan, see Appendix B. The Fund
may purchase securities of companies, wherever organized, which,
in the judgment of the Adviser, have their principal activities
and interests outside the United States determined on the basis
of such factors as location of the company's assets, or
personnel, or sales and earnings.

It is the present intention of the Adviser to invest in
companies based in (or governments of or within) the Far East
(Japan, Hong Kong, Singapore and Malaysia), Western Europe
(United Kingdom, Germany, Netherlands, France, Switzerland),
Australia, Canada, and such other areas and countries as the
Adviser may determine from time to time. However, investments
may be made from time to time in companies in, or governments of,
developing countries as well as developed countries. Although
there is no universally accepted definition, a developing country
is generally considered to be a country which is in the initial
stages of its industrialization cycle with a low per capita gross
national product. Historical experience indicates that the
markets of developing countries have been more volatile than the
markets of the more mature economies of developed countries;
however, such markets often have provided higher rates of return
to investors. Shareholders should be aware that investing in the
equity and fixed-income markets of developing countries 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. Management
at present does not intend to invest more than 10% of the Fund's
total assets in companies in, or governments of, developing
countries.

The Adviser, in determining the composition of the Fund's
portfolio, will initially seek the appropriate distribution of
investments among various countries and geographic regions.
Accordingly, the Adviser will consider the following factors in
making investment decisions on this basis: prospects for
relative economic growth between foreign countries; expected
levels of inflation; government policies influencing business
conditions; the outlook for currency relationships; and the range
of individual investment opportunities available to the
international portfolio investor.

The Fund invests in the established companies located in many
countries. As of June 30, 1994, most of the Fund's investments
were in countries comprised by the Morgan Stanley Capital
International ("MSCI") EAFE Index, which includes stock markets
of Europe, Australia and East Asia, which markets comprise 59% of
of the world's stock market capitalization. (Source: MSCI:
world stock market capitalization as of December 31, 1993.) The
United States represents 38% of the world's stock market
capitalization. As of June 30, 1994, the investments of the Fund

<PAGE>

were in Europe (37%), East Asia (53%) and other regions (10%).
As of June 30, 1994, the top five countries in which the Fund was
invested were Japan (49%), the United Kingdom (12%), France (5%),
Germany (4%) and The Netherlands (3%). As of June 30, 1994, the
ten largest investments of the Fund were Nomura Securities, Daiwa
Securities, Sony Corp., Toshiba Corp., Sumitomo Bank, Shin-Etsu
Chemical Co., Tokyo Marine & Fire Insurance Co., Nippon Steel
Corp., Sumitomo Trust & Banking Co. and Bank of Tokyo. The
portfolio manager of the Fund, A. Rama Krishna of the Adviser's
Tokyo office, believes that stock selection will continue to be
extremely important for the remainder of 1994. In Japan, the
Adviser believes the Fund should emphasize steel, paper and
chemical stocks and should remain heavily exposed to technology
stocks. In Europe, the Fund has been establishing positions in
Scandanavian paper companies and select insurance stocks.
Overall, the Adviser believes the prospects for attractive
returns in the international equity markets are positive.

The Adviser will, in analyzing individual companies for the
investment, look for one or more of the following
characteristics: an above average earnings growth per share;
high return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength;
strong competitive advantages; effective research and product
development and marketing; efficient service; pricing
flexibility; strength of management; and general operating
characteristics which will enable the companies to compete
successfully in their marketplace. While current dividend income
is not a prerequisite in the selection of portfolio companies,
the companies in which the Fund invests normally will have a
record of paying dividends for at least one year, and will
generally be expected to increase the amounts of such dividends
in future years as earnings increase.

Foreign securities such as those purchased by the Fund may be
subject to foreign government taxes which could reduce the yield
on such securities, although a shareholder otherwise subject to
U.S. Federal income taxes may, subject to certain limitations, be
entitled to claim a credit or deduction for U.S. Federal income
tax purposes for his or her proportionate share of such foreign
taxes paid by the Fund.

Under exceptional economic or market conditions abroad, the
Fund may temporarily invest for defensive purposes all or a major
portion of its assets in U.S. government obligations or debt
obligations of companies incorporated in and having their
principal activities in the United States. The Fund may also
from time to time invest its temporary cash balances in United
States, as well as foreign, short-term, high-grade money market
instruments, including, but not limited to, government
obligations, certificates of deposit, bankers' acceptances,

<PAGE>

commercial paper, short-term corporate debt securities and
repurchase agreements.

The following investment policies and restrictions
supplement, and should be read in conjunction with, the
information set forth in the Fund's Prospectus under the heading
"Investment Objectives and Policies." While the Fund's
investment objective of total return for long-term growth of
capital and from income cannot be changed without shareholder
approval, the Fund's investment policies are not fundamental and
may be changed by the Trustees of the Fund without shareholder
approval. However, shareholders will be notified prior to a
material change in such policies.

DERIVATIVE INVESTMENT PRODUCTS

The Fund may use various derivative investment products to
reduce certain risks to the Fund of exposure to local market and
currency movements. These products include forward foreign
currency exchange contracts, futures contracts, including stock
index futures, and options thereon, put and call options and
combinations thereof. The Adviser will use such products as
market conditions warrant. The Fund's ability to use these
products may be limited by market conditions, regulatory limits
and tax considerations and there can be no assurance that any of
these products would succeed in reducing the risk to the Fund of
exposure to local market and currency movements. See "Investment
Policies and Restrictions" in the Statement of Additional
Information. New financial products and risk management
techniques continue to be developed and the Fund may use these
new investments and techniques to the extent consistent with its
investment objective and policies.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may
purchase or sell forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
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 which is individually negotiated and privately traded
by currency traders and their customers. The Fund's dealings in
forward contracts will be limited to hedging involving either
specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of forward contracts with respect
to specific receivables or payables of the Fund accruing in
connection with the purchase and sale of its portfolio securities
or the payment of dividends and distributions by the Fund.
Position hedging is the sale of forward contracts with respect to
portfolio security positions denominated or quoted in such
foreign currency. The Fund will not speculate in forward
contracts and, therefore, the Adviser believes that the Fund will

<PAGE>

not be subject to the risks frequently associated with the
speculative use of such transactions. The Fund may not position
hedge with respect to the currency of a particular country 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 particular foreign currency. If
the Fund enters into a position hedging transaction, its
custodian bank will place cash or liquid securities in a separate
account of the Fund in an amount equal to the value of the Fund's
total assets committed to the consummation of such forward
contract. If the value of the securities placed in the separate
account declines, additional cash or securities will be placed in
the account so that the value of the account will equal the
amount of the Fund's commitment with respect to such 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 hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it
anticipates. The Fund will not enter into a forward contract
with a term of more than one year or if, as a result thereof,
more than 50% of the Fund's total assets would be committed to
such contracts.

While these contracts are not presently regulated by the
Commodity Futures Trading Commission ("CFTC"), the CFTC may in
the future assert authority to regulate forward contracts. In
such event the Fund's ability to utilize forward contracts in the
manner set forth in the Prospectus may be restricted. Forward
contracts will reduce the potential gain from a positive change
in the relationship between the U.S. Dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund if it had not entered
into such contracts. The use of foreign currency forward
contracts will not eliminate fluctuations in the underlying U.S.
Dollar equivalent value of the prices of or rates of return on
the Fund's foreign currency-denominated portfolio securities and
the use of such techniques will subject the Fund to certain
risks.

The matching of the increase in value of a forward contract
and the decline in the U.S. Dollar equivalent value of the
foreign currency-denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Fund may
not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's
ability to use such contracts to hedge or cross-hedge its assets.
Also, with regard to the Fund's use of cross-hedges, there can be

<PAGE>

no assurance that historical correlations between the movement of
certain foreign currencies relative to the U.S. Dollar will
continue. Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies
underlying the Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's
assets that are the subject of such cross-hedges are denominated.

OPTIONS. The Fund may write, sell and purchase put and call
options listed on one or more U.S. or foreign securities
exchanges, including options on market indices. A call option
gives the purchaser of the option, for paying the writer 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 pr ice. A put option gives the buyer of the
option, for paying the writer a premium, the right to deliver a
specified number of shares of a stock to the writer of the option
on or before a fixed date, at a predetermined price.

Writing, purchasing and selling put and call options are
highly specialized activities and entail greater than ordinary
investment risks. When puts written by the Fund are exercised,
the Fund will be obligated to purchase stocks above their then
current market price. The Fund will not write a put option
unless at all times during the option period the Fund has
(a) sold short the optioned securities, or securities convertible
into or carrying rights to acquire the optioned securities, or
(b) purchased an offsetting put on the same securities. When
calls written by the Fund are exercised, the Fund will be
obligated to sell stocks below their then current market price.
The Fund will not write a call option 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.

OPTION ON MARKET 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.

FINANCIAL FUTURES CONTRACTS, INCLUDING STOCK INDEX FUTURES,
AND OPTIONS ON FUTURES CONTRACTS. The Fund may 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 may purchase and write put
and call options to buy or sell futures contracts ("options on

<PAGE>

futures contracts"). A sale of a futures contract entails the
acquisition of a contractual obligation to deliver the foreign
currency or other commodity called for by the contract at a
specified price on a specified date. A purchase of a futures
contract entails the incurring of a contractual obligation to
acquire the commodity called for by the contract at a specified
price on a specified date. The Fund's Custodian will place cash
not available for investment or U.S. Government Securities or
other liquid high-quality debt securities in a separate account
of the Fund having a value equal to the aggregate amount of the
Fund's commitments in futures contracts. 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 and the price at which the contract was
originally struck. No physical delivery of the securities
underlying the index is made. In connection with its purchase of
stock index futures contracts the Fund will deposit in a
segregated account with the Fund's Custodian an amount of cash or
U.S. Government Securities (as defined below) or other liquid
high-quality debt securities equal to the market value of the
futures contracts less any amounts maintained in a margin account
with the Fund's broker. Options on futures contracts to be
written or purchased by the Fund will be traded on U.S. or
foreign exchanges or over-the-counter.

With respect to futures contracts and options on futures
contracts that are purchased for purposes other than for "bona
fide hedging purposes" (as defined in Commodity Futures Trading
Commission Regulations promulgated under the Commodity Exchange
Act), the aggregate initial margin and premiums required to be
paid by the Fund to establish such positions will not exceed on
all outstanding futures contracts of the Fund and premiums paid
on outstanding options on futures contracts 5% of the liquidation
value of the total assets of the Fund, after taking into account
unrealized profits and unrealized losses on any such contracts
the Fund has entered into.

For additional information on the use, risks and costs of
futures contracts and options on futures contracts and foreign
currencies, see Appendix A.

OPTIONS ON FOREIGN CURRENCIES. The Fund may write, sell and
purchase put and call options on foreign currencies traded on
securities exchanges or boards of trade (foreign and domestic) or
over-the-counter. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a
partial hedge, up to the amount of the premium received, and the
Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an

<PAGE>

effective hedge against fluctuations in exchange rates although,
in the event of rate movements adverse to the Fund's position, it
may forfeit the entire amount of the premium plus related
transaction costs. There is no specific percentage limitation on
the Fund's investments in options on foreign currencies. See the
Fund's Statement of Additional Information for further discussion
of the use, risks and costs of options on foreign currencies.

GENERAL. The successful use of the foregoing derivative
investment products draws upon the Adviser's special skills and
substantial experience with respect to such products and depends
on the Adviser's ability to forecast currency exchange rate
movements correctly. Should exchange rates move in an unexpected
manner, the Fund may not necessarily achieve the anticipated
benefits of futures contracts, options or forward contracts or
may realize losses and thus be in a worse position than if such
products 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 options on currencies
and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time.
In addition, the correlation between movements in the prices of
such instruments and movements in the price of the securities and
currencies hedged or used for cover will not be perfect and could
produce unanticipated losses.

The Fund's ability to dispose of its positions in futures
contracts, options and forward contracts will depend on the
availability of liquid markets in such instruments. Markets in
options and futures with respect to a number of securities and
currencies are relatively new and still developing. 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 over-the-counter option purchased or written by the Fund, it
might not be possible to effect a closing transactions 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 futures contract or currency upon
exercise. Therefore, no assurance can be given that the Fund
will be able to utilize these instruments effectively for the
purposes set forth above. Furthermore, the Fund's ability to
engage in options and futures transactions may be limited by tax
considerations. See "Dividends, Distributions and Taxes--U.S.
Federal Income Taxes."

<PAGE>

OTHER INVESTMENT PRACTICES

LENDING OF PORTFOLIO SECURITIES. Although it has no present
intention of doing so, the Fund may seek to increase income by
lending portfolio securities. Under present regulatory policies,
such loans may be made to member firms of the New York Stock
Exchange, Inc. (the "Exchange") and are required to be secured
continuously by collateral consisting of cash, cash equivalents
or United States Treasury Bills maintained in an amount at least
equal to the market value of the securities loaned. The value of
the securities loaned will not exceed 30% of the value of the
Fund's total assets.

The Fund may seek to increase income by lending portfolio
securities. The Fund will have the right to call a loan to
obtain the securities loaned at any time on five days' notice or
such shorter period as may be necessary to vote the securities.
During the existence of a loan the Fund will receive the income
earned on investment of the collateral. The Fund will not,
however, have the right to vote any securities having voting
rights during the existence of the loan, but the Fund will call
the loan in anticipation of an important vote to be taken among
holders of the securities or the giving or withholding of their
consent on a material matter affecting the investment. As with
other extensions of credit there are risks of delay in recovery
or even loss of rights in the collateral should the borrower of
the securities fail financially. However, the loans would be
made only to firms deemed by management of the Fund to be in good
standing, and when, in the judgment of management, the amount
which may be earned currently from securities loans of this type
justifies the attendant risk.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements, which are instruments through which an investor
(e.g., the Fund) purchases a security (the "underlying security")
from a bank or well-established securities dealer, with an
agreement by the seller to repurchase the security at the same
price, plus interest at a specified rate. The underlying
securities are limited to those which would otherwise qualify for
investment by the Fund. Repurchase agreements usually have a
short duration, often less than one week. The Fund will not
enter into a repurchase agreement of a duration of more than
seven business days if, as a result, more than 10% of the value
of the Fund's total assets would be so invested.

WARRANTS. The Fund may invest 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

<PAGE>

represent any rights in the assets of the issuing company. Also,
the value of the 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.

It is expected that the Fund's investments will ordinarily be
traded on exchanges located in the respective countries in which
the various issuers of such securities are principally based and
in some case on other exchanges. As much as 25% of the value of
the Fund's total assets may be invested in the securities of
issuers having their principal business activities in the same
industry.

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 that it will not invest in warrants
(other than warrants acquired by the Fund as a part of a unit or
attached to securities at the time of purchase) if as a result
such warrants valued at the lower of cost or market would exceed
10% of the value of the Fund's assets at the time of purchase.

PORTFOLIO TURNOVER. Generally, the Fund does not trade in
securities for short-term profits but, when circumstances
warrant, securities may be sold without regard to the length of
time held. Although the Fund cannot accurately predict its
annual portfolio turnover rate, management does not expect it to
exceed 100%. A 100% annual turnover rate would occur, for
example, if all the securities in the Fund's portfolio were
replaced in a period of one year. A 100% turnover rate is
greater than that of most other investment companies, including
those which emphasize capital appreciation as a basic policy, and
may result in correspondingly greater brokerage commissions being
paid by the Fund. The portfolio turnover rates for the years
ended June 30, 1994 and 1993 were 97% and 94%, respectively.

SPECIAL RISK CONSIDERATIONS

Investors should understand and consider carefully the
substantial risks involved in securities of foreign companies and
governments of foreign nations, some of which are referred to
below, and which are in addition to the usual risks inherent in
domestic investments. Investing in securities of non-United
States companies which are generally denominated in foreign
currencies, and utilization of derivative investment products
denominated in, or the value of which is dependent upon movements
in the relative value of, a foreign currency, involve 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 regulations, political and social instability,
expropriation, imposition of foreign taxes, less liquid markets

<PAGE>

and less available information than are generally the case in the
United States, higher transaction costs, less government
supervision of exchanges, brokers and issuers, difficulty in
enforcing contractual obligations, lack of uniform accounting and
auditing standards and greater price volatility.

There is generally less publicly available information about
foreign companies comparable to reports and ratings that are
published about companies in the United States. Foreign
companies are also generally not subject to uniform accounting
and auditing and financial reporting standards, practices and
requirements comparable to those applicable to United States
companies.

It is contemplated that foreign securities will be purchased
in over-the-counter markets or on stock exchanges located in the
countries in which the respective principal offices of the
issuers of the various securities are located, if that is the
best available market. Foreign securities markets are generally
not as developed or efficient as those in the United States.
While growing in volume, they usually have substantially less
volume than the Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of
comparable United States companies. Similarly, volume and
liquidity in most foreign bond markets is less than in the United
States and, at times, volatility of price can be greater than in
the United States. Fixed commissions on foreign stock exchanges
are generally higher than negotiated commissions on United States
exchanges, although the Fund will endeavor to achieve the most
favorable net results on its portfolio transactions. There is
generally less government supervision and regulation of stock
exchanges, brokers and listed companies than in the United
States.

With respect to certain foreign countries, there is the
possibility of adverse changes in investment or exchange control
regulations and interest rates, expropriation or confiscatory
taxation, limitations on the removal of funds or other assets of
the Fund, political or social instability, or diplomatic
developments which could affect United States investments in
those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the United States' economy
in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and
balance of payments position.

The dividends and interest payable on certain of the Fund's
foreign portfolio securities may be subject to foreign
withholding taxes, thus reducing the net amount of income
available for distribution to the Fund's shareholders. A
shareholder otherwise subject to United States Federal income

<PAGE>

taxes may, subject to certain limitations, be entitled to claim a
credit or deduction for U.S. Federal income tax purposes for his
or her proportionate share of such foreign taxes paid by the
Fund. See "U.S. Federal Income Taxes".

Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will do so
from time to time, and investors should be aware of the costs of
currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on
the difference (commonly known as the "spread") between the price
at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Fund at
onerate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.

Investors should understand that the expense ratio of the
Fund can be expected to be higher than investment companies
investing in domestic securities since, among other things, the
cost of maintaining the custody of foreign securities is higher
and the purchase and sale of portfolio securities may be subject
to higher transaction charges, such as stamp duties and turnover
taxes.

Investors should further understand that all investments have
a risk factor. There can be no guarantee against loss resulting
from an investment in the Fund, and there can be no assurance
that the Fund's investment objective will be attained. The Fund
is designed for individual and institutional investors who wish
to diversify beyond the United States in an actively researched
and managed portfolio. The Fund may not be suitable for all
investors and is intended for long-term investors who can accept
the risks entailed in seeking long-term growth of capital through
investment in foreign securities as described above.

FUNDAMENTAL INVESTMENT POLICIES

In addition to the investment objective and policies
described above, the Fund has adopted certain fundamental
investment policies which may not be changed without shareholder
approval, which means the vote of (1) 67% or more of the shares
represented at a meeting at which more than 50% of the
outstanding shares are represented or (2) more than 50% of the
outstanding shares, whichever is less. Whenever any investment
restriction states a maximum percentage of the Fund's assets
which may be invested in any security or other asset, it is
intended that such maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of
such securities or other assets. Accordingly, any later increase
or decrease in percentage beyond the specified limitation

<PAGE>

resulting from a change in values or net assets will not be
considered a violation.

Briefly, the policies provide that the 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
securities issued or guaranteed by the United
States Government, its agencies or
instrumentalities ("U.S. Government Securities") or
the government of any foreign country, its agencies
or instrumentalities ("Foreign Government
Securities"); provided, however, that the Fund may
not, with respect to 75% of the value of its total
assets, invest more than 5% of the value 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 ("restricted securities"),
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);

<PAGE>

(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 valued at market;

(vii) own, in contravention of the applicable laws or
regulations of Germany, any securities of another
investment company;

(viii) unless the securities are acquired pursuant to a
plan of reorganization or an offer of exchange, 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
10% of such value in closed-end investment
companies in general;

(ix) purchase or sell real property (including limited
partnership interests although it may purchase
readily marketable interests in real estate
investment trusts or readily marketable securities
of companies which invest in real estate);

(x) purchase or sell commodity contracts; provided,
however, that this policy does not prevent the Fund
from entering into (a) forward foreign currency
exchange contracts, (b) financial futures
contracts, including contracts for the purchase or
sale for future delivery of foreign currencies and
futures contracts based on stock indices,
(c) options or financial futures contracts, or
(d) other, similar contracts or transactions;

(xi) purchase participations or other direct interests
in oil, gas, or other mineral leases exploration or
development programs;

(xii) purchase securities on margin, except for use of
the short-term credit necessary for clearance of
purchases of portfolio securities;

(xiii) effect short sales of securities;

(xiv) make loans, except for use of the short-term credit
necessary for clearance of purchases of portfolio
securities, except that it may purchase debt
securities, enter into repurchase agreements and
lend its portfolio securities, as described in the
Fund's Prospectus;

<PAGE>

(xv) mortgage, pledge, hypothecate, or in any other
manner transfer as security for indebtedness any
security owned by the Fund, except as may be
necessary in connection with permissible
borrowings, and in the aggregate amount not to
exceed 10% of the Fund's total assets valued at
market at the time of such mortgaging, pledging or
hypothecating;

(xvi) act as an underwriter of securities, except insofar
as it might be deemed to be such for purposes of
the Securities Act of 1933, as amended, with
respect to the disposition of certain portfolio
securities acquired within the limitations of (v)
above;

(xvii) purchase or retain the securities of any issuer if,
to the knowledge of the Fund's management, those
officers and Trustees of the Fund, and of its
adviser, who each owns beneficially more than one-
half of 1% of the outstanding security of such
issuer, together own beneficially more than 5% of
the securities of such issuer;

(xviii) invest in companies for the purpose of exercising
management or control; and

(xix) issue senior securities except as permitted by the
Investment Company Act of 1940, as amended (the
"Act").

_________________________________________________________________

MANAGEMENT OF THE FUND

_________________________________________________________________

ADVISER

Alliance Capital Management L.P. (the "Adviser"), 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") as the
Fund's Adviser (see "Management of the Fund" in the Prospectus).

The Adviser is a leading international investment manager
supervising client accounts with assets as of December 31, 1994
of more than $121 billion (of which more than $36 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,

<PAGE>

foundations and endowment funds and included, as of December 31,
1994, 29 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,450
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 103 separate
investment portfolios managed by the Adviser currently have more
than one million shareholders.

Alliance Capital Management Corporation, the sole general
partner of, and the owner of a 1% general partnership interest
in, the Adviser, is an indirect wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of December 31,
1994, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
owned in the aggregate approximately 59% of the issued and
outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser
("Units"). As of December 31, 1994, approximately 32% and 9% of
the Units were owned by the public and employees of the Adviser
and its subsidiaries, respectively, including employees of the
Adviser who serve as Directors of the Fund.

AXA owns approximately 60% of the outstanding voting shares
of common stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations are comprised of
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of
January 1, 1995, 42.3% of the issued shares (representing 54.7%
of the voting power) of AXA were owned by Midi Participations, a
French corporation that is a holding company. The voting shares
of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian corporation, owned 34.1%). As of January 1, 1995, 62.1%
of the issued shares (representing 75.7% of the voting power) of
Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 31.8% of the issued shares) (representing 39.0% of the

<PAGE>

voting power), and 26.5% of the issued shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a
French bank ("Paribas"). Including the shares owned by Midi
Participations, as of January 1, 1995, the Mutuelles AXA directly
or indirectly owned 51.3% of the issued shares (representing
65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not
entitled to be voted. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa.

The Advisory Agreement became effective on July 22, 1992.
The Advisory Agreement replaced an earlier, substantially
identical agreement (the "First Advisory Agreement") that
terminated because of its technical assignment as a result of
AXA's acquisition of control over Equitable. In anticipation of
the assignment of the First Advisory Agreement, the Advisory
Agreement was approved by the unanimous vote, cast in person, of
the Fund's Trustees (including the Trustees who are not parties
to the Advisory Agreement or interested persons as defined in the
Act of any such party) at a meeting called for the purpose held
on September 12, 1991. At a meeting held on June 8, 1992, a
majority of the outstanding voting securities of the Fund
approved the Advisory Agreement. Most recently, continuance of
the Advisory Agreement was approved for the period ending
June 30, 1995 by the Trustees of the Fund, including a majority
who are not "interested persons", as defined in the Act, at their
regular meeting held on May 31, 1994.

The Advisory Agreement remains in effect until June 30 of
each year if approved annually (a) by the Trustees of the Fund or
by the holders of a majority of the outstanding voting securities
of the Fund and (b) by a majority of the Trustees who are not
parties to the agreement, or "interested persons", as defined in
the Act, of any such party, at a meeting called for the purpose
of voting on such matter. The Advisory Agreement may be
terminated without penalty on 60 days' written notice at the
option of either party or by a vote of the shareholders; it 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.

Under the Advisory Agreement, the Adviser furnishes
investment advice and recommendations to the Fund and provides
office space in New York, order placement facilities and persons
satisfactory to the Fund's Board of Trustees to act as officers
of the Fund. Such officers, as well as certain Trustees of the
Fund, may be employees of the Adviser or directors, officers or
employees of its affiliates. For the fiscal years ended June 30,

<PAGE>

1992, 1993 and 1994, the Adviser received from the Fund advisory
fees of $2,066,991, $1,603,577 and $2,156,181, respectively.

The Advisory Agreement provides that the Adviser will
reimburse the Fund to the extent, if any, that its ordinary
operating expenses for the preceding year (exclusive of interest,
taxes, brokerage and other expenditures that are capitalized in
accordance with generally accepted accounting principles and
extraordinary expenses) exceed the limits prescribed by any state
in which the Fund's shares are qualified for sale. The Fund may
not qualify its shares for sale in every state. The Fund
believes that at present the most restrictive state expense ratio
limitation imposed by any state in which the Fund has qualified
its shares for sale is 2.5% of the first $30 million of the
mutual fund's average net assets, 2.0% of the next $70 million of
its average net assets and 1.5% of its average net assets in
excess of $100 million. For the fiscal years ended June 30,
1992, 1993 and 1994, no reimbursements were required to be made
pursuant to the most restrictive expense limitation.

The Fund has, under the Advisory Agreements assumed the
obligation for payment of all 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 Trustees.

Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The
Adviser may, from time to time, make recommendations which result
in the purchase or sale of a particular security by its other
clients simultaneously with the Fund. If transactions on behalf
of more than one client during the same period increase the
demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price. 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 the same security on the 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 the following: 1) ACM Institutional
Reserves, Inc., AFD Exchange Reserves, Alliance All-Asia
Investment Fund, Inc., The Alliance Fund, Inc., Alliance Balanced
Shares, Inc., Alliance Bond Fund, Inc., Alliance Capital
Reserves, Alliance Counterpoint Fund, Alliance Developing Markets

<PAGE>

Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Government
Reserves, Alliance Growth and Income Fund, Inc., Alliance Income
Builder Fund, Inc., Alliance International Fund, Alliance Money
Market Fund, Alliance Mortgage Securities Income Fund, Inc.,
Alliance Mortgage Strategy Trust, 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 Short-Term Multi-
Market Trust, Inc., Alliance Technology Fund, Inc., Alliance
Utility Income Fund, Inc., Alliance Variable Products Series
Fund, Inc., Alliance World Income Trust, Inc., Alliance Worldwide
Privatization Fund, Inc., The Alliance Portfolios, Fiduciary
Management Associates and The Hudson River Trust, all registered
open-end investment companies; and 2) ACM Government Income Fund,
Inc., ACM Government Securities Fund, Inc., ACM Government
Spectrum Fund, Inc., ACM Government Opportunity Fund, Inc., ACM
Managed Dollar Income Fund, Inc., ACM Managed Income Fund, Inc.,
ACM Municipal Securities Income Fund, Inc., Alliance All-Market
Advantage Fund, Inc., Alliance Global Environment Fund, Inc.,
Alliance World Dollar Government Fund, Inc., Alliance World
Dollar Government Fund II, Inc., The Austria Fund, Inc., The
Global Privatization Fund, Inc., The Korean Investment Fund,
Inc., The Southern Africa Fund, Inc. and The Spain Fund, Inc.,
all registered closed-end investment companies.

TRUSTEES AND OFFICERS

The Trustees and officers of the Fund, their ages and their
primary occupations during the past five years are set forth
below. Each such trustee and officer is also a trustee, director
or officer of other registered investment companies sponsored by
the Adviser. Unless otherwise noted, the address of each of the
following persons is 1345 Avenue of the Americas, New York, New
York 10105.

TRUSTEES

JOHN D. CARIFA1 , 50, Chairman, is the President and Chief
Operating Officer and a Director of ACMC with which he has been
associated since prior to 1990.

DAVID H. DIEVLER, 65, was formerly a Senior Vice President of
ACMC, with which he had been associated since prior to 1990.

_________________________

1An "interested person" of the Fund as defined in the Act.

<PAGE>

JOHN H. DOBKIN, 53, has been the President of Historic Hudson
Valley (historic preservation) since 1990. From 1987 to 1992, he
was a Director of ACMC. His address is 105 West 55th Street, New
York, New York 10019.

W.H. HENDERSON, 68, has been an oil and gas consultant since
prior to 1990. He is also a Director of Nippon Peroxide Co.
Limited, Fidelity Japan OTC and Regional Markets Fund and a
consultant to Laporte Industries PLC and Reckitt and Colman PLC.
His address is Quarrey House, Charlton Horethorne, Sherborne,
Dorset, DT9 4NY, England.

STIG HOST, 68, is the Chairman and Chief Executive Officer of
International Energy Corp. (oil and gas exploration) with which
he has been associated since prior to 1990. He is also Chairman
and Director of Kriti Exploration, Inc. (oil and gas exploration
and production), Managing Director of Kriti Oil and Minerals,
N.V., Chairman of Kriti Properties and Development Corporation
(real estate), Chairman of International Marine Sales, Inc.
(marine fuels), and a Director of Florida Fuels, Inc. (marine
fuels) and President of Alexander Host Foundation. He is a
Trustee of the Winthrop Focus Funds. His address is 36 Keofferam
Road, Old Greenwich, Connecticut 06870.

RICHARD M. LILLY, 64, was formerly President and Chief
Executive Officer of Esso Italiana, S.p.A, Esso Europe-Africa
Services and Esso North Europe A/S since prior to 1990. His
address is 70 Palace Gardens Terrace, London W8 4RR England.

ALAN STOGA, 44, has been a Managing Director and a member of
the Board of Directors of Kissinger Associates, Inc. since prior
to 1990. His address is Kissinger Associates, Inc., 350 Park
Avenue, New York, New York 10022.

HON. JOHN C. WEST, 72, has been an attorney in private
practice since prior to 1990. Prior thereto he was Governor of
South Carolina, United States Ambassador to Saudi Arabia and a
Distinguished Professor of Middle East Studies, University of
South Carolina. He is also a Director of Whittaker Corp.
(chemical and aero space) and BioWhittaker Corp. (technology).
His address is P.O. Drawer 13, Hilton Head, South Carolina 29938.

ROBERT C. WHITE, 74, formerly a Vice President and Chief
Financial Officer of the Howard Hughes Medical Institute.
Retired Director of the MEDSTAT Group (healthcare information
systems) and the Ambassador Funds and a retired Trustee of the
St. Clair Fund (registered investment companies). He was
formerly Assistant Treasurer of Ford Motor Company. His address
is 30835 River Crossing, Bingham Farms, Michigan, 48025.

<PAGE>

OFFICERS

A. RAMA KRISHNA, Senior Vice President, 31, is a Senior Vice
President of ACMC, with which he has been associated since 1993.
Previously he was Chief Investment Strategist and Director -
Equity Research at First Boston Corporation since prior to 1990.

THOMAS J. BARDONG, Vice President, 50, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1990.

MARK H. BREEDON, Vice President, 42, has been a Vice
President of ACMC, since prior to 1990 and a Director and Senior
Vice President of Alliance Capital Limited "ACL" since prior to
1990.

NICHOLAS E. CROSSLAND, Vice President, 23, is an Assistant
Vice President with ACL with which he has been associated since
1991. Prior thereto, he was a trading assistant at Brewin,
Dolphin since prior to 1990.

KELLY A. MORGAN, Vice President, 32, is a Senior Vice
President of ACMC, with which she has been associated since prior
to 1990.

MARK D. GERSTEN, Treasurer and Chief Financial Officer, 44,
is a Senior Vice President of Alliance Fund Services, Inc. with
which he has been associated since prior to 1990.

EDMUND P. BERGAN, JR., Secretary, 45, is Senior Vice
President and General Counsel of AFD and Alliance Fund Services,
Inc. and Vice President and Assistant General Counsel of ACMC
with which he has been associated since prior to 1990.

ANDREW L. GANGOLF, Assistant Secretary, 40, Vice President
and Assistant General Counsel of AFD since January 1995. Prior
thereto, since October 1992, he was Vice President and Assistant
Secretary of Delaware Management Co., Inc. Prior thereto, he was
Vice President and Counsel of The Equitable Life Assurance
Society of the United States.

EMILIE D. WRAPP, Assistant Secretary, 39, is Special Counsel
of ACMC with which she has been associated since 1990.

PATRICK J. FARRELL, Controller, 35, is a Vice President of
Alliance Fund Services with which he has been associated since
prior to 1990.

<PAGE>

JOSEPH J. MANTINEO, Assistant Controller, 36, is a Vice
President of Alliance Fund Services with which he has been
associated since prior to 1990.

STEPHEN M. ATKINS, Assistant Controller, 29, has been a
Manager of International Mutual Fund Accounting of AFS since
July, 1992. He was formerly Supervisor in International Mutual
Fund Accounting since prior to 1990.

The Fund does not pay any fees to, or reimburse expenses of,
its Trustees who are considered "interested persons" of the Fund.
The aggregate compensation paid by the Fund to each of the
Trustees during its fiscal period ended June 30, 1994, the
aggregate compensation paid to each of the Trustees during
calendar year 1994 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of funds in the
Alliance Fund Complex with respect to which each of the Trustees
serves as a trustee or director, are set forth below. Neither
the Fund nor any other fund in the Alliance Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its trustees or directors.

<TABLE>
<CAPTION>
Total Total Number of Funds in
Compensation the Alliance Fund Complex,
Aggregate From the Alliance Including the Fund, as to
Name of Trustee Compensation Fund Complex, which the Trustee is
of the Fund from the Fund Including the Fund a Trustee or Director
_______________ _____________ __________________ _________________________

<S> <C> <C> <C>
John D. Carifa $ 0 $ 0 42
David H. Dievler $ 0 $ 0 49
John H. Dobkin $5,250 $110,750 29
W.H. Henderson $4,000 $ 22,250 5
Stig Host $4,000 $ 22,250 5
Richard M. Lilly $4,000 $ 22,250 5
Alan Stoga $4,000 $ 21,500 5
Hon. John C. West $4,000 $ 22,250 5
Robert C. White $5,500 $133,500 36
</TABLE>

As of May 24, 1995, the Trustees and officers of the Fund as a
group owned less than 1% of the shares of the Fund.

<PAGE>

_________________________________________________________________

EXPENSES OF THE FUND
_________________________________________________________________

The Fund has entered into, a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Fund directly or indirectly to pay
expenses associated with distribution of its 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 Securities and Exchange Commission (the
"Commission") under the 1940 Act (the "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, in the case of Class C shares, without
the assessment of a contingent deferred sales charge, and at the
same time to permit the Principal Underwriter to compensate
broker-dealers in connection with the sale of such shares. In
this regard the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the
Class B shares, and the distribution services fee on the Class C
shares, are the same as those of the initial sales charge and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and/or distribution services
fee provide for the financing of the distribution of the Fund's
shares.

Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Plan and the purposes for which
such expenditures were made to the Trustees of the Fund on a
quarterly basis. Also, the Agreement provides that the selection
and nomination of Trustees who are not "interested persons" of
the Fund, as defined in the 1940 Act, are committed to the
discretion of such disinterested Trustees then in office.

The Agreement became effective on July 22, 1992 and was
amended as of April 30, 1993 to permit the distribution of an
additional class of shares, Class C shares. The amendment to the
Agreement was approved by the unanimous vote, cast in person, of
the disinterested Trustees at a meeting called for that purpose
held on February 23, 1993, and by the initial holder of Class C
shares of the Fund on April 30, 1993.

The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the

<PAGE>

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 June 30, 1994, with
respect to Class A shares, the Fund paid distribution services
fees for expenditures under the Agreement, in the aggregate
amount of $330,264 which constituted approximately .18% of the
Fund's average daily net assets attributable to the Class A
shares during the period, and the Adviser made payments from its
own resources as described above, aggregating $88,967. Of the
$419,231 paid by the Fund and the Adviser under the Plan, with
respect to the Class A shares, $11,320 were spent on advertising,
$14,986 on the printing and mailing of prospectuses for persons
other than current shareholders, $281,751 for compensation to
broker- dealers and other financial intermediaries (including,
$11,320 to the Fund's Principal Underwriter), $18,057 for
compensation to sales personnel and, $93,117 were spent on
printing of sales literature, travel, entertainment, due
diligence and other promotional expenses.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class B shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $161,116, which constituted 1.00% of the Fund's average daily
net assets attributable to Class B shares during the period, and
the Adviser made payments from its own resources, as described
above, aggregating $669,061. Of the $830,177 paid by the Fund and
the Adviser under the Plan, with respect to Class B shares,
$19,781 was spent on advertising, $9,301 on the printing and
mailing of prospectuses for persons other than current
shareholders, $673,078 for compensation to broker-dealers and
other financial intermediaries (including, $94,503 to the Fund's
Principal Underwriter), $19,801 for compensation to sales
personnel, and $108,216 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class C shares, the Fund paid distribution services
fees for expenditures under the Agreement, in the aggregate
amount of $74,494 which constituted approximately 1.00%,
annualized, of the Fund's average daily net assets attributable
to Class C shares during the period, and the Adviser made
payments from its own resources, as described above, aggregating
$241,415. Of the $315,909 paid by the Fund and the Adviser under
the Plan, with respect to Class C shares, $13,950 was spent on
advertising, $8,181 on the printing and mailing of prospectuses
for persons other than current shareholders, $163,485 for
compensation to broker- dealers and other financial

<PAGE>

intermediaries (including, $90,420 to the Fund's Principal
Underwriter), $25,015 for compensation to sales personnel, and,
$105,278 were spent on printing of sales literature, travel,
entertainment, due diligence and other promotional expenses.

The Agreement will continue in effect for successive
twelve-month periods (computed from each July 1), provided,
however, that such continuance is specifically approved at least
annually by the Trustees 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 Trustees 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 trustees of the Fund) and who have no direct
or indirect financial interest in the operation of the Plan or
any agreement related thereto. Most recently the continuance of
the Agreement until June 30, 1995 was approved by a vote, cast in
person, of the Trustees, including a majority of the Trustees who
are not "interested persons", as defined in the 1940 Act, at
their meeting held on May 31, 1994.

In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class, and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.

All material amendments to the Agreement must be
approved by a vote of the Trustees or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
either case, by a majority of the disinterested Trustees, cast in
person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class
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 Trustees 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 Plan only, the Fund need give no notice to the Principal
Underwriter. The Agreement will terminate automatically in the
event of its assignment.

<PAGE>

TRANSFER AGENCY AGREEMENT

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of each of the Class A shares, Class B shares and
Class C shares of the Fund, plus reimbursement for out-of-pocket
expenses. The transfer agency fee with respect to the Class B
shares is higher than the transfer agency fee with respect to the
Class A shares or the Class C shares reflecting the additional
costs associated with the Class B contingent deferred sales
charge. For the fiscal year ended June 30, 1994, the Fund paid
Alliance Fund Services, Inc. $234,980 for transfer agency
services.

_________________________________________________________________

PURCHASE OF SHARES
_________________________________________________________________

The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How To Buy Shares."

GENERAL

Shares of the Fund will be offered on a continuous basis
at a price equal to their net asset value plus an initial sales
charge at the time of purchase (the "initial sales charge
alternative"), with a contingent deferred sales charge (the
"deferred sales charge alternative"), or without any initial or
contingent deferred sales charge (the "asset- based sales charge
alternative"), as described below. Shares of the Fund are offered
on a continuous basis 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"), or (iii) the
Principal Underwriter. The minimum for initial investments is
$250; subsequent investments (other than reinvestments of
dividends and capital gains distributions in shares) must be in
the minimum amount of $50. As described under "Shareholder
Services," the Fund offers an automatic investment program and a
403(b)(7) retirement plan which permit investments of $25 or
more. The subscriber may use the Subscription Application found
in the Prospectus for his or her initial investment. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B or Class C shares.

<PAGE>

Investors may purchase shares of the Fund in the United
States either through selected dealers or agents or directly
through the Principal Underwriter. Shares may also be sold in
foreign countries where permissible. The Fund may refuse any
order for the purchase of shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.

The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares,a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below. On each
Fund business day on which a purchase or redemption order is
received by the Fund and trading in the types of securities in
which the Fund invests might materially affect the value of Fund
shares, the per share net asset value is computed in accordance
with the Fund's Agreement and Declaration of Trust and By-Laws as
of the next close of regular trading on the New York Stock
Exchange (the "Exchange") (currently 4:00 p.m. New York time) by
dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
The respective per share net asset values of the Class A, Class B
and Class C shares are expected to be substantially the same.
Under certain circumstances, however, the per share net asset
values of the Class B and Class C shares may be lower than the
per share net asset value of the Class A shares as a result of
the daily expense accruals of the distribution and transfer
agency fees applicable with respect to the Class B and Class C
shares. Even under those circumstances, the per share net asset
values of the three 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. A Fund business day is any weekday, exclusive
of national holidays on which the Exchange is closed and Good
Friday. For purposes of this computation, Exchange-listed
securities and over-the-counter securities admitted to trading on
the NASDAQ National List are valued at the last quoted sale or,
if no sale, at the mean of closing bid and asked prices and
portfolio bonds are presently valued by a recognized pricing
service. If accurate quotations are not available, securities
will be valued at fair value determined in good faith by the
Board of Trustees.

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).

<PAGE>

In the case of orders for purchase of shares placed through
selected dealers or agents, the applicable public offering price
will be the net asset value as so determined, but only if the
selected dealer or agent receives the order prior to the close of
regular trading on the Exchange and transmits it to the Principal
Underwriter prior to its close of business that same day
(normally 5:00 p.m. New York time). The selected dealer or agent
is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to
that day's closing price must be settled between the investor and
the selected dealer or agent. If the selected dealer or agent
receives the order after the close of regular trading on the
Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on
the next day it is open for trading.

Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "Literature" telephone number
shown on the cover of this Statement of Additional Information.
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. New York
time on a Fund business day, the order to purchase shares is
automatically placed the following Fund business day, and the
applicable public offering price will be the public offering
price determined as of the close of business on such following
business day. Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, stock certificates representing shares of
the Fund are not issued except upon written request to the Fund
by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the
shareholder of the responsibility for and inconvenience of lost
or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the
shareholder's account on the books of the Fund.

In addition to the discount or commission amount paid to
selected dealers or agents, the Principal Underwriter may from
time to time pay additional cash bonuses or other incentives to
selected dealers in connection with the sale of shares of the
Fund. On some occasions, such bonuses or incentives may 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. At the option

<PAGE>

of the dealer such bonuses or other incentives may take the form
of payment for travel expenses, including lodging incurred in
connection with trips taken by persons associated with the dealer
and members of their families to places within or outside of the
United States.

ALTERNATIVE PURCHASES ARRANGEMENTS

The Fund issues three classes of shares: Class A shares
are sold to investors choosing the initial sales charge
alternative, Class B shares are sold to investors choosing the
deferred sales charge alternative, and Class C shares are sold to
investors choosing the asset-based sales charge alternative. The
three classes of shares each represent an interest in the same
portfolio of investments of the Fund, have the same rights and
are identical in all respects, except that (i) Class A shares
bear the expense of the initial sales charge and Class B 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 and in the case of Class B shares
higher transfer agency costs, (iii) each class has exclusive
voting rights with respect to provisions of the Plan pursuant to
which its distribution services fee is paid which relates to a
specific class and other matters for which separate class voting
is appropriate under applicable law, provided that, if the Fund
submits to a vote of both the Class A shareholders and the
Class B shareholders an amendment to the Plan that would
materially increase the amount to be paid thereunder with respect
to the Class A shares, the Class A shareholders and the Class B
shareholders will vote separately by Class, and (iv) only the
Class B shares are subject to a conversion feature. Each class
has different exchange privileges and certain different
shareholder service options available.

The alternative purchase arrangements permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
investment in the Fund, the accumulated distribution services fee
and contingent deferred sales charges on Class B shares prior to
conversion, or the accumulated distribution services fee on
Class C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on
Class A shares, as described below. In this regard, the
Principal Underwriter will reject any order (except orders from
certain retirement plans) for more than $250,000 for Class B

<PAGE>

shares. Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at net asset
value. For this reason, the Principal Underwriter will reject any
order for more than $5,000,000 for Class C shares.

Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.

Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
in the case of Class B shares, being subject to a contingent
deferred sales charge for a four-year period. For example, based
on current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.

Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.

The Trustees of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B and Class C shares. On an ongoing basis, the Trustees of
the Fund, pursuant to their fiduciary duties under the 1940 Act
and state laws, will seek to ensure that no such conflict arises.

<PAGE>

INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES

The public offering price of Class A shares for
purchasers choosing the initial sales charge alternative is the
net asset value plus a sales charge, as set forth below.

INITIAL SALES CHARGE

SALES DISCOUNT OR
SALES CHARGE COMMISSION
CHARGE 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
1,000,000 but
less than
3,000,000. . . 1.27 1.25 1.00
3,000,000 but
less than
5,000,000. . . 0.76 0.75 0.50

____________________
There is no sales charge on transactions of $5,000,000 or more.

With respect to purchases of $5,000,000 or more made through
selected dealers or agents, the Adviser may, pursuant to the
Agreement described above, pay such dealers or agents from its
own resources a fee of up to .25 of 1% of the amount invested to
compensate such dealers or agents for their distribution
assistance in connection with such purchases.

Shares issued pursuant to the automatic reinvestment of
income dividends or capital gains distributions are not subject
to any sales charges. 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

<PAGE>

and agents. The Principal Underwriter will reallow discounts to
selected dealers and agents in the amounts indicated in the table
above. In this regard, the Principal Underwriter may elect to
reallow the entire sales charge to selected dealers and agents
for all sales with respect to which orders are placed with the
Principal Underwriter. A selected dealer who receives
reallowance in excess of 90% of such a sales charge may be deemed
to be an "underwriter" under the Securities Act of 1933, as
amended.

Set forth below is an example of the method of computing the
offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$50,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund at December 31, 1994.

Net Asset Value per Class A Share at $16.45
December 31, 1994

Class A Per Share Sales Charge
- 4.25% of offering price (4.44% of
net asset value per share) .73
______

Class A Per Share Offering Price to
the public $17.18
======

During the Fund's fiscal years ended June 30, 1994, 1993 and
1992, the aggregate amount of underwriting commission payable
with respect to shares of the Fund were $294,098, $143,041 and
$335,773, respectively. Of that amount, the Principal
Underwriter, Alliance Fund Distributors, Inc. ("AFD"), received
the amounts of $20,439, $21,218 and $46,407, 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 year ended June 30, 1994,
the Principal Underwriter received $22,362 in contingent deferred
sales charges.

Investors choosing the initial sales charge alternative may
under certain circumstances be entitled to pay reduced sales
charges. The circumstances under which such investors may pay
reduced sales charges 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

<PAGE>

$100,000. The term "purchase" refers to: (i) a single purchase
by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund." Currently,
the Alliance Mutual Funds include:

AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
The Alliance Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, 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

<PAGE>

-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 Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Portfolios.
-The Alliance Growth Fund
-The Alliance Conservative Investors Fund
-The Alliance Growth Investors Fund
-The Alliance Balanced Fund
-The Alliance Short-Term U.S. Government Fund

Prospectuses for the Alliance Mutual Funds may be obtained
without charge by contacting Alliance Fund Services, Inc. at the
address or the "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 Class A, Class B and Class C
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.

<PAGE>

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 and/or Class C
shares) of the Fund or any other Alliance Mutual Fund. Each
purchase of shares under a Statement of Intention will be made at
the public offering price or prices applicable at the time of
such purchase to a single transaction of the dollar amount
indicated in the Statement of Intention. At the investor's
option, a Statement of Intention may include purchases of shares
of the Fund or any other Alliance Mutual Fund made not more than
90 days prior to the date that the investor signs a Statement of
Intention; however, the 13-month period during which the
Statement of Intention is in effect will begin on the date of the
earliest purchase to be included.

Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to
invest a total of $60,000 during the following 13 months in
shares of the Fund or any other Alliance Mutual Fund, to qualify
for the 3.25% sales charge on the total amount being invested
(the sales charge applicable to an investment of $100,000).

The Statement of Intention is not a binding obligation upon
the investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount. Shares purchased with the first 5% of such amount will
be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher sales charge applicable
to the shares actually purchased if the full amount indicated is
not purchased, and such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary.
Dividends on escrowed shares, whether paid in cash or reinvested
in additional Fund shares, are not subject to escrow. When the
full amount indicated has been purchased, the escrow will be
released. To the extent that an investor purchases more than the
dollar amount indicated on the Statement of Intention and
qualifies for a further reduced sales charge, the sales charge

<PAGE>

will be adjusted for the entire amount purchased at the end of
the 13-month period. The difference in sales charge will be used
to purchase additional shares of the Fund subject to the rate of
sales charge applicable to the actual amount of the aggregate
purchases.

Investors wishing to enter into a Statement of Intention in
conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.

CERTAIN RETIREMENT PLANS. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
under the schedule of sales charges set forth in this Statement
of Additional Information, to an investment 13 times larger than
such initial purchase. The sales charge applicable to each
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 Class A shareholder who has
caused any or all of his or her 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 such reinvestment
is made within 30 calendar days after the redemption or
repurchase date. 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 tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund. The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his or her individual retirement account
or other qualified retirement plan account. Investors may

<PAGE>

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 a sales charge, to certain categories of investors
including:

(i) investment management clients of the Adviser or its
affiliates;

(ii) officers and present or former Trustees 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;
officers, directors and present or retired full-time
employees of ACMC, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates;
officers, directors and present full-time employees
of selected dealers or agents; or the spouse,
sibling, direct ancestor or direct descendent
(collectively, "relatives") of any such person; or
any trust, individual retirement account or
retirement plan account for the benefit of any such
person or relative; or the estate of any such person
or relative, if such sales are made for investment
purposes (such shares may not be resold except to the
Fund);

(iii) certain employee benefit plans for employees of the
Adviser, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; and

(iv) in exchange for securities valued in the same manner
as securities held by the Fund.

These provisions are intended to provide additional job-
related incentives to persons who serve the Fund or work for
companies associated with the Fund. Since these persons are in a
position to have a basic understanding of the nature of an
investment company as well as a general familiarity with the
Fund, sales to these persons, as compared to sales in the normal
channels of distribution, require substantially less sales
effort. Similarly, these provisions extend the privilege of
purchasing shares at net asset value to certain classes of
institutional investors who, because of their investment
sophistication, can be expected to require significantly less
than normal sales effort on the part of the Fund and the
Principal Underwriter.

<PAGE>

DEFERRED SALES CHARGE ALTERNATIVE--CLASS B SHARES

Investors choosing the deferred sales charge alternative
purchase Class B shares at the public offering price equal to the
net asset value per share of the Class B shares on the date of
purchase without the imposition of a sales charge at the time of
purchase. The Class B shares are sold without an initial sales
charge so that the Fund will receive the full amount of the
investor's purchase payment.

Proceeds from the contingent deferred sales charge 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 which 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.

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.

<PAGE>

CONTINGENT DEFERRED SALES CHARGE AS A %
OF DOLLAR AMOUNT SUBJECT TO CHARGE
_______________________________________

SHARES PURCHASED SHARES PURCHASED
BEFORE ON OR AFTER
YEAR SINCE PURCHASE NOVEMBER 19, 1993 NOVEMBER 19, 1993
___________________ _________________ _________________

First 5.50% 4.00%
Second 4.50% 3.00%
Third 3.50% 2.00%
Fourth 2.50% 1.00%
Fifth 1.50% None
Sixth 0.50% None

In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed, in the case of
Class B shares purchased on or after November 19, 1993, that the
redemption is first of any Class A shares or Class C shares in
the shareholder's Fund account, second of Class B shares held for
over four years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B
shares held longest during the four-year period. When Class B
shares acquired in an exchange are redeemed, the applicable
contingent deferred sales charge and conversion schedules will be
the schedules that applied to Class B shares of the Alliance
Mutual Fund originally purchased by the shareholder at the time
of their purchase. The charge will not be applied to dollar
amounts representing an increase in the net asset value since the
time of purchase.

To illustrate, assume that on or after November 19, 1993 an
investor purchased 100 Class B shares at $10 per share (at a cost
of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment.
If at such time the investor makes his or her first redemption of
50 Class B shares (proceeds of $600), 10 Class B shares will not
be subject to charge because of dividend reinvestment. With
respect to the remaining 40 Class B shares, the charge is applied
only to the original cost of $10 per share and not to the
increase in net asset value of $2 per share. Therefore, $400 of
the $600 redemption proceeds will be charged at a rate of 3.0%
(the applicable rate in the second year after purchase).

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

<PAGE>

account or other retirement plan to a shareholder who has
attained the age of 70-1/2 or (iii) that had been purchased by
present or former Trustees 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.

CONVERSION FEATURE. At the end of the period ending 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 be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to reduce the
distribution services fee paid by holders of Class B shares that
have been outstanding long enough for the Principal Underwriter
to have been compensated for distribution expenses incurred in
the sale of such shares.

For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.

The conversion of Class B shares to Class A shares is subject
to the continuing availability of an opinion of counsel to the
effect that (i) the assessment of the higher distribution
services fee and transfer agency costs with respect to Class B
shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Code, and
(ii) 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.

ASSET-BASED SALES CHARGE ALTERNATIVE--CLASS C SHARES

Investors choosing the asset-based sales charge alternative
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

<PAGE>

purchase without the imposition of a sales charge either at the
time of purchase or 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 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. Class C shares do not
convert to any other class of shares of the Fund and incur higher
distribution services fees than Class A shares, and will thus
have a higher expense ratio and pay correspondingly lower
dividends than Class A shares.

_________________________________________________________________

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."

REDEMPTION

Subject only to the limitations described below, the Fund's
Agreement and Declaration of Trust requires 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 B 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.

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 New York Stock Exchange ("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
permits for the protection of security holders of the Fund.

Payment of the redemption price may be made either in cash or
in portfolio securities (selected in the discretion of the

<PAGE>

Trustees of the Fund and taken at their value used in determining
the redemption price), or partly in cash and partly in portfolio
securities. However, payments will be made wholly in cash unless
the Trustees believe that economic conditions exist which would
make such a practice detrimental to the best interests of the
Fund. The Fund has filed a formal election with the Commission
pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular shareholder of record
is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period. In the
opinion of the Fund's management, however, the amount of a
redemption request would have to be significantly greater than
$250,000 or 1% of total net assets before a redemption wholly or
partly in portfolio securities would be made. If payment for
shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the
securities to 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 B shares will reflect
the deduction of the contingent deferred sales charge, if any.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption or repurchase of his or her shares,
assuming the shares constitute capital assets in his, will result
in long-term or short-term capital gains (or loss) depending upon
the shareholder's holding period and basis in respect of the
shares redeemed.

To redeem shares of the Fund for which no 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
institution that is an "eligible guarantor" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended.

TELEPHONE REDEMPTION BY ELECTRONIC FUNDS TRANSFER. Requests
for redemption of shares for which no stock certificates have
been issued can also be made by telephone at (800) 221-5672 by a
shareholder who has completed the appropriate portion of the
Subscription Application or, in the case of an existing
shareholder, an "Autosell" application obtained from Alliance
Fund Services, Inc. A telephone redemption request must be for at
least $500 and may not exceed $100,000, and must be made between
9:00 a.m. and 4:00 p.m. New York 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.

<PAGE>

TELEPHONE REDEMPTION BY CHECK. Except as noted below, each
Fund shareholder is eligible to request redemption, once in any
30-day period, of Fund shares by telephone at (800) 221-5672
before 4:00 p.m. New York time on a Fund business day in an
amount not exceeding $25,000. Proceeds of such redemptions are
remitted by check to the shareholder's address of record.
Telephone redemption by check is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) purchased within 15
calendar days prior to the redemption request, (iv) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (v) held in any retirement plan
account. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application found in the
Prospectus.

GENERAL. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
Alliance Fund Services, Inc. at the address shown on the cover of
this Statement of Additional Information. The Fund reserves the
right to suspend or terminate its telephone redemption service at
any time without notice. Neither the Fund nor the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
redemptions that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
telephone requests for redemptions are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. Selected dealers or agents
may charge a commission for handling telephone requests for
redemptions.

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,

<PAGE>

alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.

REPURCHASE

The Fund may repurchase shares through the Principal
Underwriter 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 B 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. New York time). The selected dealer or agent is
responsible for transmitting the request to the Principal
Underwriter by 5:00 p.m. If the 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 B shares). Normally, if shares of the Fund
are offered through a 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 at least 60 days
after at least 30 days' written notice to the shareholder
subsequent to such period. No contingent deferred sales charge
will be deducted from the proceeds of this redemption. In the
case of a redemption or repurchase of shares of the Fund recently
purchased by check, redemption proceeds will not be made
available until the Fund is reasonably assured that the check has
cleared, normally up to 15 calendar days following the purchase
date.

<PAGE>

________________________________________________________________

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 all three classes of shares of the
Fund.

AUTOMATIC INVESTMENT PROGRAM

Investors may purchase shares of the Fund through an
automatic investment program utilizing "pre-authorized check"
drafts 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. Drafts may be
made in paper form or, if the investor's bank is a member of the
NACHA, in electronic form. If made in paper form, the draft is
normally made on the 20th day of each month, or the next business
day thereafter. If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus. Current shareholders should contact Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.

EXCHANGE PRIVILEGE

Class A shareholders of the Fund can exchange their Class A
shares for Class A shares of the Alliance Mutual Funds without
the payment of any sales or service charges. Class A
shareholders may also exchange their Class A shares for shares of
any of the ten Alliance Cash Management Funds: Alliance Capital
Reserves, Alliance Money Reserves, Alliance Government Reserves,
Alliance Treasury Reserves and the General, California,
Connecticut, New Jersey and New York Portfolios of Alliance
Municipal Trust, all of which are money market funds, and
Alliance World Income Trust, Inc., a short- term global income
fund. Prospectuses for each Alliance Mutual Fund and Alliance
Cash Management Fund (each an "Alliance Fund"), may be obtained
by contacting Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information or by
telephone at (800) 227-4618 or, in Illinois, (800) 227-4170.

<PAGE>

Class B shareholders of the Fund can exchange their Class B
shares ("original Class B shares") for Class B shares of any
other Alliance Mutual Fund that offers Class B shares ("new
Class B shares") without the payment of any contingent deferred
sales or service charges. For purposes of computing both the
time remaining before the new Class B shares convert to Class A
shares of that fund and the contingent deferred sales charge
payable upon disposition of the new Class B shares, the period of
time for which the original Class B shares have been held is
added to the period of time for which the new Class B shares have
been held, and the original fund's contingent deferred sales
charge schedule is applied.

Class C shareholders of the Fund can exchange their Class C
shares for Class C shares of the other Alliance Mutual Funds.

All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance 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 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 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
or agent, are authorized to make telephone requests for exchanges
unless Alliance Fund Services, Inc., receives written instruction
to the contrary from the shareholder, or the shareholder declines
the privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.

Eligible shareholders desiring to make an exchange should
telephone Alliance Fund Services, Inc. with their account number
and other details of the exchange, at (800) 221-5672 between
9:00 a.m. and 4:00 p.m., New York time, on a Fund business day as
defined above. Telephone requests for exchange received before
4:00 p.m. New York time on a Fund business day will be processed

<PAGE>

as of the close of business on that day. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.

A shareholder may elect to initiate a monthly "Auto Exchange"
whereby a specified dollar amount's worth of his or her Fund
shares (minimum $25) is automatically exchanged for shares of
another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto. Auto Exchange is not currently
available between Alliance Cash Management Funds and Alliance
Mutual Funds.

Neither the Alliance Funds nor the Adviser, the Principal
Underwriter or Alliance Fund Services, Inc. will be responsible
for the authenticity of telephone requests for exchanges that the
Fund reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for exchanges.

The exchange privilege is available only in states where
shares of the Alliance Mutual Funds being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.

RETIREMENT PLANS

The Fund may be a suitable investment vehicle for part or all
of the assets held in various types of retirement plans, such as
those listed below. The Fund has available forms of such plans
pursuant to which investments can be made in the Fund and other
Alliance Mutual Funds. Persons desiring information concerning
these plans should contact Alliance Fund Services, Inc. at the
"Literature" telephone number on the cover of this Statement of
Additional Information, or write to:

<PAGE>

Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520

INDIVIDUAL RETIREMENT ACCOUNT ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.

EMPLOYER-SPONSORED QUALIFIED RETIREMENT PLANS. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals.

If the aggregate net asset value of shares of the Alliance
Mutual Funds held by the qualified plan reaches $5 million on or
before December 15 in any year, all Class B or C shares of the
Fund held by such plan can be exchanged, at the Plan's request,
without any sales charge, for Class A shares of such Fund.

SIMPLIFIED EMPLOYEE PENSION PLAN ("SEP"). Sole proprietors,
partnerships and corporations may sponsor a SEP under which they
make annual tax-deductible contributions to an IRA established by
each eligible employee within prescribed limits based on employee
compensation.

403(B)(7) RETIREMENT PLAN. Certain tax-exempt organizations
and public educational institutions may sponsor retirements plans
under which an employee may agree that monies deducted from his
or her compensation (minimum $25 per pay period) may be
contributed by the employer to a custodial account established
for the employee under the plan.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, which serves as custodian or trustee under the retirement
plan prototype forms available from the Fund, charges certain
nominal fees for establishing an account and for annual
maintenance. A portion of these fees is remitted to Alliance Fund

<PAGE>

Services, Inc. as compensation for its services to the retirement
plan accounts maintained with the Fund.

Distributions from retirement plans are subject to certain
Code requirements in addition to normal redemption procedures.
For additional information please contact Alliance Fund Services,
Inc.

DIVIDEND DIRECTION PLAN

A shareholder who already maintains, in addition to his or
her Class A, Class B or Class C Fund account, a Class A, Class B
or Class C account(s) 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 or Class C Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the cover
of this Statement of Additional Information. Investors wishing to
establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.

SYSTEMATIC WITHDRAWAL PLAN

Any shareholder who owns or purchases shares of the Fund
having a current net asset value of at least $4,000 (for
quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.

Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions. 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.

<PAGE>

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 shareholder 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.

For Class A shareholders, Class B shareholders that purchased
their Class B shares under a retirement plan and Class C
shareholders, payments under a systematic withdrawal plan may be
made by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
the "Literature" telephone number shown on the cover of this
Statement of Additional Information.

STATEMENTS AND REPORTS

Each shareholder of the Fund receives semi-annual and annual
reports which include a portfolio of investments, financial
statements and, in the case of the annual report, the report of
the Fund's independent auditors, Ernst & Young LLP, as well as a
confirmation of each purchase and redemption. By contacting his
or her broker or Alliance Fund Services, Inc., a shareholder can
arrange for copies of his or her account statements to be sent to
another person.

_________________________________________________________________

NET ASSET VALUE
_________________________________________________________________

The net asset value per share is computed in accordance with
the Fund's Agreement and Declaration of Trust and By-Laws as of
the next close of regular trading on the Exchange (currently
4:00 p.m. New York time) following receipt of a purchase or
redemption order (and on such other days as the Trustees of the
Fund deem necessary in order to comply with Rule 22c-1 under the
Act), by dividing the value of the Fund's total assets less its
liabilities, by the total number of the Fund's shares then
outstanding. For this purpose, a Fund's business day is any

<PAGE>

weekday exclusive of national holidays on which the Exchange is
closed and Good Friday.

Securities listed or traded on the Exchange or other United
States or foreign securities exchanges are valued at the last
quoted sales prices on such exchanges prior to the time when
assets are valued. Securities listed or traded on certain
foreign exchanges whose operations are similar to the United
States over-the-counter market are valued at the price within the
limits of the latest available current bid and asked prices
deemed best to reflect a fair value. A security which is listed
or traded on more than one exchange is valued at the quotations
on the exchange determined to be the primary market for such
security by the Trustees or their delegates. Listed securities
that are not traded on a particular day, and securities regularly
traded in the over-the-counter market, are valued at the price
within the limits of the latest available current bid and asked
prices deemed best to reflect a fair value. In instances where
the price of a security determined above is deemed not to be
representative, the security is valued in such a manner as
prescribed by the Trustees to reflect its fair value. All other
assets and securities are valued in a manner determined in good
faith by the Trustees to reflect their fair value. For purposes
of determining the Fund's net asset value per share, all assets
and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean of the bid and
asked prices of such currencies against the United States dollar
last quoted by any major bank. If such quotations are not
available as of the close of the Exchange, the rate of exchange
will be determined in accordance with policies established in
good faith by the Trustees. On an ongoing basis, the Trustees
monitor the Fund's method of valuation.

Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well
before the close of business of each business day in New York
(i.e., a day on which the Exchange is open). In addition,
European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all
business days in New York. Furthermore, trading takes place in
Japanese markets on certain Saturdays and in various foreign
markets on days which are not business days in New York and on
which the Fund's net asset value is not calculated. The Fund
calculates net asset value per share, and therefore effects
purchases and redemptions of its shares, as of the next close of
regular trading on the Exchange following receipt of a purchase
or redemption order (and on such other days as the Trustees of
the Fund deem necessary in order to comply with Rule 22c-1 under
the Act). Such calculation does not take place contemporaneously
with the determination of the prices of the majority of the
portfolio securities used in such calculation. Events affecting

<PAGE>

the values of portfolio securities that occur between the time
their prices are determined and the close of the Exchange will
not be reflected in the Fund's calculation of net asset value
unless the Fund's Trustees deem that the particular event would
materially affect net asset value, in which case an adjustment
will be made.

The Trustees may suspend the determination of the Fund's net
asset value (and the offering and sales of shares), subject to
the rules of the Commission and other governmental rules and
regulations, at time when: (1) the Exchange is closed, other
than customary weekend and holiday closing, (2) an emergency
exists as a result of which it is not reasonably practical 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.

_________________________________________________________________

DIVIDENDS, DISTRIBUTIONS AND TAXES
_________________________________________________________________

FOREIGN INCOME TAXES. Investment income received by the Fund
from sources within foreign countries may be subject to foreign
income taxes withheld at the source. The United States has
entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of such taxes or exemption
from taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of the
Fund's assets to be invested within various countries is not
known.

U.S. FEDERAL INCOME TAXES. The Fund qualified for the fiscal
year ended June 30, 1994 and intends for each future year to
qualify for tax treatment as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code").
To the extent that the Fund distributes all of its taxable income
and net capital gain to its shareholders, qualification relieves
the Fund of Federal income and excise taxes. Investors should
consult their own counsel for a complete understanding of the
requirements the Fund must meet to qualify for such treatment.
The following discussion relates solely to U.S. Federal income
taxes on dividends and distributions by the Fund and assumes that
the Fund qualifies as a regulated investment company. Investors
should consult their own counsel for further details, including
their entitlement to foreign tax credits that might be "passed
through" to them under the rules described below, and the
application of state and local tax laws to his or her particular
situation.

<PAGE>

Income dividends and distributions of any realized short-
term capital gains are included in the income of U.S.
shareholders as ordinary income and distributions of net long-
term capital gains are included in the income of U.S.shareholders
as long-term capital gains irrespective of the length of time the
U.S. shareholder has held its shares in the Fund. The dividends-
received deduction for corporations should be applicable to some
portion of the Fund's dividends of net ordinary income and
distributions of net realized short-term capital gains. The
amount of such dividends and distributions eligible for the
dividends-received deduction is limited to the amount of
dividends received by the Fund during the fiscal year from
domestic corporations. Under provisions of the tax law a
corporation's dividend-received deduction will be disallowed
unless the corporation holds shares in the Fund at least 46 days.
Furthermore, the dividends-received deduction will be disallowed
to the extent a corporation's investment in shares of the Fund is
financed with indebtedness.

Under current Federal tax law, the amount of an income
dividend or capital gains distribution declared by the Fund
during October, November or December of a year to shareholders of
record as of a specified date during 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.

In view of the Fund's investment policies it is expected that
dividends from domestic corporations will, at most, be a small
part of the Fund's gross income and that, accordingly, a small
part, at most, of such distributions by the Fund 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 Fund will advise its
shareholders annually as to the Federal income tax status of
distributions made during the year.

There is no fixed dividend rate and there can be no assurance
that the Fund will pay any dividends or realize any gains. It is
the intention to distribute to its shareholders each fiscal year
substantially all of such year's net income and net realized
capital gains, if any. The amount and time of any such
distribution must necessarily depend upon the realization by the
Fund of income and capital gains from investments. Shareholders
will be advised annually as to the tax status of dividends and
capital gains distributions.

CURRENCY FLUCTUATIONS --"SECTION 988" GAINS OR LOSSES. Under
the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other

<PAGE>

liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, from the disposition of over-the-counter options with
respect to foreign currency, or from the disposition of a forward
contract denominated in a foreign currency (and from regulated
futures contracts and certain nonequity options if the Fund so
elects) which are attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the asset
and the date of disposition also are treated as ordinary gain or
loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, increase or decrease the amount of
the Fund's investment company taxable income available to be
distributed to its shareholders as ordinary income, rather than
increasing or decreasing the amount of the Fund's net capital
gain. Because section 988 losses reduce the amount of ordinary
dividends the Fund will be allowed to distribute for a taxable
year, such section 988 losses may result in all or a portion of
prior dividend distributions for such year being recharacterized
as a non-taxable return of capital to shareholders, rather than
as an ordinary dividend, reducing each shareholder's basis in his
Fund shares. To the extent that such distributions exceed such
shareholder's basis, each will be treated as a gain from the sale
of shares.

OPTIONS, FUTURES CONTRACTS, AND FORWARD FOREIGN CURRENCY
CONTRACTS. Certain listed options, forward foreign currency
contracts and regulated futures contracts are considered "section
1256 contracts" for Federal income tax purposes. Section 1256
contracts held by the Fund at the end of each taxable year will
be "marked to market" and treated for Federal income tax purposes
as though sold for fair market value on the last business day of
such taxable year. Gain or loss realized by the Fund on forward
foreign currency contracts will be treated as section 988 gain or
loss, as described above. In general, gain or loss realized by
the Fund on other types of section 1256 contracts will be
considered 60% long-term and 40% short-term capital gain or loss.
The Fund can elect to exempt its section 1256 contracts which are
part of a "mixed straddle" (as described below) from the
application of section 1256. These results could vary if the
Fund makes one or more elections available under sections 988 and
1256.

The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the
investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment. Regulations

<PAGE>

under this authority generally should not apply to the type of
hedging transactions in which the Fund intends to engage.

Gain or loss realized by the Fund upon the lapse or sale of
put and call equity options held by the Fund will be either
long-term or short-term capital gain or loss depending upon the
Fund's holding period with respect to such option. However, gain
or loss realized upon the lapse or closing out of such options
that are 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.

Gain or loss realized by the Fund on the lapse or sale of put
and call options on foreign currencies which are traded over-
the-counter or on certain foreign exchanges will be treated as
section 988 gain or loss and will therefore be characterized as
ordinary income or loss and will increase or decrease the amount
of the Fund's net investment income available to be distributed
to shareholders as ordinary income, as described above. The
amount of such gain or loss shall be determined by subtracting
the amount paid, if any, for or with respect to the option
(including any amount paid by the Fund upon termination of an
option written by the Fund) from the amount received, if any, for
or with respect to the option (including any amount received by
the Fund upon termination of an option held by the Fund. In
general, if the Fund exercises such an option on a foreign
currency, or if such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option.

TAX STRADDLES. Any option, futures contract, or other
position entered into or held by the Fund in conjunction with any
other position held by the Fund may constitute a "straddle" for
federal income tax purposes. A straddle of which at least one,
but not all, the positions are section 1256 contracts may
constitute a "mixed straddle". In general, straddles are subject
to certain rules that may affect the character and timing of the
Fund's gains and losses with respect to straddle positions by
requiring, among other things, that (i) loss realized on
disposition of one position of a straddle not be recognized to
the extent that the Fund has unrealized gains with respect to the
other position in such straddle; (ii) the Fund's holding period
in straddle positions be suspended while the straddle exists
(possibly resulting in gain being treated as short-term capital

<PAGE>

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.

FOREIGN TAX CREDITS. Income received by the Fund from
sources within various foreign countries may be subject to
foreign income tax. If more than 50% of the value of the Fund's
total assets at the close of its taxable year consists of the
stock or securities of foreign corporations, the Fund may elect
to "pass through" to the Fund's stockholders the amount of
foreign income taxes paid by the Fund. Pursuant to such
election, stockholders would be required: (i) to include in
gross income their respective pro-rata shares of foreign taxes
paid by the Fund; (ii) treat his pro-rata share of such foreign
taxes as having been paid by him; and (ii) either to deduct their
pro-rata share of foreign taxes in computing their taxable
income, or to use it as a foreign tax credit against Federal
income taxes (but not both). No deduction for foreign taxes
could be claimed by a shareholder who does not itemize
deductions.

The Fund has met for each fiscal year to date, and intends to
meet for each future fiscal year, the requirements of the Code to
"pass through" to its shareholder foreign income taxes paid, but
there can be no assurance that the Fund will be able to do so.
Each shareholder will be notified within 60 days after the close
of each taxable year of the Fund whether the foreign taxes paid
by the Fund will "pass through" for that year, and, if so, the
amount of each shareholder's pro-rata share (by country) of
(i) the foreign taxes paid, and (ii) the Fund's gross income from
foreign sources. Of course, shareholders who are not liable for
Federal income taxes, such as retirement plans qualified under
Section 401 of the Code, will not be affected by any such "pass
through" of foreign tax credits.

BACKUP WITHHOLDING. The Fund may be required to withhold
United States federal income tax at the rate of 31% of all
taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification numbers or to
make required certifications, or who have been notified by the
Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other
shareholders specified in the Code are exempt from such backup

<PAGE>

withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against a shareholder's
United States federal income tax liability or refunded.

TAXATION OF FOREIGN STOCKHOLDERS. The foregoing discussion
relates only to U.S. Federal income tax law as it affects
shareholders who are U.S. 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.

_________________________________________________________________

PORTFOLIO TRANSACTIONS
_________________________________________________________________

Transactions on stock exchanges involve the payment of
brokerage commissions. In transactions on stock exchanges in the
United States, these commissions are negotiated, whereas on
foreign stock exchanges these commissions are generally fixed. In
the case of securities traded in the foreign and domestic over-
the-counter markets, there is generally no stated commission, but
the price usually includes an undisclosed commission or markup.
In underwritten offerings, the price includes a disclosed fixed
commission or discount.

Investment information provided to the Adviser is of the type
described in Section 28(e) of the Securities Exchange Act of
1934, as amended, and is designed to augment the Adviser's own
internal research and investment strategy capabilities. Research
services furnished by broker-dealers 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. There may be occasions where
the transaction cost charged by a broker-dealer may be greater
than that which another broker-dealer may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relationship to the value of the brokerage and
research services provided by the executing broker-dealer.

The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Fund; but, on the other hand, certain research

<PAGE>

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 Rules of Fair
Practice 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. During the fiscal year
ended June 30, 1994 transactions in portfolio securities of the
Fund amounting to $435,708,619, with associated brokerage
commissions of approximately 30%, were allocated to persons or
firms supplying investment information to the Adviser.

The Fund is permitted to place brokerage orders with
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), a
U.S. registered broker-dealer and 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 Act of 1940 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 June 30, 1992, 1993 and 1994,
the Fund incurred brokerage commissions amounting in the
aggregate to $654,965, $540,303 and $342,290, respectively.
During the fiscal years ended June 30, 1992, 1993 and 1994,
brokerage commissions amounting in the aggregate to $0, $0 and
$0, respectively, were paid to DLJ and brokerage commissions
amounting in the aggregate to $13,078, $0 and $0, respectively,
were paid to brokers utilizing the Pershing Division of DLJ.
During the fiscal year ended June 30, 1994, the brokerage
commissions paid to DLJ constituted 0% 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 aggregate brokerage commissions. During the fiscal
year ended June 30, 1994, of the Fund's aggregate dollar amount
of brokerage transactions involving the payment of commissions,
0% were effected through DLJ and 0% were effected through brokers
utilizing the Pershing Division of DLJ.

<PAGE>

_________________________________________________________________

GENERAL INFORMATION
_________________________________________________________________

CAPITALIZATION. The Fund was organized as a Maryland
Corporation in 1980. In November 1985 the Fund was reorganized
under the laws of Massachusetts as a Massachusetts business
trust. The Fund has an unlimited number of authorized Class A,
Class B and Class C shares of beneficial interest, par value $.01
per share. All shares of the Fund, when issued, are fully paid
and nonassessable. The Trustees are authorized to reclassify and
issue any unissued shares to any number of additional classes or
series without shareholder approval. Accordingly, the Trustees
in the future, for reasons such as the desire to establish one or
more additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
of shares. Any issuance of shares of another class would be
governed by the Act and the law of the Commonwealth of
Massachusetts. If shares of another class 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 Trustees 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 classes.

The Fund's shares have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for
election of Trustees can elect 100% of the directors if they
choose to do so, and in such event the holders of the remaining
less than 50% of the shares voting for such election of Trustees
will not be able to elect any persons or persons as Trustees.

Procedures for calling a shareholders' meeting for the
removal of Trustees of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act, are available to shareholders of
the Fund. Meetings of shareholders may be called by 10% of the
Fund's outstanding shareholders. The rights of the holders of
shares of a series may not be modified except by vote of a
majority of the outstanding shares of such series.

An order has been received from the Commission permitting the
issuance and sale of three classes of shares representing
interests in the Fund. The issuance and sale of any additional
classes will require an additional order from the Commission.
There is no assurance that such exemptive relief would be
granted.

<PAGE>

At May 24, 1995, there were 10,006,734.371 Class A shares,
3,056,657.761 Class B shares and 1,240,016.895 Class C shares of
beneficial interest of the Fund outstanding. Set forth and
discussed below is certain information as to all persons who were
record holders or beneficial owners of 5% or more of any class of
the Fund's shares at May 31, 1995.

NO. OF % OF
NAME AND ADDRESS SHARES CLASS
________________ ______ ______

Orth & Company Trust Dept. 2,548,464 26.46
Ford General Ret. Plan #112 Class A
PO Box 1319
Detroit, MI 48231

Seattle City Employees 554,799 5.2
Retirement System Class A
601 Third Ave. Ste 500
Seattle, WA 98184-1510

Merrill Lynch 747,830 24.04
4800 Deer Lake Drive East Class B
Jacksonville, FL 32206

539,144 17.33
Class C

Some shareholders of the Fund are discretionary managed
accounts of the Adviser, which thereby exercised investment
discretion at May 24, 1995 with respect to an aggregate of
3,177,724 Class A shares, representing 32% of all Class A
outstanding shares as of that date.

PRINCIPAL UNDERWRITER. Alliance Fund Distributors, Inc. is
the Principal Underwriter of shares of the Fund. Alliance Fund
Distributors, Inc. is not obligated to sell any specific amount
of shares and will purchase shares for resale only against orders
for shares. Under the Agreement between the Fund and the
Principal Underwriter, the Fund has agreed to indemnify the
Principal Underwriter, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities,
including liabilities under the Securities Act of 1933, as
amended.

COUNSEL AND INDEPENDENT AUDITORS. Legal matters in
connection with the issuance of the Shares offered hereby are
passed upon by Seward & Kissel, One Battery Park Plaza, New York,
New York. Seward & Kissel has relied upon the opinion of

<PAGE>

Sullivan & Worcester, One Post Office Square, Boston,
Massachusetts, for matters relating to Massachusetts law.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York,
have been appointed as independent auditors for the Fund.

CUSTODIAN. Portfolio securities purchased in the United
States are maintained in the custody of Brown Brothers & Harriman
Co. and may be entered into the Federal Reserve Book Entry
System, or the security depository system of the Depository Trust
Company. Brown Brothers & Harriman Co. has entered into sub-
custodian agreements with Morgan Guaranty & Trust Company of New
York and other United States banks, pursuant to which cash and
portfolio securities which are purchased outside the United
States are maintained in the custody of various foreign branches
of such United States banks.

TOTAL RETURN QUOTATIONS

From time to time the Fund advertises its "total return." The
Fund's "total return" is its average annual compounded total
return for its most recently completed one, five and ten years.
The Fund's total return for each such period is computed, through
the use of a formula prescribed by the Securities and Exchange
Commission, by finding the average annual compounded rate of
return over the period that would equate an assumed initial
amount invested to the value of such investment at the end of the
period. For purposes of computing total return, income dividends
and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when received and the maximum
sales charge applicable to purchases of Fund shares is assumed to
have been paid.

The Fund's average annual compounded total return for the
year ended December 31, 1994 was 1.19% for Class A shares, 1.05%
for Class B shares and 4.78% for Class C shares; for the five
years ended December 31, 1994 was .67% for Class A shares, from
September 17, 1990 (commencement of distribution) to December 31,
1994 was 4.81% for Class B shares and from May 3, 1993
(commencement of distribution) through December 31, 1994 was
8.19% for Class C shares; and for the ten year period ended
December 31, 1994 was 14.83% for Class A shares. The Fund will
compute total return figures separately for Class A shares,
Class B shares and Class C 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. An investor's principal invested in the
Fund is not fixed and will fluctuate in response to prevailing
market conditions.

<PAGE>

A $10,000 investment in the Class A Shares of the Fund would
have grown to $44,091 over the ten years ended June 30, 1994,
giving the investor a 141% cumulative total return. Total return
for Class B and Class C Shares would have been lower because of
their higher expenses. As of December 31, 1994, the SEC average
annual total returns (at maximum offering price) were, with
respect to Class A Shares, 1.19% for the past year, 6.70% for the
past 3 years, .67% for the past 5 years and 14.83% for the past
ten years; with respect to Class B Shares, 1.05% for the past
year, 6.75% for the past 3 years and 4.81% since inception; and
with respect to Class C Shares, 4.78% for the past year and 8.19%
since inception. As of December 31, 1994, cumulative total
returns (at net asset value) were, with respect to Class A
Shares, 5.68% for the year to date, 5.68% for the past year,
26.85% for the past three years, 8.02% for the past five years
and 316.36% for the past ten years; with respect to Class B
Shares, 23.66% for the past three years and 22.32% since
inception; and with respect to Class C Shares, 4.78% for the year
to date, 4.78% for the past year and 14.05% since inception. The
preceding information is not an indication of future Fund
composition or performance. SEC average annual total returns for
the periods shown reflect deduction of the maximum front-end
sales charge for Class A Shares or applicable contingent deferred
sales charge for Class B Shares. The performance figures for
cumulative total return do not reflect sales charges which would
reduce total return figures. The investment return and principal
value of the Fund will fluctuate so that Shares, when redeemed,
may be worth more or less than their original cost.

Advertisements quoting performance rankings or ratings of the
Fund as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc., and
Morningstar, Inc. and advertisements presenting the historical
performance of the Fund may also from time to time be sent to
investors or placed in newspapers and magazines such as The New
York Times, The Wall Street Journal, Barrons, Investor's Daily,
Money Magazine, Changing Times, Business Week and Forbes or other
media on behalf of the Fund.

ADDITIONAL INFORMATION. Any shareholder inquiries may be
directed to the shareholder's broker or to Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
front cover of this Statement of Additional Information.

This Statement of Additional Information does not contain all
the information set forth in the Registration Statement filed by
the Fund with the Commission under the Securities Act of 1933, as
amended. 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.

<PAGE>

PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & OTHER
INVESTMENTS--94.5%
ARGENTINA--0.5%
Buenos Aires
Embotelladora, S.A............... 13,400 $ 432,150
YPF, S.A. Cl.D (ADR)............... 36,600 782,325
-----------
1,214,475
-----------
AUSTRALIA--1.9%
Australia & New Zealand
Bank Group, Ltd.................. 312,541 1,029,764
Boral, Ltd......................... 361,099 951,803
Broken Hill Proprietary
Co., Ltd......................... 67,278 1,022,283
Coca-Cola Amatil, Ltd.............. 152,178 967,403
Mayne Nickless, Ltd................ 165,154 845,036
-----------
4,816,289
-----------
BELGIUM--0.9%
Arbed, S.A.*....................... 3,800 570,480
Kredietbank, N.V................... 8,450 1,770,154
-----------
2,340,634
-----------
BRAZIL--0.5%
Panamerican Beverages,
Inc. Cl.A........................ 38,900 1,230,212
-----------
CANADA--0.9%
Alcan Aluminium, Ltd............... 23,200 589,200
American Barrick
Resources Corp................... 13,400 298,150
Finning, Ltd....................... 8,900 126,100
Hemlo Gold Mines, Inc.............. 10,700 109,651
Imasco, Ltd........................ 146 4,137
Noranda, Inc....................... 10,700 202,139
Northern Telecom, Ltd.............. 58 1,933
Placer Dome, Inc................... 5,300 115,275
Renaissance Energy, Ltd.*.......... 33,000 638,121
Rogers Communications,
Inc.*............................ 8,900 118,963
-----------
2,203,669
-----------
DENMARK--0.6%
Den Danske Bank
International, S.A............... 26,800 1,462,477
-----------
FINLAND--1.5%
Metsa-Serla Oy..................... 22,100 970,346
Nokia Corp. pfd.................... 19,230 2,833,386
-----------
3,803,732
-----------
FRANCE--6.2%
Assurance Generale
de France........................ 58,500 2,322,037
Banque Nationale de Paris.......... 20,500 942,286
Bouygues, S.A...................... 12,000 1,148,100
CIE Frananciere
de Paribas, S.A.................. 27,853 1,851,304
Generale des Eaux.................. 23,210 2,255,381
Gruope Danone...................... 5,500 771,297
Pechiney, S.A. .................... 15,200 1,024,527
Salomon, S.A....................... 3,300 1,319,135
Saint Gobain ...................... 19,200 2,207,227
Total, S.A. (ADR).................. 48,560 1,432,520
Cl. B............................ 5,300 307,819
Unibail............................ 4,040 369,129
-----------
15,950,762
-----------
GERMANY--6.5%
BASF A.G........................... 9,810 2,022,583
Bayer A.G.......................... 8,350 1,955,958
Bayer Motoren Werke
A.G.............................. 2,427 1,205,943
Deutsche Bank A.G.(c).............. 5,350 2,485,723
Deutsche Lufthansa
A.G.*(c)........................ 21,925 2,758,929
Klein, Schanz & Beck............... 520 125,835
Pfd. ............................ 610 127,932
Papierwerke Waldhof................ 9,800 1,505,114
Suedzucker A.G.(c)................. 4,101 2,050,963
Veba A.G.(c)....................... 6,780 2,362,598
-----------
16,601,578
-----------
GHANA--0.8%
Ashanti Goldfields Co.,
Ltd. (GDS)*................. 4,900 105,962
Ashanti Goldfields Co.,
Ltd. (ADR) (b)*............. 89,000 1,924,625
-----------
2,030,587
-----------
HONG KONG--1.4%
Hong Kong Land
Holdings, Ltd.............. 327,000 638,152
Hong Kong Aircraft &
Engineering Co., Ltd........ 200 667
Hutchinson Whampoa,
Ltd. ....................... 203,000 829,053
Jardine Strategic
Holdings, Ltd............... 233,000 764,872
</TABLE>

1
<PAGE>

PORTFOLIO OF INVESTMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Peregrine Investment
Holdings, Ltd................... 179,000 $ 210,520
Sun Hung Kai
Properties, Ltd................. 73,000 435,877
Television Broadcasts, Ltd........ 194,000 784,776
------------
3,663,917
------------
INDIA--0.1%
Baja Auto, Ltd. (GDR)............. 7,400 177,600
------------
INDONESIA--0.2%
PT Astra International............ 179,000 342,038
PT Indosat*....................... 62,500 223,925
------------
565,963
------------
ITALY--1.8%
Burgo (Cartiere) S.p.A.*.......... 215,900 1,431,160
La Rinascente S.p.A............... 232,100 1,305,260
Telecom Italia S.p.A.............. 309,600 805,639
Telecom Italia S.p.A.--
Di Risp*................... 570,000 1,137,042
------------
4,679,101
------------
JAPAN--40.2%
Asahi Bank, Ltd................... 299,000 3,480,582
Asahi Glass Co., Ltd. ............ 308,000 3,801,706
Bank of Tokyo, Ltd................ 219,000 3,384,445
Canon, Inc. ...................... 145,000 2,459,107
DDI Corp.......................... 206 1,777,822
Dai-Ichi Kangyo Bank.............. 191,000 3,603,412
Dai Nippon Printing Co.,
Ltd. ........................... 70,000 1,194,180
Daiwa Securities Co.,
Ltd. ........................... 121,000 1,748,520
East Japan Railway Co............. 259 1,294,350
Fuji Photo Film Co................ 127,000 2,944,004
Hankyu Department
Store........................... 170,000 2,183,643
Hitachi Metals, Ltd............... 279,000 3,415,755
Ito-Yokado Co., Ltd. ........... 29,000 1,551,129
Kajima Corp. ..................... 50,000 428,500
Kao Corp. ........................ 68,000 771,099
Komatsu Ltd....................... 124,000 1,119,920
Kuraray Co., Ltd.................. 187,000 2,214,350
Long Term Credit Bank Of
Japan, Ltd...................... 287,000 3,139,288
Matsushita Electric Works......... 241,000 2,466,834
Mitsubishi Chemical Corp.......... 630,500 3,467,275
Mitsubishi Electric Corp.......... 415,000 2,944,355
Mitsubishi Heavy
Industries, Ltd................. 158,000 $ 1,205,017
NEC Corp. ........................ 277,000 3,168,891
NTN Corp. ........................ 359,000 2,691,149
Nippon Denso ..................... 144,000 3,034,621
Nippon Electric Glass
Co., Ltd....................... 28,000 556,347
Nippon Express Co., Ltd........... 153,000 1,535,374
Nippon Paper Industries
Co.*............................ 212,000 1,557,291
Nippon Steel Co.*................. 490,000 1,843,954
Nippon Telegraph &
Telephone Corp.................. 241 2,130,667
Nomura Securities Co.,
Ltd. ........................... 86,000 1,786,453
Sakura Bank Ltd................... 250,000 3,361,766
Santen Pharmaceutical
Co.............................. 76,000 2,112,594
Sanyo Electric Co., Ltd........... 93,000 534,762
Seven-Eleven Japan Co.,
Ltd. ........................... 15,000 1,205,720
Sony Corp. ....................... 74,500 4,224,034
Sumitomo Bank, Ltd. (c)........... 220,000 4,194,681
Sumitomo Realty and
Development Co., Ltd............ 102,000 603,914
Taisho Pharmaceutical
Co., Ltd. ...................... 90,000 1,725,038
Takara Shuzo Co................... 224,000 1,778,063
Tokio Marine & Fire
Insurance Co., Ltd.............. 262,000 3,207,627
Tokyo Electric Power
Co., Ltd........................ 46,000 1,283,292
Tokyo Gas Co., Ltd................ 359,000 1,556,327
Toyota Motor Corp.*............... 170,000 3,582,539
UBE Industries, Ltd.*............. 425,000 1,641,997
Yamazaki Baking Co.,
Ltd. ...................... 143,000 2,870,045
------------
102,782,439
------------
MALAYSIA--1.4%
Aokam Perdana Berhad.............. 98,000 606,383
DCB Holdings Berhad............... 329,000 734,404
Resorts World Berhad.............. 33,000 781,281
Technology Resources
Industries Berhad*......... 256,000 817,074
TA Enterprise Berhad*............. 247,500 649,403
------------
3,588,545
------------
</TABLE>

2
<PAGE>

PORTFOLIO OF INVESTMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MEXICO--0.9%
Grupo Financiero
Bancomer, S.A. de
C.V. Cl.C........................ 1,340,200 $ 643,835
Grupo Tribasa, S.A. de C.V.
(ADR)*........................... 44,700 743,137
Telefonos De Mexico, S.A.
(ADR) Cl.L....................... 19,700 807,700
-----------
2,194,672
-----------
NETHERLANDS--4.7%
D.S.M. N.V. ....................... 20,300 1,612,833
Elsevier N.V....................... 117,700 1,227,394
European Vinyls Corp............... 12,000 531,663
Fortis Amev N.V.................... 72,555 3,080,803
Heineken N.V....................... 15,500 2,337,924
Koninklijke PTT N.V.*.............. 36,500 1,230,206
Ver Ned Uitgevers.................. 16,600 1,723,423
-----------
11,744,246
-----------
NORWAY--0.4%
Transocean Drilling,
A.S.*............................ 136,300 1,138,535
-----------
PHILIPPINES--0.8%
JG Summit Holdings
Series B......................... 1,787,000 654,313
Manila Electric Co. Cl.B........... 107,000 1,458,299
-----------
2,112,612
-----------
SINGAPORE--1.0%
Development Bank
of Singapore, Ltd................ 84,000 864,494
Keppel Corp., Ltd.*................ 101,000 859,280
Singapore Press Hldgs.,
Ltd. ............................ 47,000 854,545
-----------
2,578,319
-----------
SPAIN--2.8%
Banco Intercontinental
Espanol.......................... 11,200 924,806
Centros Commerciales
Continente, S.A.................. 44,000 885,730
Iberdrola, S.A. ................... 141,700 874,035
Repsol, S.A........................ 64,000 1,735,606
Tabacalera, S.A. Series A.......... 38,365 1,022,929
Telefonica de Espana............... 114,800 1,356,049
Unidad Editorial, S.A.(a).......... 297,500 322,511
-----------
7,121,666
-----------
SWEDEN--3.4%
AB Astra Series A................. 145,600 $ 3,762,187
ASEA AB Series B................... 8,275 599,140
Hennes & Mauritz AB
Series B......................... 16,300 835,777
Marieberg Tidings
Series A......................... 35,400 800,369
SKF International AB
Series A*........................ 41,000 678,683
Series B*........................ 27,000 445,120
Stora Kopparbergs
Series B......................... 26,700 1,609,782
-----------
8,731,058
-----------
SWITZERLAND--1.4%
Electrowatt A.G.................... 2,780 734,820
Nestle, S.A........................ 2,933 2,794,080
Swiss Reinsurance Co.
(registered)
B warrants
expiring 6/30/95*................ 3,900 35,753
-----------
3,564,653
-----------
THAILAND--1.1%
Advanced Information
Services Plc..................... 72,000 986,576
Bangkok Bank Co., Ltd.............. 107,000 1,142,243
Securities One, Ltd................ 87,000 727,744
-----------
2,856,563
-----------
UNITED KINGDOM--12.1%
Allied Radio Plc.*................. 1,825,950 150,001
Argos Plc.......................... 263,300 1,450,235
B.A.T. Industries Plc.............. 369,100 2,489,236
Barclays Plc....................... 224,000 2,141,578
Barratt Development Plc............ 21,000 54,876
British Airways Plc................ 398,600 2,232,879
British Land Co. Plc............... 189,800 1,138,954
British Petroleum Co. Plc.......... 142,700 950,098
Dixons Group Plc................... 724,500 2,153,956
Forte Plc.......................... 786,900 2,967,436
General Electric Plc............... 287,000 1,239,469
Johnson Matthey Plc................ 205,100 1,752,278
Mowlen (John) & Co. Plc............ 690,700 1,080,772
News International Plc.
special div. shares.............. 279,600 936,258
Queens Moat
Houses Plc.* (a)................. 500,000 7,824
</TABLE>

3
<PAGE>

PAGE>

PORTFOLIO OF INVESTMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Royal Bank of Scotland
Group Plc. .................... 298,700 $ 1,841,519
SmithKline Beecham Cl.A.......... 165,000 1,170,863
Thorn EMI Plc. .................. 140,456 2,273,608
Vodafone Group Plc. ............. 778,000 2,580,835
Wimpey (George) Plc. ............ 1,159,100 2,339,674
------------
30,952,349
------------
OTHER--0.5%
Asesores Bursatiles Capital
Fund N.V.* (a)................. 25 639,863
CLM Insurance Fund Plc. ......... 123,000 184,766
Taiwan Fund, Inc. ............... 18,000 519,750
Touche Remnant Ecotec
Environmental Fund*(a)......... 1 -0-
------------
1,344,379
------------
</TABLE>

<TABLE>
<CAPTION>
Principal
Amount
Company (000) U.S. $ Value
- --------------------------------------------------------------------------------
<S> <C> <C>

Total Common Stocks &
Other Investments
(cost $235,068,304)............ $241,451,032
------------
TIME DEPOSIT--5.6%
First National Bank
of Chicago
5.875%, 1/03/95
(cost $14,400,000)............. US$14,400 14,400,000
------------
TOTAL INVESTMENTS--100.1%
(cost $249,468,304).............. 255,851,032

Other assets less liabilities--(0.1%) (300,993)
------------

NET ASSETS--100% $255,550,039
============
- ------------------------------------------------------------------------------
</TABLE>

* Non-income producing security.
(a) Illiquid Security, valued at fair market value. (See Notes A and F.)
(b) This security is exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1994 this security amounted to $1,924,625 or 0.8% of net assets.
(c) Securities with an aggregate market value of $13,852,894 segregated to
collateralize forward exchange currency contracts.

Glossary of Terms:
ADR -- American depository receipt
GDR -- Global depository receipt
GDS -- Global depository security

See notes to financial statements.

4
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $249,468,304).................................. $255,851,032
Cash, at value (cost $1,609,106)......................................................... 1,620,139
Receivable for investment securities sold................................................ 24,867,430
Receivable for shares of beneficial interest sold........................................ 610,644
Dividends and interest receivable........................................................ 344,842
Foreign taxes receivable and other assets................................................ 250,720
------------
Total assets............................................................................. 283,544,807
------------

LIABILITIES
Payable for investment securities purchased.............................................. 24,634,016
Payable for shares of beneficial interest redeemed....................................... 1,920,882
Advisory fee payable..................................................................... 640,482
Distribution fee payable................................................................. 92,144
Unrealized depreciation of forward exchange currency contracts........................... 52,914
Accrued expenses......................................................................... 654,330
------------
Total liabilities........................................................................ 27,994,768
------------
NET ASSETS ................................................................................. $255,550,039
============

COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par.................................................... $ 156,977
Additional paid-in capital............................................................... 242,592,291
Accumulated net investment loss.......................................................... (2,014,811)
Accumulated net realized gain on investments and foreign currency transactions........... 8,476,527
Net unrealized appreciation of investments and foreign currency denominated assets
and liabilities.......................................................................... 6,339,055
------------
$255,550,039
============

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($176,845,154/10,751,205 shares of beneficial interest issued and outstanding).......... $16.45
Sales charge--4.25% of public offering price............................................. .73
------
Maximum offering price................................................................... $17.18
======
CLASS B SHARES
Net asset value and offering price per share
($49,532,149/3,113,731 shares of beneficial interest issued and outstanding)............ $15.91
======

CLASS C SHARES
Net asset value, redemption and offering price per share
($29,172,736/1,832,760 shares of beneficial interest issued and outstanding)............ $15.92
======
</TABLE>

- --------------------------------------------------------------------------------
See notes to financial statements.

5
<PAGE>

STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $185,860)...................... $1,344,974
Interest................................................................... 423,180 $1,768,154
----------
EXPENSES
Advisory fee............................................................... 1,358,900
Distribution fee-Class A................................................... 184,665
Distribution fee-Class B................................................... 203,823
Distribution fee-Class C................................................... 133,406
Custodian.................................................................. 272,638
Transfer agency............................................................ 271,139
Administrative............................................................. 84,983
Audit and legal............................................................ 49,741
Printing................................................................... 45,815
Registration............................................................... 35,529
Trustees' fees............................................................. 19,225
Miscellaneous.............................................................. 20,084
----------
Total expenses............................................................. 2,679,948
-----------

Net investment loss........................................................ (911,794)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions............................... 19,612,564
Net realized loss on foreign currency transactions......................... (1,163,191)
Net change in unrealized appreciation (depreciation) of:
Investments................................................................ (22,733,208)
Foreign currency denominated assets and liabilities........................ 310,753
-----------
Net loss on investments and foreign currency transactions.................. (3,973,082)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS....................................... $(4,884,876)
===========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30,
(UNAUDITED) 1994
----------------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss............................................................. $ (911,794) $ (1,189,227)
Net realized gain on investments and foreign currency transactions.............. 18,449,373 25,178,246
Net change in unrealized appreciation (depreciation) of investments
and foreign currency denominated assets and liabilities........................ (22,422,455) 9,924,850
------------ ------------
Net increase (decrease) in net assets from operations........................... (4,884,876) 33,913,869
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments and foreign currency transactions
Class A........................................................................ (15,878,472) (5,633,699)
Class B........................................................................ (4,457,892) (427,595)
Class C........................................................................ (2,832,662) (193,466)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase ................................................................... 38,242,776 50,062,493
------------ ------------
Total increase ................................................................. 10,188,874 77,721,602
NET ASSETS
Beginning of year............................................................... 245,361,165 167,639,563
------------ ------------
End of period................................................................... $255,550,039 $245,361,165
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.

6
<PAGE>

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE A: SIGNIFICANT ACCOUNTING POLICIES

Alliance International Fund (the "Fund"), which is a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as a diversified,
open-end management investment company. The Fund offers Class A, Class B and
Class C shares. Class A shares are sold with a front-end sales charge of up to
4.25%. Class B shares are 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 sold without an
initial or contingent deferred sales charge. All three 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 United States or European stock exchange for
which market quotations are readily available are valued at the last quoted
sales price on that exchange prior to the time when assets are valued.
Securities listed or traded on certain foreign exchanges whose operations are
similar to the U.S. over-the-counter market are valued at the price within
the limits of the latest available current bid and asked price deemed best to
reflect fair value. Securities which mature in 60 days or less are valued at
amortized cost which approximates market value. Restricted securities are
valued at fair value as determined by the Board of Trustees. In determining
fair value, consideration is given to cost, operating and other financial
data.

2. CURRENCY TRANSLATION

Assets and liabilities denominated in foreign currencies and commitments
under forward exchange currency contracts are translated into U.S. dollars at
the mean of the quoted bid and asked price of such currencies against the
U.S. dollar. Purchases and sales of portfolio securities are translated at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated at rates of exchange prevailing when
accrued.

Net realized foreign exchange losses of $1,163,191 represent foreign exchange
gains and losses from sales and maturities of debt securities, holding of
foreign currencies, exchange gains or losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of dividends, interest and foreign taxes receivable recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received
or paid. Net currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation of investments and foreign
currency denominated assets and liabilities.

3. TAXES

It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.

4. INVESTMENT INCOME AND SECURITY TRANSACTIONS

Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily. Security transactions are accounted for on the date securities
are purchased or sold. Security gains and losses are determined on the
identified cost basis. The Fund accretes discounts on short-term securities
as adjustments to interest income.

5. DIVIDENDS AND DISTRIBUTIONS

Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.

6. CHANGES IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS

Effective June 30, 1994, the Fund adopted Statement of Position 93-2
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As
a result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations.

7
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Under an investment advisory agreement, the Fund pays its Adviser, Alliance
Capital Management, L.P., (the "Adviser"), a fee at a quarterly rate equal to
1/4 of 1% (approximately 1% on an annual basis) of quarter end net
assets up to $500 million and 3/16 of 1% (approximately .75% on an
annual basis) of quarter end net assets in excess of $500 million. The
Adviser has agreed, under the terms of the advisory agreement, to reimburse
the Fund to the extent that its aggregate expenses (exclusive of interest,
taxes, brokerage, distribution fee, extraordinary expenses and certain other
expenses) exceed the limits prescribed by any state in which the Fund's
shares are qualified for sale. The Fund believes that the most restrictive
expense ratio limitation currently imposed by any state is 2.5% of the first
$30 million of the Fund's average daily net assets, 2% of the next $70
million of its average daily net assets and 1.5% of its average daily net
assets in excess of $100 million. For the six months ended December 31, 1994,
no such reimbursement was required. Pursuant to the advisory agreement, the
Fund paid $84,983 to the Adviser representing the cost of certain legal and
accounting services provided to the Fund by the Adviser for the six months
ended December 31, 1994.

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 $162,170 for the six months ended December 31, 1994.

Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $8,601 from the sale of Class A shares and
$129,380 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B for the six months ended December 31, 1994. Brokerage
commissions paid on securities transactions for the six months ended December
31, 1994, amounted to $603,281, none of which was paid to brokers utilizing
the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.

- --------------------------------------------------------------------------------

NOTE C: DISTRIBUTION SERVICES AGREEMENT

The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to the
Class B and Class C 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 $1,459,486 and $365,010, for Class B and C shares,
respectively; such costs may be recovered from the Fund in future periods so
long as the Agreement is in effect. In accordance with the Agreement, there is
no provision for recovery of unreimbursed distribution costs, incurred by the
Distributor, beyond the current fiscal year for Class A shares. The Agreement
also provides that the 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) aggregated $154,865,107 and $145,931,194, respectively, for the
six months ended December 31, 1994. There were no purchases or sales of U.S.
Government and government agency obligations for the six months ended
December 31, 1994.

The Fund enters into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign

8
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

portfolio holdings. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain
or loss from foreign currency transactions.

Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.
The Fund's custodian will place and maintain cash not available for
investment or U.S. Government securities in a separate account of the Fund
having a value equal to the aggregate amount of the Fund's commitments under
forward exchange currency contracts entered into with respect to position
hedges.

Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. At December 31, 1994, the Fund
had outstanding forward exchange currency contracts, both to purchase and
sell foreign currencies against the U.S. dollar as follows:

<TABLE>
<CAPTION>
CONTRACT VALUE ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY SALE CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------- -------- ----------- ------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks, expiring, 2/28/95 ............ 12,000 $7,676,561 $7,752,486 $(75,925)
Japanese Yen, expiring, 2/28/95 .............. 417,000 4,232,214 4,209,203 23,011
--------
$(52,914)
========
</TABLE>

At December 31, 1994, the cost of investments for federal income tax purposes
was the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $17,152,467 and gross unrealized
depreciation of investments was $10,769,739, resulting in net unrealized
appreciation of $6,382,728. At June 30, 1994, to the extent provided in the
regulations, the Fund had a capital loss carry forward of $169,387 which expires
in the year 1999.

- --------------------------------------------------------------------------------

NOTE E: SHARES OF BENEFICIAL INTEREST

There is an unlimited number of $.01 par value shares of beneficial interest
authorized, divided into three classes, designated Class A, Class B and Class
C shares. Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
SHARES AMOUNT
------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30, DECEMBER 31, 1994 JUNE 30,
(UNAUDITED) 1994 (UNAUDITED) 1994
----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................ 1,596,019 2,597,434 $ 29,418,851 $ 45,812,612
Shares issued in reinvestment of
dividends and distributions....... 926,429 328,484 15,032,351 5,442,987
Shares issued in connection with
the acquisition of the
Canadian Fund..................... -0- 747,660 -0- 12,699,508
Shares redeemed.................... (2,758,683) (2,744,645) (51,066,944) (48,609,413)
---------- ---------- ------------ ------------
Net increase (decrease)............ (236,235) 928,933 $ (6,615,742) $ 15,345,694
========== ========== ============ ============
</TABLE>

9
<PAGE>

NOTES TO FINANCIAL STATEMENTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES AMOUNT
------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30, DECEMBER 31, 1994 JUNE 30,
(UNAUDITED) 1994 (UNAUDITED) 1994
----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
CLASS B
Shares sold........................ 1,629,722 1,519,137 $ 28,975,071 $26,354,439
Shares issued in reinvestment of
distributions..................... 246,119 24,318 3,861,838 394,438
Shares redeemed.................... (434,685) (275,243) (7,533,977) (4,795,788)
--------- --------- ------------ -----------
Net increase....................... 1,441,156 1,268,212 $ 25,302,932 $21,953,089
========= ========= ============ ===========
CLASS C
Shares sold........................ 1,622,229 1,157,061 $ 29,077,802 $20,136,268
Shares issued in reinvestment of
distributions .................... 171,490 11,110 2,692,396 180,098
Shares redeemed.................... (714,807) (428,880) (12,214,612) (7,552,656)
--------- --------- ------------ -----------
Net increase....................... 1,078,912 739,291 $ 19,555,586 $12,763,710
========= ========= ============ ===========
</TABLE>

- --------------------------------------------------------------------------------

NOTE F: ILLIQUID SECURITIES

<TABLE>
<CAPTION>
DATE
SECURITY ACQUIRED U.S. $ COST
-------- -----------
<S> <C> <C>
Asesores Bursatiles Capital Fund N.V.......................................... 10/29/90 $1,113,819
Queens Moat Houses Plc........................................................ 9/22/92 275,315
Touche Remnant Ecotec Environmental Fund...................................... 6/28/90 260,066
Unidad Editorial, S.A. ....................................................... 1/20/92 369,591
</TABLE>

The securities shown are illiquid and have been valued at fair value in
accordance with procedures described in Note A. The value of these securities at
December 31, 1994 was $970,198 representing 0.4% of net assets. During the month
of March 1994, the Board of Trustees determined that Touche Remnant Ecotec
Environmental Fund ("T R Ecotec") should be valued at zero to reflect current
fair value. This decision was based on notification from the investment advisor
of T R Ecotec of the company's termination and future liquidation.

10
<PAGE>

FINANCIAL HIGHLIGHTS ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT
EACH PERIOD

<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30,
DECEMBER 31, 1994 ----------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $18.38 $16.01 $14.98 $14.00 $17.99 $17.24
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)............ (.05) (.09) (.01) .01(b) .05 .03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions........................... (.26) 3.02 1.17 1.04 (3.54) 2.87
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset
value from operations.................. (.31) 2.93 1.16 1.05 (3.49) 2.90
------ ------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment
income................................. -0- -0- (.04) (.07) (.03) (.04)
Distributions from net realized gains
on investments and foreign currency
transactions........................... (1.62) (.56) (.09) -0- (.47) (2.11)
------ ------ ------ ------ ------ ------
Total distributions..................... (1.62) (.56) (.13) (.07) (.50) (2.15)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $16.45 $18.38 $16.01 $14.98 $14.00 $17.99
====== ====== ====== ====== ====== ======

TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)........................ (1.57)% 18.68% 7.86% 7.52% (19.34)% 16.98%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of year (000's omitted). $176,845 $201,916 $161,048 $179,807 $214,442 $265,999
Ratio of expenses to average net assets 1.77%(d) 1.90% 1.88% 1.82% 1.73% 1.45%
Ratio of net investment income (loss)
to average net assets.................. (.46)%(d) (.50)% (.14)% .07% .37% .33%
Portfolio turnover rate................. 57% 97% 94% 72% 71% 37%

</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.

11
<PAGE>

FINANCIAL HIGHLIGHTS (continued) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD

<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED JUNE 30, SEPTEMBER 17, 1990 (A)
DECEMBER 31, 1994 ------------------------------ TO
(UNAUDITED) 1994 1993 1992 JUNE 30, 1991
----------------- ------ ------ ------ ----------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $17.90 $15.74 $14.81 $13.93 $15.52
====== ====== ====== ====== ======
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)................. (.06)(b) (.19)(b) (.12) (.11)(b) .03
Net realized and unrealized gain (loss) on
investments and foreign
currency transactions....................... (.31) 2.91 1.14 1.02 (1.12)
------ ------ ------ ------ ------
Net increase (decrease) in net asset value
from operations............................ (.37) 2.72 1.02 .91 (1.09)
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income......... -0- -0- -0- (.03) (.03)
Distributions from net realized gains on
investments and foreign currency
transactions................................ (1.62) (.56) (.09) -0- (.47)
------ ------ ------ ------ ------
Total distributions.......................... (1.62) (.56) (.09) (.03) (.50)
------ ------ ------ ------ ------
Net asset value, end of period............... $15.91 $17.90 $15.74 $14.81 $13.93
====== ====== ====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)............................. (1.94)% 17.65% 6.98% 6.54% (6.97)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted).... $49,532 $29,943 $6,363 $5,585 $3,515
Ratio of expenses to average net assets...... 2.56%(d) 2.78% 2.70% 2.68% 3.39%(d)
Ratio of net investment income (loss)
to average net assets....................... (1.32)%(d) (1.15)% (.96)% (.70)% .84%(d)
Portfolio turnover rate...................... 57% 97% 94% 72% 71%
</TABLE>

- --------------------------------------------------------------------------------
See footnote summary on page 19.

12
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD

<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED MAY 3, 1993(A)
DECEMBER 31, 1994 JUNE 30, TO
(UNAUDITED) 1994 JUNE 30, 1993
----------------- ---------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period.................. $17.91 $15.74 $15.93
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss).......................... (.03) (.11) -0-
Net realized and unrealized gain (loss) on
investments and foreign currency transactions........ (.34) 2.84 (.19)
------ ------ ------
Net increase (decrease) in net asset value
from operations...................................... (.37) 2.73 (.19)
------ ------ ------

LESS: DISTRIBUTIONS
- -------------------
Distributions from net realized gains on
investments and foreign currency transactions........ (1.62) (.56) -0-
------ ------ ------
Total distributions................................... (1.62) (.56) -0-
------ ------ ------
Net asset value, end of period........................ $15.92 $17.91 $15.74
====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)...................................... (1.94)% 17.72% (1.19)%
====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted)............. $29,173 $13,503 $229
Ratio of expenses to average net assets............... 2.56%(d) 2.78% 2.57%(d)
Ratio of net investment income (loss)
to average net assets................................ (1.29)%(d) (1.12)% .08%(d)
Portfolio turnover rate............................... 57% 97% 94%
</TABLE>

- --------------------------------------------------------------------------------
(a) Commencement of distribution.
(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 for a period of less
than one year is not annualized.
(d) Annualized.

13
<PAGE>

PORTFOLIO OF INVESTMENTS
June 30 , 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & OTHER
INVESTMENTS--95.9%
ARGENTINA--0.5%
Buenos Aires
Embotelladora, S.A...................... 15,000 $ 463,125
YPF, S.A. (ADR) Cl.D..................... 26,000 620,750
-----------
1,083,875
-----------
AUSTRALIA--0.3%
Amcor, Ltd............................... 100,000 660,972
-----------
BELGIUM--0.8%
Delhaize-Le Lion, S.A.................... 11,000 447,654
Kredietbank N.V.......................... 8,250 1,633,194
-----------
2,080,848
-----------
BRAZIL--0.4%
Panamerican Beverages,
Inc. Cl.A............................... 43,500 1,049,438
-----------
CANADA--1.0%
Alcan Aluminum, Ltd...................... 26,000 587,725
American Barrick
Resources Corp.......................... 15,000 358,125
Finning, Ltd............................. 10,000 139,246
Hemlo Gold Mines, Inc.................... 12,000 103,078
Noranda, Inc............................. 12,000 205,071
Northern Telecom, Ltd.................... 58 1,615
Placer Dome, Inc......................... 6,000 129,000
Renaissance Energy,
Ltd.*................................... 37,000 772,813
Rogers Communications,
Inc.*................................... 10,000 143,767
-----------
2,440,440
-----------
CHILE--0.2%
Enersis, S.A. (ADR)...................... 27,000 570,375
-----------
DENMARK--0.4%
Tele Danmark A/S*
Series B................................. 19,000 958,775
-----------
FINLAND--1.7%
Enso-Gutzeit OY.......................... 200,000 1,516,178
Metsa-Serla OY........................... 22,500 869,907
Nokia Corp............................... 22,000 1,813,728
-----------
4,199,813
-----------
FRANCE--4.8%
Banque Nationale de
Paris*.................................. 20,000 855,487
Cetelem, S.A............................. 78 16,474
Compagnie de Saint
Gobain.................................. 15,000 $ 1,755,128
Compagnie Financiere
de Paribas, S.A.
Ord..................................... 24,444 1,552,400
new shares.............................. 2,444 155,215
Generale des Eaux........................ 4,285 1,730,397
Pechiney, S.A............................ 6,900 497,490
Peugeot, S.A............................. 12,000 1,704,351
Societe Centrale des
Assurances Generales
de France (AGF)......................... 24,000 2,084,077
Total, S.A. (ADR)........................ 51,166 1,471,023
-----------
11,822,042
-----------
GERMANY--4.2%
Bayer A.G................................ 6,400 1,391,260
Bayer Motoren Werke
A.G..................................... 3,272 1,610,450
Deutsche Bank A.G........................ 4,000 1,726,455
Deutsche Lufthansa
A.G.*................................... 10,000 1,161,066
Suedzucker
Aktiengesellschaft...................... 4,000 1,716,359
Veba A.G................................. 5,500 1,730,084
Volkswagen A.G........................... 3,000 890,677
-----------
10,226,351
-----------

HONG KONG--1.2%
HSBC Holdings Ord........................ 6,266 68,501
Hutchinson Whampoa,
Ltd. Ord................................ 400,000 1,655,993
Oriental Press Group..................... 670,000 502,749
Peregrine Investment
Holdings................................ 235,000 389,158
Television Broadcasts,
Ltd..................................... 71,000 280,160
-----------
2,896,561
-----------

INDONESIA--0.1%
PT Astra International................... 50,000 357,147
-----------

IRELAND--0.6%
Bank of Ireland.......................... 350,000 1,390,481
-----------

ITALY--2.0%
Banca Popolare Di
Bergamo................................. 44,000 581,422
Istituto Mobiliare
Italiano S.p.A.......................... 158,000 1,069,451

</TABLE>

14
<PAGE>

PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Rinascente............................... 300,000 $ 1,901,314
Sip Di Risp non-conv..................... 600,000 1,251,064
------------
4,803,251
------------

JAPAN--48.6%
Aoyama Trading........................... 9,000 352,708
Asahi Bank, Ltd.* (c).................... 80,000 1,015,280
Asahi Glass Co., Ltd..................... 180,000 2,229,555
Bank of Tokyo, Ltd. (c).................. 200,000 3,248,896
Canon, Inc............................... 50,000 878,217
Canon Sales Co., Inc..................... 36,000 1,228,083
Cosmo Oil Co., Ltd....................... 100,000 871,110
Credit Saison Co.,
Ltd. (c)................................ 109,000 2,567,440
Dai Nippon Printing Co.,
Ltd.*................................... 60,000 1,187,878
Daiwa Securities Co.,
Ltd. (c)................................ 359,000 6,305,599
Denny's Japan Co., Ltd................... 12,000 490,989
East Japan Railway Co.................... 348 1,784,253
Hankyu Department
Store................................... 144,000 1,856,744
Hitachi Metals, Ltd. (c)................. 210,000 2,537,185
Ito-Yokado Co., Ltd...................... 19,000 1,051,322
Japan Radio Co., Ltd. (c)................ 109,000 2,290,776
Kajima Corp.* (c)........................ 240,000 2,424,489
Komatsu, Ltd.*........................... 87,000 847,962
Lion Corp.*.............................. 190,000 1,388,903
Long Term Credit Bank
of Japan, Ltd. (c)...................... 207,000 2,521,955
Matsumotokiyoshi......................... 15,000 435,555
Matsushita Electric Industrial
Co., Ltd................................ 140,000 1,648,815
Mitsubishi Electric
Corp. (c)............................... 300,000 2,037,667
Mitsubishi Heavy
Industries, Ltd. (c).................... 330,000 2,643,484
Mitsubishi Petrochemical
Enterprise* (c)......................... 350,000 2,508,757
Mitsui Trust & Banking
Co., Ltd. (c)........................... 174,000 2,155,236
NEC Corp. (c)............................ 218,000 2,700,239
Nippon Denso (c)......................... 109,000 2,290,776
Nippon Express Co.,
Ltd. (c)................................ 272,000 2,899,640
Nippon Paper Industries
Co. (c)................................. 300,000 2,241,738
Nippon Shokubai
Co., Ltd. (c)........................... 218,000 $ 2,213,310
Nippon Steel Corp.* (c).................. 960,000 3,352,861
Nippon Telegraph &
Telephone Corp.......................... 100 888,370
Nomura Securities
Co., Ltd. (c)........................... 272,000 6,572,516
NTN Corp. (c)............................ 264,000 1,911,082
Oki Electric Industry
Co., Ltd* (c)........................... 320,000 2,579,623
Richo Co., Ltd........................... 120,000 1,159,856
Santen Pharmaceutical
Co.*.................................... 44,000 1,049,799
Seven-Eleven Japan
Co., Ltd................................ 13,000 1,036,093
Sharp Corp. (c).......................... 143,000 2,598,812
Shin-Etsu Chemical
Co., Ltd. (c)........................... 163,000 3,491,852
Sony Corp. (c)........................... 87,000 5,343,926
Sumitomo Bank, Ltd. (c).................. 196,000 4,318,189
Sumitomo Realty &
Development Co., Ltd.................... 270,000 1,842,124
Sumitomo Trust &
Banking Co., Ltd. (c)................... 200,000 3,309,813
Taisho
Pharmaceutical
Co., Ltd.* (c).......................... 100,000 2,000,102
Toho Co.................................. 3,300 680,136
Tokio Marine & Fire
Insurance Co., Ltd. (c)................. 270,000 3,481,395
Tokyo Electric Power
Co., Ltd................................ 49,000 1,591,959
Tokyo Electron, Ltd...................... 33,000 1,102,289
Tokyo Gas Co., Ltd. (c).................. 381,000 1,934,108
Toshiba Corp. (c)........................ 620,000 5,086,147
Toyota Motor Corp. (c)................... 142,000 3,186,152
------------
119,371,765
------------
MALAYSIA--1.8%
Aokam Perdana
Berhad.................................. 190,000 1,196,621
new shares.............................. 76,000 437,788
Resorts World Berhad..................... 340,000 1,958,525
TA Enterprise Berhad..................... 165,000 741,359
warrants expiring
12/31/99*............................... 82,500 140,035
------------
4,474,328
------------
</TABLE>

15
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
MEXICO--2.2%
Cifra, S.A. de C.V...................... 700,000 $ 1,630,547
Grupo Financiero
Bancomer, S.A. de C.V.
Cl.C................................... 1,500,000 1,260,504
Grupo Tribasa, S.A.
(ADR)*................................. 50,000 1,106,250
Telefonos de Mexico,
S.A. (ADR) Cl.L........................ 22,000 1,229,250
-----------
5,226,551
-----------

NETHERLANDS--3.2%
Amev N.V................................ 38,305 1,515,336
Elsevier N.V............................ 24,000 2,066,335
Heineken N.V............................ 8,000 970,142
Koninklijke KNP BT*..................... 70,000 1,693,810
Koninklijke KNP PIT*.................... 54,000 1,516,326
-----------
7,761,949
-----------

NEW ZEALAND--0.5%
Carter Holt Harvey, Ltd................. 405,111 902,478
Lion Nathan, Ltd........................ 200,000 366,920
-----------
1,269,398
-----------

NORWAY--0.1%
Transocean Drilling,
A.S.*.................................. 55,000 326,175
-----------

PHILIPPINES--0.9%
JG Summit Holdings
Series B............................... 2,000,000 686,055
Manila Electric Co.
Series B............................... 120,000 1,510,067
-----------
2,196,122
-----------

SINGAPORE--0.1%
QAF, Ltd.
warrants 11/14/98*..................... 400,000 208,545
-----------

SPAIN--1.9%
Banco Intercontinental
Espanol................................ 11,000 924,592
Centros Commerciales
Continente, S.A........................ 43,000 912,606
Iberdrola, S.A.*........................ 65,000 457,525
Repsol, S.A............................. 30,000 865,731
Telefonica de Espana.................... 112,000 1,513,427
-----------
4,673,881
-----------

SWEDEN--2.8%
AB Astra Series A....................... 142,000 $ 2,872,815
ASEA AB Series B........................ 8,075 606,035
Hennes & Mauritz AB
Series B............................... 30,000 1,495,796
SKF International AB
Series A............................... 40,000 699,604
Stora Kopparbergs
Series B............................... 26,000 1,306,537
-----------
6,980,787
-----------

SWITZERLAND--2.5%
Nestle, S.A............................. 600 505,666
Roche Holding, Ltd...................... 80 383,640
Sulzer Brothers, Ltd.................... 1,900 1,261,914
Swiss Bank Corp.
(registered)*.......................... 8,228 1,201,010
warrants expiring
6/30/95*............................... 228 2,267
Swiss Reinsurance Co.
(registered)........................... 4,000 1,681,051
A warrants
expiring 10/14/94*..................... 4,400 9,906
B warrants
expiring 6/30/95*...................... 4,400 13,208
Union Bank of
Switzerland............................ 1,200 1,046,454
-----------
6,105,116
-----------

THAILAND--1.1%
Advanced Information
Services Plc........................... 25,000 954,473
Bangkok Bank Co.,
Ltd.................................... 120,000 910,543
Securities One, Ltd.*................... 30,000 848,243
-----------
2,713,259
-----------

UNITED KINGDOM--11.4%
Abbey National Plc...................... 160,000 970,905
Allied Radio Ord........................ 1,825,950 155,461
Argos Plc............................... 150,000 792,963
Ashanti Goldfields Co.,
Ltd.*(b)............................... 100,000 2,084,375
Barclays Plc............................ 112,000 898,087
British Airways Plc..................... 200,000 1,154,808
British Petroleum Co.,
Plc.................................... 400,000 2,417,975
British Steel Plc....................... 800,000 1,755,432

</TABLE>

16
<PAGE>

PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
British Telecommunications
Plc.................................... 220,000 $ 1,251,558
Forte Plc............................... 400,000 1,405,584
General Electric Plc.................... 280,000 1,222,300
Glaxo Holdings Plc...................... 90,000 756,507
HSBC Holdings Plc....................... 121,235 1,286,490
Johnson Matthey Plc..................... 200,000 1,540,260
News International Plc.
special div. shares.................... 550,000 1,941,192
Queens Moat
Houses Plc.*(a)........................ 500,000 7,740
Royal Insurance Holdings
Plc.................................... 400,000 1,535,616
RTZ Corp. Plc........................... 150,000 1,911,005
Thorn EMI Plc........................... 110,956 1,722,751
Wimpey (George) Plc..................... 900,000 2,340,575
Zeneca Group Plc........................ 82,000 922,190
-----------
28,073,774
-----------
OTHER--0.6%
Asesores Bursatiles Capital
Fund N.V.* (a)......................... 25 648,600
CLM Insurance Fund
Plc.*.................................. 120,000 171,828
HCG Lloyds Investment
Trust*................................. 11,000 13,793
Taiwan Fund, Inc........................ 20,000 537,500
Touche Remnant Ecotec
Environmental
Fund* (a).............................. 1 -0-
-----------
1,371,721
-----------
</TABLE>

<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Common Stocks &
Other Investments
(cost $206,081,020)................... $235,293,740
------------

CONVERTIBLE BONDS--0.1%
MALAYSIA--0.0%
TA Enterprise Berhad
6.50%, 12/31/99........................ MYR 248 78,888
------------

SPAIN--0.1%
Unidesa
9.50%, 9/01/95 (a)..................... ESP 3 284,862
------------

Total Convertible Bonds
(cost $460,534)......................... 363,750
------------

TIME DEPOSIT--4.3%
Mitsubishi Bank-
Grand Cayman
4.4375%, 7/01/94
(cost $10,500,000)..................... US$ 10,500 10,500,000
------------

TOTAL INVESTMENTS--100.3%
(cost $217,041,554)..................... 246,157,490
Other assets less liabilities--(0.3%).... (796,325)
------------
NET ASSETS--100%......................... $245,361,165
============
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) Restricted Security, valued at fair market value. (See Notes A and F.)
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1994
this security amounted to $2,084,375 or 0.8% of net assets.
(c) Securities with an aggregate market value of $93,769,045 segregated
to collateralize forward exchange currency contracts.

Glossary of Terms:
ADR--American depository receipt.
ESP--Spanish peseta.
MYR--Malaysian ringgit.

See notes to financial statements.

17
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at value (cost $217,041,554).......... $246,157,490
Cash, at value (cost $116,338)................................... 116,351
Receivable for investment securities sold........................ 3,753,640
Dividends and interest receivable................................ 818,206
Receivable for shares of beneficial interest sold................ 733,207
Foreign taxes receivable and other assets........................ 224,561
------------
Total assets..................................................... 251,803,455
------------

<CAPTION>
LIABILITIES
<S> <C>
Payable for investment securities purchased...................... 4,476,252
Advisory fee payable............................................. 613,431
Unrealized depreciation of forward exchange currency contracts... 377,754
Payable for shares of beneficial interest redeemed............... 337,388
Distribution fee payable......................................... 64,271
Accrued expenses................................................. 573,194
------------
Total liabilities................................................ 6,442,290
------------

NET ASSETS........................................................ $245,361,165
============

<CAPTION>
COMPOSITION OF NET ASSETS
<S> <C>
Shares of beneficial interest, at par............................ $ 134,139
Additional paid-in capital....................................... 204,372,353
Accumulated net investment loss.................................. (1,103,017)
Accumulated net realized gain on investments and foreign
currency transactions........................................... 13,196,180
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities..................... 28,761,510
------------
$245,361,165
============

<CAPTION>
CALCULATION OF MAXIMUM OFFERING PRICE
<S> <C>
CLASS A SHARES
Net asset value and redemption price per share
($201,915,548/10,987,440 shares of beneficial interest
issued and outstanding)......................................... $18.38
Sales charge--4.25% of public offering price..................... .82
------
Maximum offering price........................................... $19.20
======

CLASS B SHARES
Net asset value and offering price per share
($29,942,525/1,672,575 shares of beneficial interest
issued and outstanding)......................................... $17.90
======

CLASS C SHARES
Net asset value, redemption and offering price per share
($13,503,092/753,848 shares of beneficial interest issued
and outstanding)................................................ $17.91
======
- --------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.

18
<PAGE>

STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

INVESTMENT INCOME
<S> <C> <C>
Dividends (net of foreign taxes withheld of
$389,978)................................... $2,716,394
Interest..................................... 234,891 $ 2,951,285
----------

EXPENSES
Advisory fee................................. 2,156,181
Distribution fee-Class A..................... 330,264
Distribution fee-Class B..................... 161,116
Distribution fee-Class C..................... 74,494
Custodian.................................... 427,625
Transfer agency.............................. 302,059
Registration................................. 199,195
Audit and legal.............................. 163,645
Administrative............................... 133,005
Printing..................................... 99,621
Trustees' fees............................... 32,386
Miscellaneous................................ 60,921
----------
Total expenses............................... 4,140,512
-----------
Net investment loss.......................... (1,189,227)
-----------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investment transactions. 25,708,659
Net realized loss on foreign currency
transactions................................ (530,413)
Net change in unrealized appreciation of:
Investments................................. 10,036,267
Foreign currency denominated assets and
liabilities................................ (111,417)
-----------
Net gain on investments and foreign
currency transactions....................... 35,103,096
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS.... $33,913,869
===========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss............................. $ (1,189,227) $ (271,136)
Net realized gain (loss) on investments and
foreign currency transactions.................. 25,178,246 (4,763,521)
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities......................... 9,924,850 15,757,093
------------ ------------
Net increase in net assets from operations...... 33,913,869 10,722,436
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A........................................ -0- (413,364)
Net realized gain on investments and foreign
currency transactions
Class A........................................ (5,633,699) (971,539)
Class B........................................ (427,595) (37,430)
Class C........................................ (193,466) -0-
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase (decrease)......................... 50,062,493 (27,052,263)
------------ ------------
Total increase (decrease)....................... 77,721,602 (17,752,160)
NET ASSETS
Beginning of year............................... 167,639,563 185,391,723
------------ ------------
End of year (including accumulated net
investment loss of $1,103,017 and
accumulated net investment income of $86,210,
respectively).................................. $245,361,165 $167,639,563
============ ============
- --------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.

19
<PAGE>

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994 ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE A: SIGNIFICANT ACCOUNTING POLICIES

Alliance International Fund (the "Fund"), which is a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as a
diversified, open-end management investment company. The Fund offers Class A,
Class B and Class C shares. Class A shares are sold with a front-end sales
charge of up to 4.25%. Class B shares are sold with a contingent deferred
sales charge which declines from 4.00% 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 sold without an initial or contingent deferred sales charge. All
three 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

2. CURRENCY TRANSLATION

Net realized foreign exchange losses of $530,413 represent foreign exchange
gains and losses from sales and maturities of debt securities, holding of
foreign currencies, exchange gains or losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of dividends, interest and foreign taxes receivable recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received
or paid. Net currency gains and losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected
as a component of net unrealized appreciation of investments and foreign
currency denominated assets and liabilities.

3. TAXES

4. INVESTMENT INCOME AND SECURITY TRANSACTIONS

5. DIVIDENDS AND DISTRIBUTIONS

20
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Under an investment advisory agreement, the Fund pays its Adviser, Alliance
Capital Management, L.P., (the "Adviser"), a fee at a quarterly rate equal to
1/4 of 1% (approximately 1% on an annual basis) of quarter end net assets up
to $500 million and 3/16 of 1% (approximately .75% on an annual basis) of
quarter end net assets in excess of $500 million. The Adviser has agreed,
under the terms of the advisory agreement, to reimburse the Fund to the
extent that its aggregate expenses (exclusive of interest, taxes, brokerage,
distribution fee, extraordinary expenses and certain other expenses) exceed
the limits prescribed by any state in which the Fund's shares are qualified
for sale. The Fund believes that the most restrictive expense ratio
limitation currently imposed by any state is 2.5% of the first $30 million of
the Fund's average daily net assets, 2% of the next $70 million of its
average daily net assets and 1.5% of its average daily net assets in excess
of $100 million. For the year ended June 30, 1994, no such reimbursement was
required. Pursuant to the advisory agreement, the Fund paid $133,005 to the
Adviser representing the cost of certain legal and accounting services
provided to the Fund by the Adviser for the year ended June 30, 1994.

Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $20,439 from the sale of Class A shares and
$32,369 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B for the year ended June 30, 1994. Brokerage
commissions paid on securities transactions for the year ended June 30, 1994,
amounted to $342,290, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.

- --------------------------------------------------------------------------------

NOTE C: DISTRIBUTION SERVICES AGREEMENT

The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the average daily net assets attributable to the
Class A shares and 1% of the average daily net assets attributable to the
Class B and Class C 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 $1,043,557 and $251,661, for Class B and C shares, respectively;
such costs may be recovered from the Fund in future periods so long as the
Agreement is in effect. In accordance with the Agreement, there is no provision
for recovery of unreimbursed distribution costs, incurred by the Distributor,
beyond the current fiscal year for Class A shares. The Agreement also provides
that the 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) aggregated $240,634,343 and $195,074,276, respectively, for the
year ended June 30, 1994. There were no purchases or sales of U.S. Government
and government agency obligations for the year ended June 30, 1994.

The Fund enters into forward exchange currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between

21
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
the original contracts and the closing of such contracts is included in net
realized gain or loss from foreign currency transactions.

Fluctuations in the value of forward exchange currency contracts are recorded
for financial reporting purposes as unrealized gains or losses by the Fund.

Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar. At June 30, 1994, the Fund had
outstanding forward exchange currency contracts, both to purchase and sell
foreign currencies against the U.S. dollar as follows:

CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY BUY CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------ ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
British Pounds, expiring 7/12/94........ 2,659,000 $ 3,992,489 $ 4,114,888 $122,399
Deutsche Marks, expiring 7/12/94........ 9,767,500 5,759,818 6,161,190 401,372
Japanese Yen, expiring 8/26/94.......... 1,097,000,000 10,892,338 11,178,418 286,080

FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
<S> <C> <C> <C> <C>
British Pounds, expiring 7/12/94........ 2,659,000 3,906,071 4,114,553 (208,482)
Deutsche Marks, expiring 7/12/94........ 9,767,500 5,659,694 6,160,219 (500,525)
Japanese Yen, expiring 7/12/94-11/25/94. 1,567,674,000 15,457,855 15,936,453 (478,598)
---------
$(377,754)
=========
</TABLE>

At June 30, 1994, the cost of investments for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $37,088,832 and gross unrealized
depreciation of investments was $7,972,896, resulting in net unrealized
appreciation of $29,115,936. At June 30, 1994, to the extent provided in the
regulations, the Fund had a capital loss carry forward of $169,387
which expires in the year 1999.

- --------------------------------------------------------------------------------

NOTE E: SHARES OF BENEFICIAL INTEREST

There is an unlimited number of $.01 par value shares of beneficial interest
authorized, divided into three classes, designated Class A, Class B and Class C
shares. Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
SHARES AMOUNT
---------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993 JUNE 30, 1994 JUNE 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................ 2,597,434 1,515,795 $ 45,812,612 $ 22,252,742
Shares issued in reinvestment of
dividends and distributions....... 328,484 90,871 5,442,987 1,264,353
Shares issued in connection with
the acquisition of the Canadian
Fund.............................. 747,660 -0- 12,699,508 -0-
Shares redeemed.................... (2,744,645) (3,551,900) (48,609,413) (51,287,518)
--------- --------- ------------ ------------
Net increase (decrease)............ 928,933 (1,945,234) $ 15,345,694 $(27,770,423)
========= ========= ============ ============
</TABLE>

22
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES AMOUNT
---------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993 JUNE 30, 1994 JUNE 30, 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................ 2,597,434 1,515,795 $ 45,812,612 $ 22,252,742
--------- --------- ------------ ------------
CLASS B
Shares sold........................ 1,519,137 175,861 $ 26,354,439 $ 2,581,656
Shares issued in reinvestment of
distributions..................... 24,318 2,172 394,438 29,626
Shares redeemed.................... (275,243) (150,794) (4,795,788) (2,126,581)
--------- --------- ------------ ------------
Net increase....................... 1,268,212 27,239 $ 21,953,089 $ 484,701

CLASS C
Shares sold........................ 1,157,061 16,415 $ 20,136,268 $ 261,988

Shares issued in reinvestment of
distributions..................... 11,110 -0- 180,098 -0-
Shares redeemed.................... (428,880) (1,858) (7,552,656) (28,529)
--------- --------- ------------ ------------
Net increase....................... 739,291 14,557 $12,763,710 $ 233,459
========= ========= ============ ============

- --------------------------------------------------------------------------------
</TABLE>

NOTE F: ILLIQUID SECURITIES

<TABLE>
<CAPTION>
DATE
SECURITY ACQUIRED U.S. $ COST
-------- -----------
<S> <C> <C>
Asesores Bursatiles Capital Fund N.V................... 10/29/90 $1,113,819
Queens Moat Houses Plc................................. 9/22/92 275,315
Touche Remnant Ecotec Environmental Fund............... 6/28/90 260,066
Unidesa, conv. bond 9.50%, 9/01/95..................... 1/20/92 369,591
</TABLE>

The value of these securities at June 30, 1994 was $941,202 representing 0.4%
of net assets. During the month of March 1994, the Board of Trustees
determined that Touche Remnant Ecotec Environmental Fund ("T R Ecotec")
should be valued at zero to reflect current fair value. This decision was
based on notification from the investment advisor of T R Ecotec of the
company's termination and future liquidation.

- --------------------------------------------------------------------------------

NOTE G: ACQUISITION OF THE CANADIAN FUND

On March 25, 1994, the Fund acquired all the net assets of the Canadian Fund,
the sole series of Alliance Global Fund (the "Trust") pursuant to a plan of
reorganization approved by the Canadian Fund shareholders on March 18, 1994.
The acquisition was accomplished by a tax-free exchange of 747,660 shares of
the Fund for 2,321,131 shares of Canadian

Fund on March 25, 1994. The aggregate net assets of the Fund and Canadian
Fund immediately before the acquisition were $215,961,187 and $13,317,340
(including unrealized appreciation of $7,351,031), respectively. Immediately
after the acquisition the combined net assets of the fund amounted to
$229,278,527.

23
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

NOTE H: ADOPTION OF STATEMENT OF POSITION 93-2

During the year ended June 30, 1994, the Fund adopted Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. Accordingly, dividends from net investment income and distributions
from realized gains from investment transactions have been determined in
accordance with income tax regulations. Such amounts may differ from investment
income and realized gains.

- --------------------------------------------------------------------------------

NOTE I: FOREIGN TAX CREDIT (UNAUDITED)

The Fund has elected to give the benefit to its shareholders of foreign taxes
that have been paid and/or withheld. For the fiscal year ended June 30,
1994, this amounted to $389,978. Although the Fund has made the election
required to make this credit available, the amount of allowable tax credit is
subject to limitations under the Internal Revenue Code.

A notification reflecting the per share amount to be used by taxpayers on
their federal income tax return will be mailed to shareholders in January
1995.

24
<PAGE>

FINANCIAL HIGHLIGHTS ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR

<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED JUNE 30,
----------------------------------------------------
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $16.01 $14.98 $14.00 $17.99 $17.24
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)...................... (.09) (.01) .01(b) .05 .03
Net realized and unrealized gain (loss) on
investments and foreign currency transactions.... 3.02 1.17 1.04 (3.54) 2.87
------ ------ ------ ------ ------
Net increase (decrease) in net asset value from
operations....................................... 2.93 1.16 1.05 (3.49) 2.90
------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income.............. -0- (.04) (.07) (.03) (.04)
Distributions from net realized gains on
investments and foreign currency transactions.... (.56) (.09) -0- (.47) (2.11)
------ ------ ------ ------ ------
Total distributions............................... (.56) (.13) (.07) (.50) (2.15)
------ ------ ------ ------ ------
Net asset value, end of year...................... $18.38 $16.01 $14.98 $14.00 $17.99
====== ====== ====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c).................................. 18.68% 7.86% 7.52% (19.34)% 16.98%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of year (000's omitted)........... $201,916 $161,048 $179,807 $214,442 $265,999
Ratio of expenses to average net assets........... 1.90% 1.88% 1.82% 1.73% 1.45%
Ratio of net investment income
(loss) to average net assets..................... (.50)% (.14)% .07% .37% .33%
Portfolio turnover rate........................... 97% 94% 72% 71% 37%

- --------------------------------------------------------------------------------
</TABLE>

See footnote summary on page 19.

25
<PAGE>

ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>

CLASS B CLASS C
--------------------------------------------------- ---------------------------
SEPTEMBER 17, 1990 (a) YEAR ENDED MAY 3, 1993 (a)
YEAR ENDED JUNE 30, TO JUNE 30, TO
1994 1993 1992 JUNE 30, 1991 1994 JUNE 30, 1993
------ ------ ------ ---------------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............. $15.74 $14.81 $13.93 $15.52 $15.74 $15.93
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income (loss)..................... (.19)(b) (.12) (.11)(b) .03 (.11) -0-
Net realized and unrealized gain (loss) on
investments and foreign currency transactions... 2.91 1.14 1.02 (1.12) 2.84 (.19)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value
from operations................................. 2.72 1.02 .91 (1.09) 2.73 (.19)
------ ------ ------ ------ ------ ------
LESS: DISTRIBUTIONS
- -------------------
Dividends from net investment income............. -0- -0- (.03) (.03) -0- -0-
Distributions from net realized gains on
investments and foreign currency
transactions.................................... (.56) (.09) -0- (.47) (.56) -0-
------ ------ ------ ------ ------ ------
Total distributions.............................. (.56) (.09) (.03) (.50) (.56) -0-
------ ------ ------ ------ ------ ------
Net asset value, end of period................... $17.90 $15.74 $14.81 $13.93 $17.91 $15.74
====== ====== ====== ====== ====== ======
TOTAL RETURN
- ------------
Total investment return based on net
asset value (c)................................. 17.65% 6.98% 6.54% (6.97)% 17.72% (1.19)%
====== ====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted)........ $29,943 $6,363 $5,585 $3,515 $13,503 $ 229
Ratio of expenses to average net assets.......... 2.78% 2.70% 2.68% 3.39%(d) 2.78% 2.57%(d)
Ratio of net investment income (loss)
to average net assets........................... (1.15)% (.96)% (.70)% .84%(d) (1.12)% .08%(d)
Portfolio turnover rate.......................... 97% 94% 72% 71% 97% 94%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of distribution.
(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 for a period of less than one
year is not annualized.
(d) Annualized.

26
<PAGE>

REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE INTERNATIONAL FUND
- --------------------------------------------------------------------------------

To the Shareholders and Board of Trustees
Alliance International Fund

We have audited the accompanying statement of assets and liabilities of
Alliance International Fund (the "Fund"), including the portfolio of
investments, as of June 30, 1994, 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 June 30, 1994, 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 International Fund at June 30, 1994, 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.

/s/ Ernst & Young LLP

New York, New York
August 5, 1994

<PAGE>

APPENDIX A

Futures Contracts and Options on Futures
Contracts and Foreign Currencies

FUTURES CONTRACTS

The Fund may 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. U.S. futures contracts have been designed by exchanges
which have been designated "contracts markets" by the Commodity
Futures Trading Commission ("CFTC"), and must be executed through
a futures commission merchant, or brokerage firm, which is a
member of the relevant contract market. Futures contracts trade
on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.

At the same time a futures contract is purchased or sold, the
Fund must allocate cash or securities as a deposit payment
("initial deposit"). It is expected that the initial deposit
would be approximately 1 1/2%-5% of a contract's face value.
Daily thereafter, the futures contract is valued and the payment
of "variation margin" may be required, since each day the Fund
would provide or receive cash that reflects any decline or
increase in the contract's value.

At the time of delivery of securities pursuant to such a
contract, adjustments are made to recognize differences in value
arising from the delivery of securities with a different interest
rate from that specified in the contract. In some (but not many)
cases, securities called for by a futures contract may not have
been issued when the contract was written.

Although futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation
to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled
through a clearinghouse associated with the exchange on which the
contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.

A-1

<PAGE>

The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures
market are subject to initial deposit and variation margin
requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through
offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the
liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of
speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the
securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price
distortions. Due to the possibility of distortion, a correct
forecast of general interest rate trends by the Adviser may still
not result in a successful transaction.

In addition, futures contracts entail risks. Although the
Fund believes that use of such contracts will benefit the Fund,
if the Adviser's investment judgment is incorrect about the
general direction of a stock market index for example, the Fund's
overall performance would be poorer than if it had not entered
into any such contract. For example, if the Fund has hedged
against the possibility of a bear market in equities in a
particular country in which would adversely affect the price of
equities held in its portfolio and there is a bull market
instead, the Fund will lose part or all of the benefit of the
increased value of the equities that it has hedged because it
will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash,
it may have to sell equities from its portfolio to meet daily
variation margin requirements. Such sales may be, but will not
necessarily be, at increased prices which reflect the rising
market. The Fund may have to sell securities at a time when it
may be disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS

The Fund intends to purchase and write options on futures
contracts. The purchase of a call option on a futures contract
is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which
it is based or the price of the underlying securities, it may or
may not be less risky than ownership of the futures contract or
underlying securities.

A-2

<PAGE>

The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the
security or foreign currency which is deliverable upon exercise
of the futures contract. If the futures price at expiration of
the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's
portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of
the security or foreign currency which is deliverable upon
exercise of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the
Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call
option the Fund has written is exercised, the Fund will incur a
loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes
in the value of its portfolio securities and changes in the value
of its futures positions, the Fund's losses from existing options
on futures may to some extent be reduced or increased by changes
in the value of portfolio securities.

The purchase of a put option on a futures contract is similar
in some respects to the purchase of protective put options on
portfolio securities. For example, the Fund may purchase a put
option on a futures contract to hedge the Fund's portfolio
against the risk of a general market decline.

The amount of risk the Fund assumes when it purchases an
option on a futures contract is the premium paid for the option
plus related transaction costs. In addition to the correlation
risks discussed above, the purchase of an option also entails the
risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the option purchased.

OPTIONS ON FOREIGN CURRENCIES

The Fund may purchase and write options on foreign currencies
in a manner similar to that in which futures contracts on foreign
currencies, or forward contracts, will be utilized. For example,
a decline in the dollar value of a foreign currency in which
portfolio securities are denominated will reduce the dollar value
of such securities, even if their value in the foreign currency
remains constant. In order to protect against such diminutions
in the value of portfolio securities, the Fund may purchase put
options on the foreign currency. If the value of the currency
does decline, the Fund will have the right to sell such currency
for a fixed amount in dollars and will thereby offset, in whole
or in part, the adverse effect on its portfolio which otherwise
would have resulted.

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<PAGE>

Conversely, where a rise in the dollar value of a currency in
which securities to be acquired are denominated is projected,
thereby increasing the cost of such securities, the Fund may
purchase call options thereon. The purchase of such options
could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of
options, however, the benefit to the Fund deriving from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where
currency exchange rates do not move in the direction or to the
extent anticipated, the Fund could sustain losses on transactions
in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such
rates.

The Fund may also write options on foreign currencies for the
same purposes. For example, where the Fund anticipates a decline
in the dollar value of foreign currency denominated securities
due to adverse fluctuations in exchange rates it could, instead
of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most
likely not be exercised, and the diminution in value of portfolio
securities will be offset by the amount of the premium received.

Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the dollar cost of securities
to be acquired, the Fund could write a put option on the relevant
currency which, if rates move in the manner projected, will
expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. As in the case of other
types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of
the premium, and only if rates move in the expected direction. If
this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at
a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, the Fund
also may be required to forego all or a portion of the benefits
which might otherwise have been obtained from favorable movements
in exchange rates.

The Fund intends to write covered call options on foreign
currencies. A call option written on a foreign currency by the
Fund is "covered" if the Fund owns the underlying foreign
currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a
segregated account by its Custodian) upon conversion or exchange
of other foreign currency held in its portfolio. A call option
is also covered if the Fund has a call on the same foreign
currency and in the same principal amount as the call written

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<PAGE>

where the exercise price of the call held (a) is equal to or less
than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is
maintained by the Fund in cash, U.S. Government Securities or
other appropriate liquid securities in a segregated account with
its Custodian.

The Fund also intends to write call options on foreign
currencies that are not covered for cross-hedging purposes. A
call option on a foreign currency is for cross-hedging purposes
if it is not covered, but is designed to provide a hedge against
a decline in the U.S. dollar value of a security which the Fund
owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the
exchange rate. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
Custodian, cash or U.S. government securities or other
appropriate liquid securities in an amount not less than the
value of the underlying foreign currency in U.S. dollars marked
to market daily.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD
CONTRACTS AND OPTIONS ON FOREIGN CURRENCIES

Unlike transactions entered into by the Fund in futures
contracts, options on foreign currencies and forward contracts
are not traded on contract markets regulated by the CFTC or (with
the exception of certain foreign currency options) by the SEC. To
the contrary, such instruments are traded through financial
institutions acting as market-makers, although foreign currency
options are also traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. Similarly, options
on currencies may be traded over-the-counter. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there
are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a
period of time. Although the purchaser of an option cannot lose
more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option
writer and a trader of forward contracts could lose amounts
substantially in excess of their initial investments, due to the
margin and collateral requirements associated with such
positions.

Options on foreign currencies traded on national securities
exchanges are within the jurisdiction of the SEC, as are other
securities traded on such exchanges. As a result, many of the
protections provided to traders on organized exchanges will be
available with respect to such transactions. In particular, all

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<PAGE>

foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options
Clearing Corporation ("OCC"), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market,
potentially permitting the Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.

The purchase and sale of exchange-traded foreign currency
options, however, is subject to the risks of the availability of
a liquid secondary market described above, as well as the risks
regarding adverse market movements, margining of options written,
the nature of the foreign currency market, possible intervention
by governmental authorities and the effects of other political
and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercises, or would
result in undue burdens on the OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

In addition, futures contracts, options on futures contracts,
forward contracts and options on foreign currencies may be traded
on foreign exchanges. Such transactions are subject to the risk
of governmental actions affecting trading in or the prices of
foreign currencies or securities. The value of such positions
also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in
the United States of data, on which to make trading decisions,
(iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the
United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.

A-6
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<PAGE>

APPENDIX B: JAPAN

Japan, located in eastern Asia, consists of four main
islands, Hokkaido, Honshu, Kyushu and Shikoku, and many small
islands. Its population is approximately 125 million.

The government of Japan is a representative democracy whose
principal executive is the Prime Minister. Japan's legislature
(known as the Diet) consists of two houses, the House of
Representatives (the lower house) and the House of Councillors
(the upper house).

POLITICS

From 1955 to 1993, Japan's government was controlled by the
Liberal Democratic Party (the "LDP"), the major conservative
party. In August 1993, after a main faction left the LDP over
the issue of political reform, a non-LDP coalition government was
formed consisting of centrist and leftist parties and was headed
by Prime Minister Morihiro Hosokawa. In April 1994, Mr. Hosokawa
resigned due to allegations of personal financial irregularities.
The coalition members thereafter agreed to choose as prime
minister the foreign minister, Tsutomu Hata. As a result of the
formation of a center-right voting bloc, however, the Social
Democratic Party of Japan (the "SDPJ"), a leftist party, withdrew
from the coalition. Consequently, Mr. Hata's government was a
minority coalition, the first since 1955, and was therefore
inherently unstable. In June 1994, Mr. Hata and his coalition
were replaced by a new coalition made up of the SDPJ, the LDP and
the New Party Harbinger. This coalition is led by the present
prime minister Tomiichi Murayama, the first Socialist prime
minister in 47 years. Various political parties within the
present coalition are calling for political reform that could
split the government and lead to new political alignments. Thus,
the stability of the current ruling coalition is not assured.

ECONOMY

The Japanese economy maintained an average annual growth rate
of 3.9% in real GDP terms from 1980 through 1992, compared with
2.1% for the United States during the same period. In 1992,
Japan's real GDP growth rate fell to 1.3% and there was little or
no growth in GDP in 1993. Inflation has remained low, estimated
at 1.5% for 1993. Consumer expenditures dropped 0.9% in 1993
from 1992 due to prevalent fears that have affected consumer and
business sentiment, such as the fear of corporate restructuring.
Recently, Japanese companies have taken steps designed to address
the economic downturn. These steps include reducing overtime and
bonus payments and initiating or accelerating early retirement
programs. Overall employment, however, increased in 1993.

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<PAGE>

Employment growth has been shifting from the manufacturing to the
service industry, a trend expected to continue in 1994. Although
investment has declined from the high levels of the late 1980s
and the recent appreciation of the Japanese Yen against the U.S.
Dollar has curtailed business profits and weakened exports,
increases in housing and public investment and a decline in
imports in the early part of 1993 have provided some buffers to
the economy's recent downturn.

Japan's post World War II reliance on heavy industries has
shifted to higher technology products assembly and, most
recently, to automobile, electrical and electronic production.
Japan's success in exporting its products has generated sizeable
trade surpluses. Japan is in a difficult phase in its relations
with its trading partners that is partly due to the concentration
of Japanese exports ill products such as automobiles, machine
tools and semiconductors and the large trade surpluses ensuing
therefrom, recent large and visible Japanese real estate
investments in the U.S. and an overall trade imbalance as
indicated by Japan's balance of payments. Although probable that
the recent improvement of the U.S. economy, a significant
decrease in the U.S. trade deficit with Japan and an increased
competitiveness and success in manufacturing, such as with the
U.S. automobile industry, has had a negative effect on Japan's
growth, Japan's overall trade surplus for 1993 remained the
largest in its history, amounting to $120 billion. Exports
totaled $362 billion, up 6.2% from 1992, and imports were $242
billion, up 3.5% from 1992. The current account surplus in 1993
was a record $131 billion. Consequently, ,Japan has become the
largest creditor nation and a significant donor of foreign aid.
On October 1, 1994, the U.S. and Japan reached an agreement that
may lead to more open Japanese markets with respect to insurance,
glass and medical and telecommunications equipment. The two
countries failed to agree, however, with respect to Japanese
imports of American automobiles and automotive parts. In response
to this failure, the U.S has initiated the process of imposing
limited trade sanctions on Japan. The sanctions process takes
twelve to eighteen months and, therefore, it will be late 1995 at
the earliest before any trade sanctions are imposed upon Japanese
exports.

In response to pressures exerted by the slumping economy and
the growing trade surplus, the government, in April and September
1993, announced emergency economic packages which included
stimulus plans totaling 19.2 trillion yen for 1994 and numerous
legislative provisions. A significant amount of the expenditures
was allocated for improving infrastructure, public works
projects, low-interest loans used for housing, and low interest
loans used for housing, and low interest small business loans.
Most importantly, the September 1993 package includes an
elimination or relaxation of government regulations, a reduction

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<PAGE>

of import costs, an extension of subsidies to companies for
sustaining excess workers in order to curb unemployment, and an
offer of tax breaks to middle-income taxpayers for educational
expenses and to companies for operational streamlining in order
to influence lower retail costs. In early 1994, the government
responded to the business and financial communities by providing
an immediate income-tax cut.

The Japanese Yen has been generally appreciating against the
U.S. Dollar for the past decade. In 1994, through September 30,
the Japanese Yen high against the U.S. Dollar was 96.81 Yen per
dollar and the low was 113.10 Yen per dollar. The average for
1994 through September 30 was 103.37 Yen per dollar. On October
19, 1994, the exchange rate was 97.36 Yen per dollar.

JAPANESE STOCK EXCHANGES

Currently, there are eight stock exchanges in Japan. The
Tokyo Stock Exchange (the "TSE"), the Osaka Securities Exchange
and the Nagoya Stock Exchange are the largest, together
accounting for approximately 99% of the share trading volume and
for about 98.9% of the overall market value of all shares traded
on Japanese stock exchanges during the year ended December 31,
1993. The other stock exchanges are located in Kyoto, Hiroshima,
Fukuoka, NiSgata and Sapporo. The chart below presents share
trading volume and overall market value information of each of
the three major Japanese stock exchanges for the years 1989
through 1993.

<TABLE>
<CAPTION>
ALL EXCHANGES TOKYO OSAKA NAGOYA
_____________ _____ _____
VOLUME VALUE VOLUME VALUE VOLUME VALUE VOLUME VALUE
_____ _____ ______ _____ ______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1989 256,296 386,395 222,599 332,617 25,096 41,679 7,263 10,395
1990 145,837 231,837 123,099 186,667 17,187 35,813 4,323 7,301
1991 107,844 134,16() 93,606 110,897 10,998 18,723 2,479 3,586
1992 82,563 80,456 66,408 60,110 12,069 15,575 3,300 3,876
1993 101,173 106,123 86,935 86,889 10,440 14,635 2,780 3,459
</TABLE>

Sources: The Tokyo Stock Exchange 1994 Fact Book and 1993 Fact
Book. Trading volume and value of foreign stocks are not
included.

At end of the third quarter of 1994, the market
capitalization of the First Section of the TSE (described below)
was approximately 40% below its all-time high reached in 1989.

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<PAGE>

Although the price/earnings ratios of individual companies vary
widely from company to company, absolute Japanese price/earnings
ratios are high in comparison with other major stock markets.
Other valuation measures, such as price-to-book value and price-
to-cash flow ratios, show that the Japanese market is near its
lowest level in the last 20 years relative to other world
markets.

THE TOKYO STOCK EXCHANGE

OVERVIEW OF THE TOKYO STOCK EXCHANGE. The TSE is the largest
of the Japanese stock exchanges and as such is widely regarded as
the PRINCIPAL securities exchange for all of Japan. In 1993, the
TSE accounted for 81.98 of the market value and 85.98 of the
share trading volume on all Japanese stock exchanges. A foreign
stock section on the TSE, consisting of shares of non-Japanese
companies, listed 110 non-Japanese companies at the end of 1993.
The market for stock of Japanese issuers on the TSE is divided
into a First Section and a Second Section. The First Section is
generally for larger, established companies (in existence for
five years or more) that meet stringent listing criteria relating
to the size and business condition of the issuing company, the
liquidity of its securities and other factors pertinent to
investor protection. The TSE's Second Section is for smaller
companies and newly listed issuers.

SECTOR ANALYSIS OF THE FIRST AND SECOND SECTIONS. The TSE's
domestic stocks include a broad cross-section of companies
involved in many different areas of the Japanese economy. At the
end of 1993, the four largest industry sectors, based on market
value, listed on the TSE were banking, with 101 companies
representing 23.8% of all domestic stocks listed on the TSE;
electric appliances, with 172 companies representing 10.28 of all
domestic stocks so listed; transportation equipment, with 82
companies representing 6.6% of all domestic stocks so listed; and
electric power and gas, with 16 companies representing 5.48 of
all domestic stocks so listed. No other industry sector
represented more than 5E of TSE listed domestic stocks.

Market Growth of the TSE. The First and Second Sections of
the TSE grew in terms of both average daily trading value and
aggregate year-end market value from 1982, when they were l28,320
million yen and 98,090 billion yen, respectively, through the end
of 1989, when they were 1,335,810 million yen and 6S1,152 billion
yen, respectively. Following the peak in 1989, both average
daily trading value and aggregate year-end market value declined
through 1992 when they were 243,362 million yen and 289,483
billion yen, respectively. In 1993, both average daily trading
value and aggregate year end market value increased and were
353,208 million yen and 324,357 billion yen, respectively.

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MARKET PERFORMANCE OF THE FIRST SECTION. 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 46E through the beginning of 1993. In 1993, the
TOPIX increased by approximately 9th from the end of 1992, and by
the end of the third quarter of 1994 increased by approximately
8% from the end of 1993.

JAPANESE FOREIGN EXCHANGE CONTROLS

Under Japan's Foreign Exchange and Foreign Trade Control Law
and cabinet orders and ministerial ordinances thereunder (the
"Foreign Exchange Controls"), prior notification to the Minister
of Finance of Japan (the "Minister of Finance") of the
acquisition of shares in a Japanese company from a resident of
Japan (including a corporation) by a non-resident of Japan
(including a corporation) is required unless the acquisition is
made from or through a securities company designated by the
Minister of Finance or if the yen equivalent of the aggregate
purchase price of shares is not more than Y100 million. Even in
these situations, if a foreign investor intends to acquire shares
of a Japanese corporation listed on a Japanese stock exchange or
traded on a Japanese over-the-counter market (regardless of the
person from or through whom the foreign investor acquires such
shares) and as a result of the acquisition the foreign investor
would directly or indirectly hold 108 or more of the total
outstanding shares of that corporation, the foreign investor must
file a report within 15 days from and including the day of such
acquisition with the Minister of Finance and any other minister
with proper jurisdiction. In instances where the acquisition
concerns national security or meets certain other conditions
specified in the Foreign Exchange Controls, the foreign investor
must file a prior notification with respect to the proposed
acquisition with the Minister of Finance and any other minister
with proper jurisdiction. The ministers may make a
recommendation to modify or prohibit the proposed acquisition if
they consider that the acquisition would impair the safety and
maintenance of public order in Japan or harmfully influence the
smooth operation of the Japanese economy. If the foreign
investor does not accept the recommendation, the ministers may
issue an order modifying or prohibiting the acquisition. In
certain limited and exceptional circumstances, the Foreign
Exchange Controls give the Minister of Finance the power to
require prior approval for any acquisition of shares in a
Japanese company by a non-resident of Japan.

In general, the acquisition of shares by non-resident
shareholders by way of stock splits, as well as the acquisition
of shares of a Japanese company listed on a Japanese stock
exchange by non-residents upon exercise of warrants or conversion

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<PAGE>

of convertible bonds, are not subject to any of the foregoing
notification or reporting requirements. Under the Foreign
Exchange Controls, dividends paid on share, held by non-residents
of Japan and the proceeds of any sales of shares within Japan
may, in general, be converted into any foreign currency and
remitted abroad.

REGULATION OF THE JAPANESE EQUITIES MARKETS

The principal securities law in Japan is the Securities and
Exchange Law which provides overall regulation for the issuance
of securities in public offerings and private placements and for
secondary market trading. Inside, trading provisions are
applicable to debt and equity securities listed on a Japanese
stock exchange and to unlisted debt and equity securities issued
by a Japanese corporation that has securities listed on a
Japanese stock exchange or registered with the Japan Securities
Dealer's Association (the "JSDA"). In addition, each of the
eight stock exchanges in Japan has its own constitution,
regulations governing the sale and purchase of securities and
standing rules for exchange contracts for the purchase and sale
of securities on the exchange, as well as detained rules and
regulations covering a variety of matters, including rules and
standards for listing and delisting of securities.

The loss compensation incidents involving preferential
treatment of certain customers by certain .Japanese securities
companies, which came to light in 1991, provided the impetus for
amendments to the Securities and Exchange Law, which took effect
in 1992, as well as two reform bills passed by the Diet in 1992.
The amended Securities Exchange Law now prohibits securities
companies from the operation of discretionary accounts, loss
compensation or provision of artificial gains in securities
transactions, directly or indirectly, to their customers and
making offers or agreements with respect thereto To ensure that
securities are traded at their fair value, the JSDA and the TSE
have promulgated certain rules, effective in 1992, which, among
other things, explicitly prohibit any transaction undertaken with
the intent to provide loss compensation of illegal gains
regardless of whether the transaction otherwise technically
complies with the rules. The reform bill passed by the Diet,
which took effect in 1992 and 1993, provide for the establishment
of a new Japanese securities regulator and for a variety of
reforms designed to revitalize the Japanese financial and capital
markets by permitting banks and securities companies to compete
in each other's field of business, subject to various regulations
and restrictions.

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