<PAGE>
As filed with the Securities and Exchange
Commission on April 23, 1996
File No. 2-70428
811-03130
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 26 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 24 X
____________________________
Alliance International Fund
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York l0105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:(800)221-5672
___________________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(1)
on (date) pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
<PAGE>
on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new
effective date for a previously filed post-
effective amendment.
Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed a notice pursuant to such
Rule for its fiscal year ended June 30, 1995 on August 28, 1995.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-1A Item No. Location in Prospectus
_____________ ______________________
PART A
Item 1. Cover Page....................... Cover Page
Item 2. Synopsis......................... Financial Highlight
Item 3. Condensed Financial Information.. Financial Highlights
Item 4. General Description of
Registrant..................... Description of the
Fund
Item 5. Management of the Fund........... Management of the
Fund; General
Information
Item 5(a) Management Discussion of Fund
Performance.................... Not Applicable
Item 6. Capital Stock and Other
Securities..................... General Information;
Dividends,
Distributions and
Taxes
Item 7. Purchase of Securities Being
Offered........................ Purchase and Sale of
Shares; General
Information
Item 8. Redemption or Repurchase......... Purchase and Sale of
Shares
Item 9. Pending Legal Proceedings........ Not Applicable
Location in Statement
of Additional Information
_________________________
PART B
Item 10. Cover Page....................... Cover Page
Item 11. Table of Contents................ Cover Page
<PAGE>
Item 12. General Information and
History........................ Management of the
Fund; General
Information
Item 13. Investment Objectives and
Policies....................... Investment Policies
and Restrictions
Item 14. Management of the Registrant..... Management of the
Fund
Item 15. Control Persons and Principal
Holders of Securities.......... Management of the
Fund
Item 16. Investment Advisory and Other
Services....................... Management of the
Fund
Item 17. Brokerage Allocation and Other
Practices...................... Portfolio
Transactions
Item 18. Capital Stock and Other
Securities..................... General Information
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered.... Purchase and
Redemption of
Shares; Net Asset
Value
Item 20. Tax Status....................... Dividends,
Distributions and
Taxes
Item 21. Underwriters..................... General Information
Item 22. Calculation of Performance
Data........................... General Information
Item 23. Financial Statements............. Financial
Statements; Report
of Independent
Auditors
<PAGE>
<PAGE>
THE ALLIANCE
- --------------------------------------------------------------------------------
STOCK FUNDS
- --------------------------------------------------------------------------------
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
(Advisor Class)
June [ ], 1996
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 Technology Fund -Alliance All-Asia Investment Fund
- -Alliance Quasar Fund -Alliance Global Small Cap 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>
<CAPTION>
Table of Contents Page
<S> <C>
The Funds at a Glance ................................................. 2
Expense Information ................................................... 4
Financial Highlights .................................................. 4
Glossary .............................................................. 6
Description of the Funds .............................................. 7
Investment Objectives and Policies ................................. 7
Additional Investment Practices .................................... 15
Certain Fundamental Investment Policies ............................ 22
Risk Considerations ................................................ 25
Purchase and Sale of Shares ........................................... 28
Management of the Funds ............................................... 30
Dividends, Distributions and Taxes .................................... 31
General Information ................................................... 32
</TABLE>
- --------------------------------------------------------------------------------
Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return. The Domestic Stock Funds
invest mainly in the United States equity markets and the Global Stock Funds
diversify their investments among equity markets around the world, while the
Total Return Funds invest in both equity and fixed-income securities.
Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, write Alliance Fund Services, Inc. at the indicated address or call
the "For Literature" telephone number shown above.
This Prospectus offers the Advisor Class shares of each Fund which may be
purchased at net asset value without any initial or contingent deferred sales
charges and without ongoing distribution expenses. Advisor Class shares are
offered solely to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors, Inc., each Fund's
principal underwriters and (ii) participants in self-directed defined
contribution employee benefit plans (e.g., 401(k) plans) that meet certain
minimum standards. 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.(SM)
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>
The Funds At A Glance
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.
The Funds' Investment Adviser Is . . .
Alliance Capital Management L.P. ("Alliance"), a global investment manager
providing diversified services to institutions and individuals through a broad
line of investments including 107 mutual funds. Since 1971, Alliance has earned
a reputation as a leader in the investment world with over $156 billion in
assets under management as of March 1, 1996. Alliance provides investment
management services to 34 of the FORTUNE 100 companies.
Domestic Stock Funds
Alliance Fund
Seeks . . . Long-term growth of capital and income primarily through investment
in common stocks.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, have the potential to achieve capital appreciation.
Growth Fund
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities.
Invests Principally in . . . A diversified portfolio of equity securities of
companies with a favorable outlook for earnings and whose rate of growth is
expected to exceed that of the United States economy over time.
Premier Growth Fund
Seeks . . . Long-term growth of capital by investing in the equity securities of
a limited number of large, carefully selected, high-quality American companies
from a relatively small universe of intensively researched companies.
Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, are likely to achieve superior earnings growth.
Normally, approximately 40 companies will be represented in the Fund's
investment portfolio. The Fund's investments in 25 of these companies most
highly regarded at any point in time by Alliance will usually constitute
approximately 70% of the Fund's net assets.
Technology Fund
Seeks . . . Growth of capital through investment in companies expected to
benefit from advances in technology.
Invests Principally in . . . A diversified portfolio of securities of companies
which use technology extensively in the development of new or improved products
or processes.
Quasar Fund
Seeks . . . Growth of capital by pursuing aggressive investment policies.
Invests Principally in . . . A diversified portfolio of equity securities of any
company and industry and in any type of security which is believed to offer
possibilities for capital appreciation.
Global Stock Funds
International Fund
Seeks . . . A total return on its assets from long-term growth of capital and
from income.
Invests Principally in . . . A diversified portfolio of marketable securities of
established non-United States companies, companies participating in foreign
economies with prospects for growth, and foreign government securities.
Worldwide Privatization Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities
issued by enterprises that are undergoing, or have undergone, privatization. The
balance of the Fund's investment portfolio will include securities of companies
that are believed by Alliance to be beneficiaries of the privatization process.
New Europe Fund
Seeks . . . Long-term capital appreciation through investment primarily in the
equity securities of companies based in Europe.
Invests Principally in . . . A non-diversified portfolio of equity securities of
European companies.
All-Asia Investment Fund
Seeks . . . Long-term capital appreciation.
Invests Principally in . . . A non-diversified portfolio of equity securities of
Asian/Pacific companies.
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. Each
Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares may be purchased at net asset
value without any initial or contingent deferred sales charges and are not
subject to ongoing distribution expenses. Advisor Class shares may be purchased
solely by investors (i) through accounts established under a fee-based program,
sponsored and maintained by a registered broker-dealer or other financial
intermediary and approved by Alliance Fund Distributors, Inc., each Fund's
principal underwriter, pursuant to which each investor pays an asset-based fee
at an annual rate of at least .50% of the assets in the investor's account, to
the broker-dealer or financial intermediary, or its affiliate or agent, for
investment advisory or administrative services, or (ii) through a self-directed
defined contribution employee benefit plan (e.g., a 401(k) plan) that has at
least 1,000 participants or $25 million in assets. Shares can be purchased for a
minimum initial investment of $250, and subsequent investments can be made for
as little as $50. Fee-based programs through which Advisor Class shares may be
purchased may impose different requirements with respect to minimal initial and
subsequent investment levels than described above. For detailed information
about purchasing and selling shares, see "Purchase and Sale of Shares." Be sure
to ask your financial representative about:
- --------------------------------------------------------------------------------
AUTOMATIC REINVESTMENT
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PROGRAM
- --------------------------------------------------------------------------------
RETIREMENT PLANS
- --------------------------------------------------------------------------------
SHAREHOLDER COMMUNICATIONS
- --------------------------------------------------------------------------------
DIVIDEND DIRECTION PLANS
- --------------------------------------------------------------------------------
AUTO EXCHANGE
- --------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWALS
- --------------------------------------------------------------------------------
TELEPHONE TRANSACTIONS
- --------------------------------------------------------------------------------
24 HOUR INFORMATION
- --------------------------------------------------------------------------------
Alliance(R)
Mutual funds without the Mystery.(SM)
(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
3
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses are one of several factors to consider when you
invest in a Fund. The following table summarizes your maximum transaction costs
from investing in the Advisor Class shares of each Fund and estimated annual
expenses for Advisor Class shares of each Fund. For each Fund, the "Examples" to
the right of the table below show the cumulative expenses attributable to a
hypothetical $1,000 investment in Advisor Class shares for the periods
specified.
<TABLE>
<CAPTION>
Advisor Class Shares
--------------------
<S> <C>
Maximum sales charge imposed on purchases .............. None
Sales charge imposed on dividend reinvestments ......... None
Deferred sales charge .................................. None
Exchange fee ........................................... None
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating Expenses Examples
- ---------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C>
Alliance Fund Advisor Class Advisor Class
------------- -------------
Management fees .71% After 1 year $ 9
Other expenses (a) .18% After 3 years $ 28
----
Total fund
operating expenses .89%
====
Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees .75% After 1 year $ 11
Other expenses (a) .30% After 3 years $ 33
----
Total fund
operating expenses 1.05%
====
Premier Growth Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 14
Other expenses (a) .38% After 3 years $ 44
----
Total fund
operating expenses 1.38%
====
Technology Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 15
Other expenses (a) .45% After 3 years $ 46
----
Total fund
operating expenses 1.45%
====
Quasar Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 16
Other expenses (a) .61% After 3 years $ 51
----
Total fund
operating expenses 1.61%
====
International Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 17
Other expenses (a) .68% After 3 years $ 53
----
Total fund
operating expenses 1.68%
====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page [ ] and the discussion following these
tables on page [ ].
4
<PAGE>
<TABLE>
<CAPTION>
Operating Expenses Examples
- ---------------------------------------------------------- -------------------------------------------
<S> <C> <C> <C>
Worldwide Privatization Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 20
Other expenses (a) .98% After 3 years $ 62
----
Total fund
operating expenses 1.98%
====
New Europe Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.07% After 1 year $ 17
Other expenses (a) .65% After 3 years $ 54
----
Total fund
operating expenses 1.72%
====
All-Asia Investment Fund Advisor Class Advisor Class
------------- -------------
Management fees (b) 0.00% After 1 year $ 41
Other expenses After 3 years $125
Administration fees 0.00%
Other operating expenses (a) 4.12%
----
Total other expenses 4.12%
----
Total fund
operating expenses 4.12%
====
Global Small Cap Fund Advisor Class Advisor Class
------------- -------------
Management fees 1.00% After 1 year $ 23
Other expenses (a) 1.29% After 3 years $ 72
----
Total fund
operating expenses 2.29%
====
Strategic Balanced Fund Advisor Class Advisor Class
------------- -------------
Management fees (b) .45% After 1 year $ 11
Other expenses (a) .65% After 3 years $ 35
----
Total fund
operating expenses 1.10%
====
Balanced Shares Advisor Class Advisor Class
------------- -------------
Management fees .63% After 1 year $ 11
Other expenses (a) .48% After 3 years $ 35
----
Total fund
operating expenses 1.11%
====
Income Builder Fund Advisor Class Advisor Class
------------- -------------
Management fees .75% After 1 year $ 21
Other expenses (a) 1.33% After 3 years $ 65
----
Total fund
operating expenses 2.08%
====
Utility Income Fund Advisor Class Advisor Class
------------- -------------
Management fees .75% After 1 year $ 12
Other expenses (a) .45% After 3 years $ 38
----
Total fund
operating expenses 1.20%
====
Growth and Income Fund Advisor Class Advisor Class
------------- -------------
Management fees .53% After 1 year $ 9
Other expenses (a) .31% After 3 years $ 27
----
Total fund
operating expenses .84%
====
</TABLE>
- --------------------------------------------------------------------------------
(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) Net of voluntary fee waiver. In the absence of such waiver, management fees
would be 1.00% for All-Asia Investment Fund and .75% for Strategic
Balanced Fund.
5
<PAGE>
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly or
indirectly. The examples do not reflect any charges or expenses imposed by your
financial representative or your employee benefit plan. "Other Expenses" are
based on estimated amounts for each Fund's current fiscal year. The management
fee rates of Growth Fund, Premier Growth Fund, Strategic Balanced Fund,
Technology Fund, International Fund, Worldwide Privatization Fund, New Europe
Fund, All-Asia Investment Fund, Income Builder Fund, Utility Income Fund and
Global Small Cap 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 examples set forth
above assume reinvestment of all dividends and distributions and utilize a 5%
annual rate of return as mandated by Commission regulations. The examples should
not be considered representative of future expenses; actual expenses may be
greater or less than those shown.
- --------------------------------------------------------------------------------
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 Ratings Services.
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.
6
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------
Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder vote.
No Fund will change a non-fundamental objective or policy without notifying its
shareholders. There is no guarantee that any Fund will achieve its investment
objective.
INVESTMENT OBJECTIVES AND POLICIES
Domestic Stock Funds
The Domestic Stock Funds have been designed to offer investors seeking capital
appreciation a range of alternative approaches to investing in the U.S. equity
markets.
The Alliance Fund
The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company
that seeks long-term growth of capital and income primarily through investment
in common stocks. The Fund normally invests substantially all of its assets in
common stocks that Alliance believes will appreciate in value, but it may invest
in other types of securities such as convertible securities, high grade
instruments, U.S. Government securities and high quality, short-term obligations
such as repurchase agreements, bankers' acceptances and domestic certificates of
deposit, and may invest without limit in foreign securities. While the
diversification and generally high quality of the Fund's investments cannot
prevent fluctuations in market values, they tend to limit investment risk and
contribute to achieving the Fund's objective. The Fund generally does not effect
portfolio transactions in order to realize short-term trading profits or
exercise control.
The Fund may also: (i) make secured loans of its portfolio securities equal in
value up to 25% of its total assets to brokers, dealers and financial
institutions; (ii) enter into repurchase agreements of up to one week in
duration with commercial banks, but only if those agreements together with any
restricted securities and any securities which do not have readily available
market quotations do not exceed 10% of its net assets; and (iii) write
exchange-traded covered call options with respect to up to 25% of its total
assets. For additional information on the use, risks and costs of these policies
and practices see "Additional Investment Practices."
Alliance Growth Fund
Alliance Growth Fund ("Growth Fund") is a diversified investment company that
seeks long-term growth of capital. Current income is only an incidental
consideration. The Fund seeks 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 ConsiderationsSecurities
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 period ended December 31,
1995, 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 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
7
<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.
Alliance Technology Fund
Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment
company that emphasizes growth of capital and invests for capital appreciation,
and only incidentally for current income. The Fund may seek income by writing
listed call options. The Fund invests primarily in securities of companies
expected to benefit from technological advances and improvements (i.e.,
companies that use technology extensively in the development of new or improved
products or processes). The Fund will normally have at least 80% of its assets
invested in the securities of these companies. The Fund normally will have
substantially all its assets invested in equity securities, but it also invests
in debt securities offering an opportunity for price appreciation. The Fund will
invest in listed and unlisted securities and U.S. and foreign securities, but it
will not purchase a foreign security if as a result 10% or more of the Fund's
total assets would be invested in foreign securities.
The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known and
established companies and in new and unseasoned companies.
The Fund may also: (i) write and purchase exchange-listed call options and
purchase listed put options, including exchange-traded index put options; (ii)
invest up to 10% of its total assets in warrants; (iii) invest in restricted
securities and in other assets having no ready market if as a result no more
than 10% of the Fund's net assets are invested in such securities and assets;
(iv) lend portfolio securities equal in value to not more than 30% of the Fund's
total assets; and (v) invest up to 10% of its total assets in foreign
securities. For additional information on the use, risks and costs of the
policies and practices see "Additional Investment Practices."
Alliance Quasar Fund
Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment company
that seeks growth of capital by pursuing aggressive investment policies. It
invests for capital appreciation and only incidentally for current income. The
selection of securities based on the possibility of appreciation cannot prevent
loss in value. Moreover, because the Fund's investment policies are aggressive,
an investment in the Fund is risky and investors who want assured income or
preservation of capital should not invest in the Fund.
The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities,
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
8
<PAGE>
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 December
31, 1995, approximately 33% of the Fund's assets were invested in securities of
Japanese issuers. The Fund may invest in companies, wherever organized, that
Alliance judges have their principal activities and interests outside the U.S.
These companies may be located in developing countries, which involves exposure
to economic structures that are generally less diverse and mature, and to
political systems which can be expected to have less stability, than those of
developed countries. The Fund currently does not intend to invest more than 10%
of its total assets in companies in, or governments of, developing countries.
The Fund may also: (i) purchase or sell forward foreign currency exchange
contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put and
call options, including exchange-traded index options; (iii) enter into
financial futures contracts, including contracts for the purchase or sale for
future delivery of foreign currencies and stock index futures, and purchase and
write put and call options on futures contracts traded on U.S. or foreign
exchanges or over-the-counter; (iv) purchase and write put options on foreign
currencies traded on securities exchanges or boards of trade or
over-the-counter; (v) lend portfolio securities equal in value to not more than
30% of its total assets; and (vi) enter into repurchase agreements of up to
seven days' duration, provided that not more than 10% of the Fund's total assets
would be so invested. For additional information on the use, risks and costs of
these policies and practices see "Additional Investment Practices."
Alliance 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,
9
<PAGE>
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 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
10
<PAGE>
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 December 31, 1995, approximately 27% of the Fund's assets were
invested in securities of issuers in the United Kingdom.
The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants and rights to purchase equity securities of European companies; (iii)
invest in depositary receipts or other securities convertible into securities of
companies based in European countries, debt securities of supranational entities
denominated in the currency of any European country, debt securities denominated
in European Currency Units of an issuer in a European country (including
supranational issuers) and "semi-governmental securities"; (iv) purchase and
sell forward contracts; (v) write, sell and purchase exchange-traded put and
call options, including exchange-traded index options; (vi) enter into financial
futures contracts, including contracts for the purchase or sale for future
delivery of foreign currencies and futures contracts based on stock indices, and
purchase and write options on futures contracts; (vii) purchase and write put
options on foreign currencies traded on securities exchanges or boards of trade
or over-the-counter; (viii) make secured loans of portfolio securities not in
excess of 30% of its total assets to brokers, dealers and financial
institutions; (ix) enter into forward commitments for the purchase or sale of
securities; and (x) enter into standby commitment agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."
Alliance All-Asia Investment Fund
Alliance All-Asia Investment Fund, Inc. ("All-Asia Investment Fund") is a
non-diversified investment company whose investment objective is to seek
long-term capital appreciation. In seeking to achieve its investment objective,
the Fund will invest at least 65% of its total assets in equity securities (for
the purposes of this investment policy, rights, warrants and options to purchase
common stocks are not deemed to be equity securities), preferred stocks and
equity-linked debt securities issued by Asian companies. The Fund may invest up
to 35% of its total assets in debt securities issued or guaranteed by Asian
companies or by Asian governments, their agencies or instrumentalities. The Fund
may also invest in securities issued by non-Asian issuers, provided that the
Fund will invest at least 80% of its total assets in securities issued by Asian
companies and the Asian debt securities referred to above. The Fund expects to
invest, from time to time, a significant portion, 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", "--Investment in Lower-Rated Fixed-Income
Securities" and Appendix C in the Fund's Statement of
11
<PAGE>
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 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
12
<PAGE>
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
ConsiderationsSecurities 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, 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.
13
<PAGE>
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 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
14
<PAGE>
changes in tax laws. To the extent that rates are established or reviewed by
governmental authorities, utility companies are subject to the risk that such
authorities will not authorize increased rates. Because of the Fund's policy of
concentrating its investments in utility companies, the Fund is more susceptible
than most other mutual funds to economic, political or regulatory occurrences
affecting the utilities industry.
Foreign utility companies, like those in the U.S., are generally subject to
regulation, although such regulations may or may not be comparable to domestic
regulations. Foreign utility companies in certain countries may be more heavily
regulated by their respective governments than utility companies located in the
U.S. and, as in the U.S., generally are required to seek government approval for
rate increases. In addition, because many foreign utility companies use fuels
that cause more pollution than those used in the U.S., such utilities may yet be
required to invest in pollution control equipment. Foreign utility regulatory
systems vary from country to country and may evolve in ways different from
regulation in the U.S. The percentage of the Fund's assets invested in issuers
of particular countries will vary. See "Risk Considerations -- Foreign
Investment."
The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other than
utility companies, including U.S. Government securities and repurchase
agreements pertaining thereto, foreign government securities, corporate
fixed-income securities of domestic issuers, corporate fixed-income securities
of foreign issuers denominated in foreign currencies or in U.S. dollars (in each
case including fixed-income securities of an issuer in one country denominated
in the currency of another country), qualifying bank deposits and prime
commercial paper.
The Fund may also: (i) invest up to 30% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii) invest
in depositary receipts, securities of supranational entities denominated in the
currency of any country, securities denominated in European Currency Units and
"semi-governmental securities;" (iv) write covered put and call options and
purchase put and call options on securities of the types in which it is
permitted to invest that are exchange-traded and over-the-counter; (v) purchase
and sell exchange-traded options on any securities index composed of the types
of securities in which it may invest; (vi) enter into contracts for the purchase
or sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including an index of U.S. Government
securities, foreign government securities, corporate fixed-income securities, or
common stock, and may purchase and write options on futures contracts; (vii)
purchase and write put and call options on foreign currencies traded on U.S. and
foreign exchanges or over-the-counter for hedging purposes; (viii) purchase or
sell forward contracts; (ix) enter into interest rate swaps and purchase or sell
interest rate caps and floors; (x) enter 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 PracticesOptions."
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."
15
<PAGE>
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
Investment 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.
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
16
<PAGE>
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 owed by a corporate, governmental or other borrower to
another party. They may represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or services (trade claims
or other receivables), or to other creditors. Direct debt instruments involve
the risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to 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 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 be repaid.
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.
17
<PAGE>
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 Investment 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 purchasing an option, a Fund would be in a position to realize a gain if,
during the option period, the price of the underlying security increased (in the
case of a call) or decreased (in the case of a put) by an amount in excess of
the premium paid; otherwise the Fund would experience a loss equal to the
premium paid for the option.
If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the underlying
security at the exercise price. The risk involved in writing an option is that,
if the option were exercised, the underlying security would then be purchased or
sold by the Fund at a disadvantageous price. These risks could be reduced by
entering into a closing transaction (i.e., by disposing of the option prior to
its exercise). A Fund retains the premium received from writing a put or call
option whether or not the option is exercised. The writing of covered call
options could result in increases in a Fund's portfolio turnover rate,
especially during periods when market prices of the underlying securities
appreciate.
Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global
Small Cap Fund will not write uncovered call options. Technology Fund and Global
Small Cap Fund will not write a call option if the premium to be received by the
Fund in doing so would not produce an annualized return of at least 15% of the
then current market value of the securities subject to the option (without
giving effect to commissions, stock transfer taxes and other expenses that are
deducted from premium receipts). Technology Fund, Quasar Fund and Global Small
Cap Fund will not write a call option if, as a result, the aggregate of the
Fund's portfolio securities subject to outstanding call options (valued at the
lower of the option price or market value of such securities) would exceed 15%
of the Fund's total assets or more than 10% of the Fund's assets would be
committed to call options that at the time of sale have a remaining term of more
than 100 days. The aggregate cost of all outstanding options purchased and held
by each of Premier Growth Fund, Technology Fund, Quasar Fund and Global Small
Cap Fund will at no time exceed 10% of the Fund's total assets. Neither
International Fund nor New Europe Fund will write uncovered put options.
A Fund that purchases or writes options on securities in privately negotiated
(i.e., over-the-counter) transactions will effect such transactions only with
investment dealers and other financial institutions (such as commercial banks or
savings and loan institutions) deemed creditworthy by Alliance, and Alliance has
adopted procedures for monitoring the creditworthiness of such entities. Options
purchased or written by a Fund in negotiated transactions are illiquid and it
may not be possible for the Fund to effect a closing transaction at an
advantageous time. See "Illiquid Securities."
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
18
<PAGE>
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. Premier Growth Fund may not purchase or sell a
stock index future if immediately thereafter more than 30% of its total assets
would be hedged by stock index futures. 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 may not purchase or sell a stock index future if, immediately
thereafter, the sum of the amount of margin deposits on the Fund's existing
futures positions would exceed 5% of the market value of the Fund's total
assets.
Options on Foreign Currencies. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and a Fund could be required to purchase
or sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event of
rate movements adverse to a Fund's position, it may forfeit the entire amount of
the premium plus related transaction costs. See the Statement of Additional
Information of each Fund that may invest in options on foreign currencies for
further discussion of the use, risks and costs of options on foreign currencies.
Forward Foreign Currency Exchange Contracts. A Fund purchases or sells forward
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"). 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"
19
<PAGE>
basis or purchases or sales on a "delayed delivery" basis. In some cases, a
forward commitment may be conditioned upon the occurrence of a subsequent event,
such as approval and consummation of a merger, corporate reorganization or debt
restructuring (i.e., a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the price is fixed at the
time the commitment is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within two months
after the transaction, but settlements beyond two months may be negotiated.
Securities purchased or sold under a forward commitment are subject to market
fluctuation, and no interest or dividends accrue to the purchaser prior to the
settlement date. At the time a Fund intends to enter into a forward commitment,
it records the transaction and thereafter reflects the value of the security
purchased or, if a sale, the proceeds to be received, in determining its net
asset value. Any unrealized appreciation or depreciation reflected in such
valuation of a "when, as and if issued" security would be canceled in the event
that the required conditions did not occur and the trade was canceled.
The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling prices.
In periods of falling interest rates and rising bond prices, a Fund might sell a
security in its portfolio and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if Alliance were to forecast incorrectly
the direction of interest rate movements, a Fund might be required to complete
such when-issued or forward transactions at prices inferior to the then current
market values. When-issued securities and forward commitments may be sold prior
to the settlement date, but a Fund enters into when-issued and forward
commitments only with the intention of actually receiving securities or
delivering them, as the case may be. If a Fund chooses to dispose of the right
to acquire a when-issued security prior to its acquisition or dispose of its
right to deliver or receive against a forward commitment, it may incur a gain or
loss. Any significant commitment of Fund assets to the purchase of securities on
a "when, as and if issued" basis may increase the volatility of the Fund's net
asset value. No forward commitments will be made by New Europe Fund, All-Asia
Investment 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. In the event the
other party to a forward commitment transaction were to default, a Fund might
lose the opportunity to invest money at favorable rates or to dispose of
securities at favorable prices.
Standby Commitment Agreements. Standby commitment agreements commit a Fund, for
a stated period of time, to purchase a stated amount of a security that may be
issued and sold to the Fund at the option of the issuer. The price and coupon of
the security are fixed at the time of the commitment. At the time of entering
into the agreement the Fund is paid a commitment fee, regardless of whether the
security ultimately is issued, typically equal to approximately 0.5% of the
aggregate purchase price of the security the Fund has committed to purchase. A
Fund will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price considered advantageous
to the Fund and unavailable on a firm commitment basis. No Fund, other than
Income Builder Fund, will enter into a standby commitment with a remaining term
in excess of 45 days. Investments in standby commitments will be limited so that
the aggregate purchase price of the securities subject to the commitments will
not exceed 25% with respect to New Europe Fund, 50% with respect to Worldwide
Privatization Fund and All-Asia Investment Fund, and 20% with respect to Utility
Income Fund, of the Fund's assets taken at the time of making the commitment.
There is no guarantee that 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. 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.
20
<PAGE>
Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Interest rate swaps are entered on a net
basis (i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). With
respect to All-Asia Investment Fund and Utility Income Fund, the exchange
commitments can involve payments in the same currency or in different
currencies. The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the party
selling such interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on an agreed principal amount
from the party selling the interest rate floor.
A Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging its
assets or liabilities. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each interest rate swap, cap
and floor is accrued daily. A Fund will not enter into an interest rate swap,
cap or floor transaction unless the unsecured senior debt or the claims-paying
ability of the other party thereto is then rated in the highest rating category
of at least one nationally recognized rating organization. Alliance will monitor
the creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps and floors are more recent innovations for which standardized documentation
has not yet been developed and, accordingly, they are less liquid than swaps.
The use of interest rate transactions is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance 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. If a vendor defaults on its
repurchase obligation, a Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
a vendor goes bankrupt, a Fund might be delayed in, or prevented from, selling
the collateral for its benefit. Alliance monitors the creditworthiness of the
vendors with which the Fund enters into repurchase agreements. There is no
percentage restriction on a Fund's ability to enter into repurchase agreements,
other than as indicated under "Investment Objectives and Policies."
Short Sales. A short sale is effected by selling a security that a Fund does not
own, or if the Fund does own such security, it is not to be delivered upon
consummation of the sale. A short sale is "against the box" to the extent that a
Fund contemporaneously owns or has the right to obtain securities identical to
those sold short without payment. Worldwide Privatization Fund, All-Asia
Investment Fund, 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 Investment Fund may not make a
short sale if as a result more than 25% of the Fund's net assets would be held
as collateral for short sales. If the price of the security sold short increases
between the time of the short sale and the time a Fund replaces the borrowed
security, the Fund will incur a loss; conversely, if the price declines, the
Fund will realize a capital gain. See "Certain Fundamental Investment Policies."
Certain special federal income tax considerations may apply to short sales
entered into by a Fund. See "Dividends, Distributions and Taxes" in the relevant
Fund's Statement of Additional Information.
Loans of Portfolio Securities. The 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
21
<PAGE>
securities or equivalent securities in order to exercise ownership rights such
as voting rights, subscription rights and rights to dividends, interest or
distributions. A Fund may pay reasonable finders', administrative and custodial
fees in connection with a loan. A Fund will not lend its portfolio securities to
any officer, director, employee or affiliate of the Fund or Alliance.
General. The successful use of the foregoing investment practices draws upon
Alliance's special skills and experience with respect to such instruments and
usually depends on Alliance's ability to forecast price movements, interest
rates or currency exchange rate movements correctly. Should interest rates,
prices or exchange rates move unexpectedly, a Fund may not achieve the
anticipated benefits of the transactions or may realize losses and thus be in a
worse position than if such strategies had not been used. Unlike many
exchange-traded futures contracts and options on futures contracts, there are no
daily price fluctuation limits with respect to certain options and forward
contracts, and adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation between movements in
the prices of futures contracts, options and forward contracts and movements in
the prices of the securities and currencies hedged or used for cover will not be
perfect and could produce unanticipated losses.
A Fund's ability to dispose of its position in futures contracts, options and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types of
securities and currencies are relatively new and still developing, and there is
no public market for forward contracts. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options and forward contracts. If a secondary market does not exist with respect
to an option purchased or written by a Fund, it might not be possible to effect
a closing transaction in the option (i.e., dispose of the option) with the
result that (i) an option purchased by the Fund would have to be exercised in
order for the Fund to realize any profit and (ii) the Fund may not be able to
sell currencies or portfolio securities covering an option written by the Fund
until the option expires or it delivers the underlying security, futures
contract or currency upon exercise. Therefore, no assurance can be given that
the Funds will be able to utilize these instruments effectively for the purposes
set forth above. Furthermore, a Fund's ability to engage in options and futures
transactions may be limited by tax considerations. 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. Alliance anticipates that the annual turnover rate will not
exceed 100% for Alliance Fund, Worldwide Privatization Fund and All-Asia
Investment Fund; 150% for Premier Growth Fund, International Fund, New Europe
Fund, Global Small Cap Fund, Income Builder Fund and Growth and Income Fund; and
200% for Growth Fund, Technology Fund, Strategic Balanced Fund, Balanced Shares
and Utility Income Fund. A 100%, 150% and 200% 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 and twice, respectively, in a period of one year. These
portfolio turnover rates are greater than those of most other investment
companies, including those which emphasize capital appreciation as a basic
policy. A high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be borne by the Fund
and its shareholders. High portfolio turnover also may result in the realization
of substantial net short-term capital gains. See "Dividends, Distributions and
Taxes" in each Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement of
Additional Information.
Alliance Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government); (ii) acquire more
than 10% of the voting or other securities of any one issuer; or (iii) buy
securities of any company that (including its predecessors) has not been in
business at least three continuous years. Pursuant to investment policies which
are not fundamental, the Fund does not invest (i) in puts or calls (except as
discussed above); (ii) in straddles, spreads, or any combination thereof; (iii)
in oil, gas or other mineral exploration or development programs; or
22
<PAGE>
(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 each may not: (i) invest more than 5% of
its total assets in the securities of any one issuer (other than U.S. Government
securities and repurchase agreements relating thereto), although up to 25% of
each Fund's total assets may be invested without regard to this restriction; or
(ii) invest 25% or more of its total assets in the securities of any one
industry.
Premier Growth Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest 25% or more of the value of its
total assets in the same industry; (iii) borrow money or issue senior securities
except for temporary or emergency purposes in an amount not exceeding 5% of the
value of its total assets at the time the borrowing is made; (iv) pledge,
mortgage, hypothecate or otherwise encumber any of its assets except in
connection with the writing of call options and except to secure permitted
borrowings; or (v) invest in the securities of any issuer that has a record of
less than three years of continuous operation (including the operation of any
predecessor) if as a result more than 10% of the value of the total assets of
the Fund would be invested in the securities of such issuer or issuers.
Technology Fund may not: (i) with respect to 75% of its total assets, have such
assets represented by other than: (a) cash and cash items, (b) U.S. Government
securities, or (c) securities of any one issuer (other than the U.S. Government
and its agencies or instrumentalities) not greater in value than 5% of the
Fund's total assets, and not more than 10% of the outstanding voting securities
of such issuer; (ii) purchase the securities of any one issuer, other than the
U.S. Government and its agencies or instrumentalities, if as a result (a) the
value of the holdings of the Fund in the securities of such issuer exceeds 25%
of its total assets, or (b) the Fund owns more than 25% of the outstanding
securities of any one class of securities of such issuer; (iii) concentrate its
investments in any one industry, but the Fund has reserved the right to invest
up to 25% of its total assets in a particular industry; and (iv) invest in the
securities of any issuer which has a record of less than three years of
continuous operation (including the operation of any predecessor) if such
purchase would cause 10% or more of its total assets to be invested in the
securities of such issuers.
Quasar Fund may not: (i) purchase the securities of any one issuer, other than
the U.S. Government or any of its agencies or instrumentalities, if as a result
more than 5% of its total assets would be invested in such issuer or the Fund
would own more than 10% of the outstanding voting securities of such issuer,
except that up to 25% of its total assets may be invested without regard to
these 5% and 10% limitations; (ii) invest more than 25% of its total assets in
any particular industry; (iii) borrow money except for temporary or emergency
purposes in an amount not exceeding 5% of its total assets at the time the
borrowing is made; or (iv) invest more than 10% of its assets in restricted
securities.
International Fund may not: (i) invest more than 5% of the value of its total
assets in securities of a single issuer (including repurchase agreements with
any one entity), except U.S. Government securities or foreign government
securities; provided, however, that the Fund may not, with respect to 75% of its
total assets, invest more than 5% of its total assets in securities of any one
foreign government issuer; (ii) own more than 10% of the outstanding securities
of any class of any issuer (for this purpose, all preferred stocks of an issuer
shall be deemed a single class, and all indebtedness of an issuer shall be
deemed a single class), except U.S. Government securities; (iii) invest more
than 25% of the value of its total assets in securities of issuers having their
principal business activities in the same industry; provided, that this
limitation does not apply to U.S. Government securities or foreign government
securities; (iv) invest more than 5% of the value of its total assets in the
securities of any issuer that has a record of less than three years of
continuous operation (including the operation of any predecessor or
unconditional guarantor), except U.S. Government securities or foreign
government securities; (v) invest more than 5% of the value of its total assets
in securities with legal or contractual restrictions on resale, other than
repurchase agreements, or more than 10% of the value of its total assets in
securities that are not readily marketable (including restricted securities and
repurchase agreements not terminable within seven business days); and (vi)
borrow money, except as a temporary measure for extraordinary or emergency
purposes, and then only from banks in amounts not exceeding 5% of its total
assets.
Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets
in securities of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a) U.S.
Government securities, or (b) the purchase of securities of issuers whose
primary business activity is in the national commercial banking industry, so
long as the Fund's Directors determine, on the basis of factors such as
liquidity, availability of investments and anticipated returns, that the Fund's
ability to achieve its investment objective would be adversely affected if the
Fund were not permitted to invest more than 25% of its total assets in those
securities, and so long as the Fund notifies its shareholders of any decision by
the Directors to permit or cease to permit the Fund to invest more than 25% of
its total assets in those securities, such notice to include a discussion of any
increased investment risks to which the Fund may be subjected as a result of the
Directors' determination; (ii) borrow money except from banks for temporary or
emergency purposes, including the meeting of redemption requests that might
require the untimely disposition of securities; borrowing in the aggregate may
not exceed 15%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding
23
<PAGE>
borrowings in excess of 5% of the value of the Fund's total assets will be
repaid before any investments are made; or (iii) pledge, hypothecate, mortgage
or otherwise encumber its assets, except to secure permitted borrowings. The
exception contained in clause (i)(b) above is subject to the operating policy
regarding concentration described in this Prospectus.
New Europe Fund may not: (i) purchase more than 10% of the outstanding voting
securities of any one issuer; (ii) invest more than 15% of its total assets in
the securities of any one issuer or 25% or more of its total assets in the same
industry, provided, however, that the foregoing restriction shall not be deemed
to prohibit the Fund from purchasing the securities of any issuer pursuant to
the exercise of rights distributed to the Fund by the issuer, except that no
such purchase may be made if as a result the Fund will fail to meet the
diversification requirements of the Code and any such acquisition in excess of
the foregoing 15% or 25% limits will be sold by the Fund as soon as reasonably
practicable (this restriction does not apply to U.S. Government securities, but
will apply to foreign government securities unless the Commission permits their
exclusion); (iii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the Fund's total assets will be repaid
before any subsequent investments are made; or (iv) purchase a security (unless
the security is acquired pursuant to a plan of reorganization or an offer of
exchange) if, as a result, the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of any
closed-end investment company, or more than 5% of the value of the Fund's total
assets would be invested in securities of any closed-end investment company, or
more than 10% of such value in closed-end investment companies in general.
All-Asia Investment Fund may not: (i) invest 25% or more of its total assets in
securities of issuers conducting their principal business activities in the same
industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the borrowing is made;
outstanding borrowings in excess of 5% of the value of the Fund's total assets
will be repaid before any investments are made; or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings.
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 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
24
<PAGE>
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 Investment 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 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
25
<PAGE>
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 1990 through
1994, the pound sterling declined at an average annual rate of approximately
3.6% 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 3593.0 on October 18, 1995, up 17% from the end of
1994.
The public sector borrowing requirement ("PSBR"), a mandated measure of the
amount required to balance the budget, is running in excess of the November 1994
budget estimate, as a result of decreased revenue growth and increased
government spending. The PSBR estimate for the 1996-97 fiscal year has also been
raised, but is still expected to be under the European Union limit.
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. Mr. Major's position has been strengthened
by his reelection as leader of the Conservative Party and is expected to retain
that position until the next general election. 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 Investment 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 but has recently fallen
from its post-World War II high against the U.S. dollar.
Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section of
which is reserved for larger, established companies. As measured by the TOPIX, a
capitalization-weighted composite index of all common stocks listed in the First
Section, the performance of the First Section reached a peak in 1989.
Thereafter, the TOPIX declined approximately 46% through the beginning of 1993.
In 1993, the TOPIX increased by approximately 9% from the end of 1992, and by
the end of 1994 increased by approximately 8% from the end of 1993. As of
October 27, 1995, the TOPIX had declined by approximately 11% from the end of
1994. 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 price/earnings ratios
of First Section companies, however, are on average 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. In June 1995, the two countries agreed in principle to
increase Japanese imports of American automobiles and automotive parts.
Nevertheless it is expected that the continuing friction between the U.S. and
Japan with
26
<PAGE>
respect to trade issues will 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 Investment 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 Investment 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 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.
27
<PAGE>
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 Worldwide Privatization Fund, New Europe Fund,
All-Asia Investment 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
Worldwide Privatization Fund, New Europe Fund, All-Asia Investment 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
Each Fund offers multiple classes of shares, of which only the Advisor Class is
offered by this Prospectus. Advisor Class shares of each Fund may be purchased
through your financial representative at net asset value without any initial or
contingent deferred sales charges and are not subject to ongoing distribution
expenses. Advisor Class shares may be purchased solely by investors (i) through
accounts established under a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary and approved by
Alliance Fund Distributors, Inc. ("AFD"), each Fund's principal underwriter,
pursuant to which each investor pays an asset-based fee at an annual rate of at
least .50% of the assets in the investor's account to the broker-dealer or
financial intermediary, or its affiliate or agent, for investment advisory or
administrative services, or (ii) through a self-directed defined contribution
employee benefit plan (e.g., a 401(k) plan) that has at least 1,000 participants
or $25 million in assets. The minimum initial investment in each Fund is $250.
The minimum for subsequent investments in each Fund is $50. Investments of $25
or more are allowed under the automatic investment program of each Fund and
under a 403(b)(7) retirement plan. Share certificates are issued only upon
request. See the Subscription Application and Statement of Additional
Information for more information.
The Funds may refuse any order to purchase Advisor Class shares. In this regard,
the Funds reserve the right to restrict purchases of Advisor Class shares
(including exchanges) when there appears to be evidence of a pattern of frequent
purchases and sales made in response to short-term fluctuations in share price.
How the Funds Value Their Shares
The net asset value of Advisor Class shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to the Advisor Class by the
outstanding shares of the Advisor Class. Shares are valued each day the 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.
HOW TO SELL SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any day the
Exchange is open, either directly or through your financial representative. The
price you will receive is the net asset value next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by
28
<PAGE>
check or electronic funds transfer, a Fund will not send proceeds until it is
reasonably satisfied that the check or electronic funds transfer has been
collected (which may take up to 15 days). If you are in doubt about what
documents are required by your fee-based program or employee benefit plan, you
should contact your financial representative.
Selling Shares Through Your Financial Representative
Your financial representative must receive your request before 4:00 p.m. Eastern
time, and your financial representative must transmit your request to the Fund
by 5:00 p.m. Eastern time, for you to receive that day's net asset value. Your
financial representative is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service.
Selling Shares Directly To A Fund
Send a signed letter of instruction or stock power form to Alliance Fund
Services, Inc. ("AFS") along with certificates, if any, that represent the
shares you want to sell. For your protection, signatures must be guaranteed by a
bank, a member firm of a national stock exchange or other eligible guarantor
institution. Stock power forms are available from your financial representative,
AFS, and many commercial banks. Additional documentation is required for the
sale of shares by corporations, intermediaries, fiduciaries and surviving joint
owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
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.
Telephone redemption requests must be made by 4 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value, and, except for
certain omnibus accounts, may be made only once in any 30-day period. A
shareholder who has completed the Telephone Transactions section of the
Subscription Application, or the Shareholder Options form obtained from AFS, can
elect to have the proceeds of their redemption sent to their bank via an
electronic funds transfer. Proceeds of telephone redemptions also may be sent by
check to a shareholder's address of record. Except for certain omnibus accounts,
redemption requests by electronic funds transfer may not exceed $100,000 and
redemption requests by check may not exceed $50,000. Telephone redemption is not
available for shares held in nominee or "street name" accounts or retirement
plan accounts or shares held by a shareholder who has changed his or her address
of record within the previous 30 calendar days.
General
The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, 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.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares of any Fund for Advisor Class shares
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. Telephone exchange requests must be received by
AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that
day's net asset value.
Please read carefully the Prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to exchange
uncertificated shares. An exchange is a taxable capital transaction for federal
tax purposes. The exchange service may be changed, suspended, or terminated on
60 days' written notice.
GENERAL
If you are a Fund shareholder through an account established under a fee-based
program, your fee-based program may impose requirements with respect to the
purchase, sale or exchange of Advisor Class shares of a Fund that are different
from those described in this Prospectus. A transaction fee may be charged by
your financial representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Each Fund offers three classes of shares other than the Advisor Class, which are
Class A, Class B and Class C. All classes of shares of a Fund have a common
investment objective and investment portfolio. Class A shares are offered with
an initial sales charge and pay a distribution services fee. Class B shares have
a contingent deferred sales charge (a "CDSC") and also pay a distribution
services fee. Class C shares have no initial sales charge or CDSC but pay a
distribution services fee. Because Advisor Class shares have no initial sales
charge or CDSC and pay no distribution services fee, Advisor Class shares are
expected to have different performance from Class A, Class B or Class C shares.
You may obtain more information about Class A, Class B and Class C shares, which
are not offered by this Prospectus, by contacting AFS by telephone at
1-800-221-5672 or by contacting your financial representative.
29
<PAGE>
- --------------------------------------------------------------------------------
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>
The 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)
Technology Fund Peter Anastos since 1992-- Associated with
Senior Vice President of ACMC Alliance
Gerald T. Malone since 1992-- Associated with
Senior Vice President of ACMC Alliance 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
Senior Vice President of ACMC Alliance since July
1993; prior
thereto,
associated with
Equitable Capital
Timothy Rice since 1993-- Associated with
Vice President of ACMC Alliance
International Fund A. Rama Krishna since 1993-- Associated with
Senior Vice President of ACMC Alliance since
and director of Asian Equity 1993, prior
research thereto,
Chief Investment
Strategist and
Director--Equity
Research for CS
First Boston
Worldwide Mark H. Breedon since inception-- Associated with
Privatization Senior Vice President of ACMC Alliance
and Director and Vice President
of Alliance Capital Limited ***
New Europe Fund Eric N. Perkins since 1992-- Associated with
Senior Vice President of ACMC Alliance
and director of European equity
research
All-Asia Investment A. Rama Krishna since inception-- (see above)
Fund (see above)
Global Small Cap Alden M. Stewart since 1994-- (see above)
Fund (see above)
Randall E. Haase since 1994-- (see above)
(see above)
Timothy Rice since 1993-- (see above)
(see above)
Ronald L. Simcoe since 1993-- Associated with
Vice President of ACMC Alliance since
1993; prior
thereto,
associated with
Equitable Capital
Strategic Balanced Robert G. Heisterberg since 1996-- Associated with
Fund Senior Vice President of ACMC Alliance
and Global Economic Policy Analyst
Balanced Shares Kevin J. O'Brien since 1996-- Associated with
Senior Vice President of ACMC Alliance
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.
Thomas M. Perkins since 1991-- Associated with
Senior Vice President of ACMC Alliance
Utility Income Fund Gregory Allison since 1995-- Associated with
Portfolio Manager of Utility Alliance since
Income Fund 1994; prior
thereto
associated with
Gabelli & Co.
Growth & Income Paul Rissman since 1994-- 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.
Alliance is a leading international investment manager supervising client
accounts with assets as of March 1, 1996 totaling more than $156 billion (of
which approximately $48 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 107
separate investment portfolios currently have
30
<PAGE>
over two million shareholders. As of March 1, 1996, Alliance was retained as
an investment manager for 34 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 INVESTMENT FUND
Alliance has been retained by All-Asia Investment Fund under an administration
agreement (the "Administration Agreement") to perform administrative services
necessary for the operation of the Fund. For a description of such services, see
the Statement of Additional Information of the Fund.
In connection with its provision of advisory services to All-Asia Investment
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
September 30, 1995, OAM had approximately $1.5 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 September 30, 1995 of approximately $11.4 billion.
DISTRIBUTION SERVICES AGREEMENTS
Each Fund has entered into a Distribution Services Agreement with AFD with
respect to Advisor Class shares. The Glass-Steagall Act and other applicable
laws may limit the ability of a bank or other depository institution to become
an underwriter or distributor of securities. However, in the opinion of the
Funds' management, based on the advice of counsel, these laws do not prohibit
such depository institutions from providing services for investment companies
such as the administrative, accounting and other services referred to in the
Agreements. In the event that a change in these laws prevented a bank from
providing such services, it is expected that other services arrangements would
be made and that shareholders would not be adversely affected. The State of
Texas requires that shares of a Fund may be sold in that state only by dealers
or other financial institutions that are registered there as broker-dealers.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
- --------------------------------------------------------------------------------
AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
If you receive an income dividend or capital gains distribution in cash you may,
within 120 days following the date of its payment, reinvest the dividend or
distribution in additional shares of that Fund without charge by returning to
Alliance, with appropriate instructions, the check representing such dividend or
distribution. Thereafter, unless you otherwise specify, you will be deemed to
have elected to reinvest all subsequent dividends and distributions in shares of
that Fund.
Each income dividend and capital gains distribution, if any, declared by a Fund
on its outstanding shares will, at the election of each shareholder, be paid in
cash or in additional shares of the same class of shares of that Fund having an
aggregate net asset value as of the close of business on the day following the
declaration date of such dividend or distribution equal to the cash amount of
such income dividend or distribution. Election to receive dividends and
distributions in cash or shares is made at the time shares are initially
purchased and may be changed at any time prior to the record date for a
particular dividend or distribution. Cash dividends can be paid by check or, if
the shareholder so elects, electronically via the ACH network. There is no sales
or other charge in connection with the reinvestment of dividends and capital
gains distributions.
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
31
<PAGE>
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, Income Builder 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.
- --------------------------------------------------------------------------------
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. (1968), 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), and Alliance International Fund (1980). Prior to August 2, 1993, The
Alliance Portfolios was known as The Equitable Funds, Growth Fund was known
32
<PAGE>
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. 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. Advisor Class, Class A, Class B and Class C shares have identical
voting, dividend, liquidation and other rights, except that each class bears its
own transfer agency expenses and each of Class A, Class B and Class C shares
bears its own distribution expenses. Each class of shares votes separately with
respect to matters for which separate class voting is appropriate under
applicable law. Shares are freely transferable, are entitled to dividends as
determined by the Directors and, in liquidation of a Fund, are entitled to
receive the net assets of the Fund. Since this Prospectus sets forth information
about all the Funds, it is theoretically possible that a Fund might be liable
for any materially inaccurate or incomplete disclosure in this Prospectus
concerning another Fund. Based on the advice of counsel, however, the Funds
believe that the potential liability of each Fund with respect to the disclosure
in this Prospectus extends only to the disclosure relating to that Fund. Certain
additional matters relating to a Fund's organization are discussed in its
Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent
and dividend-disbursing agent for a fee based upon the number of shareholder
accounts maintained for the Funds.
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.
PERFORMANCE INFORMATION
From time to time, the Funds advertise their "total return," which is computed
separately for each class of shares, including Advisor Class shares. Such
advertisements disclose a Fund's average annual compounded total return for the
periods prescribed by the Commission. A Fund's total return for each such period
is computed by finding, through the use of a formula prescribed by the
Commission, the average annual compounded rate of return over the period that
would equate an assumed initial amount invested to the value of the investment
at the end of the period. For purposes of computing total return, income
dividends and capital gains distributions paid on shares of a Fund are assumed
to have been reinvested when paid and the maximum sales charges applicable to
purchases and redemptions of a Fund's shares are assumed to have been paid.
Balanced Shares, Growth and Income Fund, Income Builder Fund, Strategic Balanced
Fund and Utility Income Fund may also advertise their "yield," which is also
computed separately for each class of shares, including Advisor Class shares. A
Fund's yield for any 30-day (or one-month) period is computed by dividing the
net investment income per share earned during such period by the maximum public
offering price per share on the last day of the period, and then annualizing
such 30-day (or one-month) yield in accordance with a formula prescribed by the
Commission which provides for compounding on a semi-annual basis.
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 each class of shares, including
Advisor Class shares.
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.
33
<PAGE>
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."
34
<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
(Advisor Class)
June [ ], 1996
_______________________________________________________________
This Statement of Additional Information relating to
Advisor Class shares of the Fund is not a prospectus and should
be read in conjunction with the Fund's current Prospectus
relating to Advisor Class shares. A copy of the Prospectus
relating to Advisor Class shares 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................................
Management of the Fund.................................
Expenses of the Fund...................................
Purchase of Shares.....................................
Redemption and Repurchase of Shares....................
Shareholder Services...................................
Net Asset Value........................................
Dividends, Distributions and Taxes.....................
Portfolio Transactions.................................
General Information....................................
Report of Independent Auditors and Financial Statements
6
<PAGE>
Appendix A: Futures Contracts and Options on Futures
Contracts and Foreign Currencies...........................A-1
Appendix B: Additional Information About Japan.............B-1
______________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
7
<PAGE>
_______________________________________________________________
DESCRIPTION OF THE FUND
_______________________________________________________________
Incorporated by reference from the section "Description
of the Fund" contained in the Statement of Additional Information
of Alliance International Fund (the "Fund") dated November 1,
1995 relating to Class A, Class B and Class C shares of the Fund
as filed with the Securities and Exchange Commission pursuant to
Rule 497(c) on November 9, 1995 (file nos. 2-70428 and 811-03130)
(the "Rule 497 SAI").
Capitalized terms used herein that are not otherwise
defined herein are used as defined in the Rule 497 SAI.
_______________________________________________________________
MANAGEMENT OF THE FUND
_______________________________________________________________
Incorporated by reference from the section "Management
of the Fund" contained in the Rule 497 SAI, except that the
second, third, fourth and eleventh paragraphs of the sub-section
"Adviser" and the sub-section "Officers" are restated as set
forth below:
The Adviser is a leading international investment
manager supervising client accounts with assets as of March 1,
1996 of more than $156 billion (of which more than $48 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds and included, as of March 1,
1996, 34 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,350
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 50
registered investment companies comprising 107 separate
investment portfolios managed by the Adviser currently have more
than two 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 March 1, 1996,
8
<PAGE>
ACMC, Inc. and Equitable Capital Management Corporation, each a
wholly-owned direct or indirect subsidiary of Equitable, together
with Equitable, owned in the aggregate approximately 57.6% of the
issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of March 1, 1996, approximately 32.4% and
10.0% 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 and its subsidiaries own approximately 63.9% of the
issued and outstanding shares of capital stock of ECI. AXA is
the holding company for an international group of insurance and
related financial services companies. AXA's insurance operations
include activities in life insurance, property and casualty
insurance and reinsurance. The insurance operations are diverse
geographically, with activities in France, the United States,
Australia, the United Kingdom, Canada and other countries,
principally in Europe and the Asia Pacific area. AXA is also
engaged in asset management, investment banking, securities
trading, brokerage, real estate and other financial services
activities in the United States, Europe and the Asia Pacific
area. Based on information provided by AXA, as of March 1, 1996,
42.1% of the issued ordinary shares (representing 53.4% of the
voting power) of AXA were owned by Midi Participations, a French
holding company ("Midi"). The shares of Midi were, in turn,
owned 61.4% (representing 62.5% of the voting power) by Finaxa, a
French holding company, and 38.6% (representing 37.5% of the
voting power) by subsidiaries of Assicurazioni Generali S.p.A.,
an Italian corporation (one of which, Belgica Insurance Holding
S.A., a Belgian corporation, owned 30.8%, representing 33.1% of
the voting power). As of March 1, 1996, 61.1% of the voting
shares (representing 73.4% 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
34.7% of the voting shares representing 40.4% of the voting
power), and 25.5% of the voting shares (representing 16% of the
voting power) of Finaxa were owned by Banque Paribas, a French
bank. Including the ordinary shares owned by Midi, as of
March 1, 1996, the Mutuelles AXA directly or indirectly owned 51%
of the issued ordinary shares (representing 64.7% of the voting
power) of AXA. Acting as a group, the Mutuelles AXA control AXA,
Midi and Finaxa.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to 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 Developing
Markets Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
9
<PAGE>
Alliance Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance Growth
and Income Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance International Fund, Alliance Limited Maturity Government
Fund, Inc., Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Multi-Market Strategy
Trust, Inc., Alliance Municipal Income Fund, Inc., Alliance
Municipal Income Fund II, Alliance Municipal Trust, Alliance New
Europe Fund, Inc., Alliance North American Government Income
Trust, Inc., Alliance Premier Growth Fund, Inc., Alliance Quasar
Fund, Inc., Alliance Short-Term Multi-Market Trust, Inc.,
Alliance Technology Fund, Inc., Alliance Utility Income Fund,
Inc., Alliance Variable Products Series Fund, Inc., Alliance
World Income Trust, Inc., Alliance Worldwide Privatization Fund,
Inc., The Alliance Portfolios, Fiduciary Management Associates
and The Hudson River Trust, all registered open-end investment
companies; and to ACM Government Income Fund, Inc., ACM
Government Securities Fund, Inc., ACM Government Spectrum Fund,
Inc., ACM Government Opportunity Fund, Inc., ACM Managed 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 Korean Investment
Fund, Inc., The Southern Africa Fund, Inc. and The Spain Fund,
Inc., all registered closed-end investment companies.
Officers
John D. Carifa, Chairman of the Board and President, see
biography above.
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 1991.
Thomas J. Bardong, Vice President, 50, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1991.
Mark H. Breedon, Vice President, 42, has been a Vice
President of ACMC since prior to 1991 and a Director and Senior
Vice President of Alliance Capital Limited ("ACL") since prior to
1990.
Nicholas E. Crossland, Vice President, 24, 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 1991.
10
<PAGE>
Kelly A. Morgan, Vice President, 32, is a Senior Vice
President of ACMC, with which she has been associated since prior
to 1991.
Daniel Panker, Vice President, 57, is a Senior Vice
President of ACMC since 1993. Prior thereto he was associated
with ECMC.
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 1991.
Edmund P. Bergan, Jr., Secretary, 45, is Senior Vice
President and the General Counsel of Alliance Fund Distributors
Inc. ("AFD") and Alliance Fund Services, Inc. and Vice President
and Assistant General Counsel of ACMC with which he has been
associated since prior to 1991.
Domenick Pugliese, Assistant Secretary, 34, is Vice
President and Associate General Counsel of AFD, with which he has
been associated since May 1995. Previously, he was Vice
President and Counsel of Concord Financial Holding Corporation
since 1994, Vice President and Associate General Counsel of
Prudential Securities since 1991 and an associate with Battle
Fowler since prior to 1991.
Joseph J. Mantineo, Assistant Controller, 36, is a Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1991.
Melvin J. Oliver, Assistant Controller, 37, is an
Accounting Manager of Mutual Funds for Alliance Fund Services,
Inc., with which he has been associated since prior to 1991.
Phyllis Clarke, Assistant Controller, 34, is a Manager
of Alliance Fund Services, Inc., since 1994. Previously, she was
a Supervisor for Fixed Income Mutual Fund Accounting for Alliance
Fund Services, Inc.
The aggregate compensation paid by the Fund to each of
the Trustees during its fiscal year ended June 30, 1995, the
aggregate compensation paid to each of the Trustees during
calendar year 1995 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies in the Alliance Fund Complex with respect to
which each of the 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. Each of the Trustees is a trustee of one or more
11
<PAGE>
other registered investment companies in the Alliance Fund
Complex.
Total Number
of Funds in
the Alliance
Total Fund Complex,
Compensation Including the
From the Fund, as to
Alliance Fund which the
Aggregate Complex, Trustee is a
Name of Trustee Compensation Including the Trustee or
of the Fund From the Fund Fund Director
________________ _____________ _____________ ______________
John D. Carifa $0 $0 49
David H. Dievler $2,350 $179,200 42
John H. Dobkin $5,600 $117,200 29
W.H. Henderson $4,750 $26,000 5
Stig Host $4,750 $26,000 5
Richard M. Lilly $4,750 $26,000 5
Alan Stoga $4,750 $26,000 5
Robert C. White $5,000 $133,200 36
As of April 5, 1996, the Trustees and officers of the Fund as a
group owned less than 1% of the shares of the Fund.
12
<PAGE>
________________________________________________________________
EXPENSES OF THE FUND
________________________________________________________________
Distribution Services Agreement
The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Principal Underwriter to distribute
the Fund's Advisor Class shares.
The Agreement became effective on July 22, 1992, and was
amended as of [ ], 1996 to permit the distribution of the
Advisor Class shares. The amendment to the Agreement was
approved by a vote of the Trustees on [ ], 1996.
The Agreement will continue in effect for successive
twelve-month periods with respect to Advisor Class shares
(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). All amendments to the Agreement
must be approved by a vote of the Trustees of the Fund.
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 Class A, Class B, Class C and Advisor
Class share of the Fund, plus reimbursement for out-of-pocket
expenses. For the fiscal year ended June 30, 1995, the Fund paid
Alliance Fund Services, Inc. $355,426 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; -- How to Sell Shares; -- and
Shareholder Services."
13
<PAGE>
General
If you are a Fund shareholder through an account
established under a fee-based program, your fee-based program may
impose requirements with respect to the purchase, sale or
exchange of Advisor Class shares of the Fund that are different
from those described in the Prospectus and this Statement of
Additional Information. A transaction fee may be charged by your
financial representative with respect to the purchase, sale or
exchange of Advisor Class shares made through such financial
representative.
Advisor Class shares of the Fund are offered on a
continuous basis at a price equal to their net asset value. 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.
Investors may purchase Advisor Class shares of the Fund
solely through (i) accounts established under a fee-based
program, sponsored and maintained by registered broker-dealers or
other financial intermediaries and approved by the Principal
Underwriter, pursuant to which each investor pays an asset-based
fee at an annual rate of at least .50% of the assets in the
investor's account, to the broker-dealer or financial
intermediary, or its affiliate or agent, for investment advisory
or administrative services, or (ii) a self-directed defined
contribution employee benefit plan (e.g., a 401(k) plan) that has
at least 1,000 participants or $25 million in assets. The Fund
may refuse any order for the purchase of Advisor Class shares.
The Fund reserves the right to suspend the sale of its Advisor
Class shares to the public in response to conditions in the
securities markets or for other reasons.
The public offering price of Advisor Class shares of the
Fund is their net asset value. 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 Advisor Class shares of the
Fund, 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. Eastern time) by
dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
A Fund business day is any weekday, exclusive of days on which
the Exchange is closed (most national holidays and Good Friday).
For purposes of this computation, Exchange-listed securities and
14
<PAGE>
over-the-counter securities admitted to trading on the NASDAQ
National List are valued at the last quoted sale or, if there is
no such sale, at the mean of closing bid and asked prices and
portfolio bonds as 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
Advisor Class shares to be executed at the public offering price
equal to their net asset value next determined, 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. In
the case of orders for purchase of Advisor Class shares placed
through a shareholder's financial representative the applicable
public offering price will be the net asset value as so
determined, but only if the financial representative 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. Eastern time). The
financial representative is responsible for transmitting such
orders by 5:00 p.m. If the financial representative fails to do
so, the investor's right to that day's closing price must be
settled between the investor and the financial representative.
If the financial representative 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 Advisor Class shares,
a shareholder may place orders to purchase additional Advisor
Class shares by telephone if the shareholder has completed the
appropriate portion of the Subscription Application. Except with
respect to certain omnibus accounts, a telephone purchase order
may not exceed $500,000. Payment for Advisor Class shares
purchased by telephone can be made only by Electronic Funds
Transfer from a bank account maintained by the shareholder at a
bank that is a member of the National Automated Clearing House
Association ("NACHA"). If a shareholder's telephone purchase
request is received before 3:00 p.m. Eastern time on a Fund
business day, the order to purchase Advisor Class 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 Advisor Class 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
15
<PAGE>
expense to the Fund, stock certificates representing Advisor
Class shares of the Fund are not issued except upon written
request to the Fund by the shareholder or his or her authorized
financial representative. 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 Advisor Class shares, although such
Advisor Class shares remain in the shareholder's account on the
books of the Fund.
____________________________________________________________
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 Advisor Class shares tendered to it, as described
below, at a redemption price equal to their net asset value as
next computed following the receipt of Advisor Class shares
tendered for redemption in proper form. Payment of the
redemption price will be made within seven days after the Fund's
receipt of such tender for redemption. If a shareholder is in
doubt about what documents are required by his or her fee-based
program or employee benefit plan, the shareholder should contact
his or her financial representative.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after Advisor Class shares are tendered for redemption, except
for any period during which the Exchange is closed (other than
customary weekend and holiday closings) or during which the
Commission determines that trading thereon is restricted, or for
any period during which an emergency (as determined by the
Commission) exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or as a
result of which it is not reasonably practicable for the Fund
fairly to determine the value of its net assets, or for such
other periods as the Commission may by order permits for the
protection of security holders of the Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's Advisor Class shares on redemption
or repurchase may be more or less than the cost of such Advisor
Class shares to the shareholder, depending upon the market value
16
<PAGE>
of the Fund's portfolio securities at the time of such redemption
or repurchase. Payment received by a shareholder upon redemption
or repurchase of his or her Advisor Class shares, assuming the
Advisor Class shares constitute capital assets in his or her
hands, will result in long-term or short-term capital gains (or
loss) depending upon the shareholder's holding period and basis
in respect of the Advisor Class shares redeemed.
To redeem Advisor Class shares of the Fund for which no
stock certificates have been issued, the registered owner or
owners should forward a letter to the Fund containing a request
for redemption. The signature or signatures on the letter must
be guaranteed by an "eligible guarantor institution" as defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
To redeem Advisor Class 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 Advisor Class shares represented thereby, or a specified
portion thereof, be redeemed. The stock assignment form on the
reverse side of each stock certificate surrendered to the Fund
for redemption must be signed by the registered owner or owners
exactly as the registered name appears on the face of the
certificate or, alternatively, a stock power signed in the same
manner may be attached to the stock certificate or certificates
or, where tender is made by mail, separately mailed to the Fund.
The signature or signatures on the assignment form must be
guaranteed in the manner described above.
Telephone Redemption By Electronic Funds Transfer.
Each Fund shareholder is entitled to request redemption by
electronic funds transfer, once in any 30-day period (except for
certain omnibus accounts), of Advisor Class shares for which no
stock certificates have been issued by telephone at
(800) 221-5672 by a shareholder who has completed the appropriate
portion of the Subscription Application. A telephone redemption
request may not exceed $100,000 (except for certain omnibus
accounts), and must be made by 4:00 p.m. Eastern time on a Fund
business day as defined above. Proceeds of telephone redemptions
will be sent by Electronic Funds Transfer to a shareholder's
designated bank account at a bank selected by the shareholder
that is a member of the NACHA.
Telephone Redemption By Check. Except for certain
omnibus accounts or as otherwise noted below, each Fund
shareholder is eligible to request redemption, by check once in
any 30-day period, of Advisor Class shares for which no stock
certificates have been issued by telephone at (800) 221-5672
before 4:00 p.m. Eastern time on a Fund business day in an amount
17
<PAGE>
not exceeding $50,000. Proceeds of such redemptions are remitted
by check to the shareholder's address of record. Telephone
redemption by check is not available with respect to Advisor
Class shares (i) for which certificates have been issued, (ii)
held in nominee or "street name" accounts, (iii) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (iv) held in any retirement
plan account. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application.
Telephone Redemption -- 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.
A shareholder's financial representative may charge a fee for
handling telephone requests for redemptions.
Repurchase
The Fund may repurchase Advisor Class shares through the
Principal Underwriter or selected financial intermediaries. The
repurchase price will be the net asset value next determined
after the Principal Underwriter receives the request except that
requests placed through selected financial intermediaries before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary is
responsible for transmitting the request to the Principal
Underwriter by 5:00 p.m. If the financial intermediary fails to
do so, the shareholder's right to receive that day's closing
18
<PAGE>
price must be settled between the shareholder and the financial
intermediary. A shareholder may offer Advisor Class shares of
the Fund to the Principal Underwriter either directly or through
a financial intermediary. Neither the Fund nor the Principal
Underwriter charges a fee or commission in connection with the
repurchase of Advisor Class shares. Normally, if Advisor Class
shares of the Fund are offered through a financial intermediary,
repurchase is settled by the shareholder as an ordinary
transaction with or through the financial intermediary, who may
charge the shareholder for this service. The repurchase of
Advisor Class shares of the Fund as described above is a
voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. In the case of a
redemption or repurchase of Advisor Class 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.
________________________________________________________________
SHAREHOLDER SERVICES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- Shareholder Services."
Automatic Investment Program
Investors may purchase Advisor Class 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 Advisor Class shares through
the financial intermediary 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
19
<PAGE>
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application. 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
Advisor Class shareholders of the Fund can exchange
their Advisor Class shares for Advisor Class shares of any other
Alliance Mutual Fund that offers Advisor Class shares.
Exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose Advisor Class
shares are being acquired. An exchange is effected through the
redemption of the Advisor Class shares tendered for exchange and
the purchase of Advisor Class shares being acquired at their
respective net asset values as next determined following receipt
by the Alliance Mutual Fund whose Advisor Class 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 Advisor Class shares recently
purchased by check will be permitted only after the Alliance
Mutual Fund whose Advisor Class 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 Advisor Class 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 financial
representative 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. Such telephone requests
cannot be accepted with respect to Advisor Class shares then
represented by stock certificates. Advisor Class shares acquired
pursuant to a telephone request for exchange will be held under
the same account registration as the Advisor Class 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., Eastern time, on a Fund business
day as defined above. Telephone requests for exchange received
20
<PAGE>
before 4:00 p.m. Eastern time on a Fund business day will be
processed as of the close of business on that day. During
periods of drastic economic or market developments, such as the
market break of October 1987, it is possible that shareholders
would have difficulty in reaching Alliance Fund Services, Inc. by
telephone (although no such difficulty was apparent at any time
in connection with the 1987 market break). If a shareholder were
to experience such difficulty, the shareholder should issue
written instructions to Alliance Fund Services, Inc. at the
address shown on the cover of this Statement of Additional
Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Advisor Class Fund shares (minimum $25) is automatically
exchanged for Advisor Class shares of another Alliance Mutual
Fund. Auto Exchange transactions normally occur on the 12th day
of each month, or the following Fund business day.
Neither the Alliance Mutual 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. A shareholder's financial
representative may charge a fee for handling telephone requests
for exchanges.
The exchange privilege is available only in states where
Advisor Class shares of the Alliance Mutual Fund being acquired
may be legally sold. Each Alliance Mutual Fund reserves the
right, at any time on 60 days' notice to its shareholders, to
reject any order to acquire its Advisor Class 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:
21
<PAGE>
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
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, under which annual tax-deductible
contributions are made within prescribed limits based on
compensation paid to participating individuals.
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 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 Advisor Class account, an Advisor Class account with one
or more other Alliance Mutual Funds may direct that income
dividends and/or capital gains paid on his or her Advisor Class
Fund shares be automatically reinvested, in any amount, without
the payment of any service charges, in Advisor Class shares 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
22
<PAGE>
to establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application. Current shareholders should contact
Alliance Fund Services, Inc. to establish a dividend direction
plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases Advisor
Class 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 Advisor Class shares of the Fund.
Advisor Class 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.
Advisor Class shares acquired with reinvested dividends and
distributions will be liquidated first to provide such withdrawal
payments and thereafter other Advisor Class shares will be
liquidated to the extent necessary, and depending upon the amount
withdrawn, the investor's principal may be depleted. A
systematic withdrawal plan may be terminated at any time by the
shareholder or the Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level. Therefore,
redemptions of Advisor Class 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."
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
network. Investors wishing to establish a systematic withdrawal
plan in conjunction with their initial investment in Advisor
Class shares of the Fund should complete the appropriate portion
of the Subscription Application, 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.
23
<PAGE>
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
________________________________________________________________
Incorporated by reference from the section "Net Asset
Value" contained in the Rule 497 SAI, except that a fifth
paragraph is added as set forth below:
The assets belonging to the Class A, Class B, Class C
and Advisor Class shares will be invested together in a single
portfolio. The net asset value of each class will be determined
separately by subtracting the expenses and liabilities allocated
to that class from the assets belonging to that class.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
Incorporated by reference from the section "Dividends,
Distributions and Taxes" contained in the Rule 497 SAI.
________________________________________________________________
PORTFOLIO TRANSACTIONS
________________________________________________________________
Incorporated by reference from the section "Portfolio
Transactions" contained in the Rule 497 SAI.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
Incorporated by reference from the section "General
Information" contained in the Rule 497 SAI, except that the sub-
sections entitled "Capitalization" and "Total Return Quotations"
are restated as set forth below:
24
<PAGE>
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, Class C and Class Y shares of beneficial interest, par
value $.01 per share. Class Y shares are designated as Advisor
Class shares. 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.
To the knowledge of the Fund, the following persons
owned of record, and no person owned beneficially, 5% or more of
the outstanding shares of the Fund as of April 5, 1996:
25
<PAGE>
No. of % of % of % of
Name and Address Shares Class A Class B ClassC
---------------- ------ ------- ------- -------
Orth & Company Trust Dept.3,022,777 28.79
Ford General Ret. Plan #112
c/o Commerica Bank
Mutual Fund Unit
PO Box 75000
Detroit, MI 48275
Equitable Investment Plan 1,095,541 10.43
Hewitt as Administrator
40 Rector Street
New York, NY 10006-1705
Merrill Lynch 852,795 8.12
4800 Deer Lake Drive East
Jacksonville, FL 32206
Merrill Lynch 986,612 25.21
4800 Deer Lake Drive East
Jacksonville, FL 32206
Merrill Lynch 610,589 43.62
4800 Deer Lake Drive East
Jacksonville, FL 32206
Some shareholders of the Fund are discretionary managed
accounts of the Adviser, which thereby exercised investment
discretion at April 5, 1996 with respect to an aggregate of
3,141,260 Class A shares, representing 34% of all Class A
outstanding shares as of that date.
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
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.
26
<PAGE>
The Fund's average annual compounded total return for
the period ended December 31, 1995 was 10.10% for Class A shares,
9.18% for Class B shares and 9.18% for Class C shares; for the
five years ended December 31, 1995 was 8.51% for Class A shares,
from September 17, 1990 (commencement of distribution) to
December 31, 1995 was 7.55% for Class B shares and from May 3,
1993 (commencement of distribution) through December 31, 1995 was
8.56% for Class C shares; and for the ten year period ended
December 31, 1995 was 10.79% for Class A shares. The Fund will
compute total return figures separately for Class A, Class B,
Class C and Advisor Class shares.
The Fund's total return is not fixed and will fluctuate
in response to prevailing market conditions or as a function of
the type and quality of the securities in the Fund's portfolio
and the Fund's expenses. An investor's principal invested in the
Fund is not fixed and will fluctuate in response to prevailing
market conditions.
A $10,000 investment in the Class A Shares of the Fund
would have grown to $37,523 over the ten years ended December 31,
1995, giving the investor a 275% 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, 1995, the
SEC average annual total returns (at maximum offering price)
were, with respect to Class A Shares, 5.42% for the past year,
12.40% for the past 3 years, 7.57% for the past 5 years and
10.31% for the past ten years; with respect to Class B Shares,
5.18% for the past year, 12.59% for the past 3 years and 5.62%
since inception; and with respect to Class C Shares, 9.18% for
the past year and 8.56% since inception. As of December 31,
1995, cumulative total returns (at net asset value) were, with
respect to Class A Shares, 10.10% for the year to date, 10.10%
for the past year, 48.36% for the past three years, 50.46% for
the past five years and 178.62% for the past ten years; with
respect to Class B Shares, 44.71% for the past three years and
33.55% since inception; and with respect to Class C Shares, 9.18%
for the year to date, 9.18% for the past year and 24.52% 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
27
<PAGE>
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.
28
00250086.AM4
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
COMMON STOCKS AND OTHER INVESTMENTS97.5%
AUSTRALIA1.7%
Coca-Cola Amatil, Ltd. 173,119 $1,380,637
Mayne Nickless, Ltd. 64,053 285,644
National Australia Bank, Ltd. 92,000 827,386
Qantas Airways, Ltd. 103,109 171,664
Woolworths, Ltd. 651,515 1,568,933
----------
4,234,264
BELGIUM0.5%
Kredietbank NV (a) 4,460 1,216,407
BRAZIL0.6%
Dixie Toga, S.A. 643,028 562,347
Industrias Klabin de Papel e Celulose, S.A. 712,500 645,095
Siderurgica Riograndense, S.A. 9,433,000 142,667
----------
1,350,109
CANADA0.0%
Imasco, Ltd. 4 78
DENMARK1.0%
Den Danske Bank 34,000 2,344,724
FINLAND1.4%
Metsa-Serla Oy 27,800 856,412
Nokia Corp. 38,100 1,471,524
Unitas Bank, Ltd. 443,000 1,120,287
----------
3,448,223
FRANCE9.6%
Assurance Generale de France (a) 48,500 1,626,252
Banque Nationale de Paris* (a) 34,400 1,553,662
Bouygues (a) 12,167 1,227,148
Casino Guichard Perrachon 17,020 496,576
Compagnie Financiere de Paribas (a) 20,400 1,119,894
Compagnie Generale des Eaux (a) 17,200 1,719,297
Credit Foncier de France 15,700 227,266
Gruope Danone 11,130 1,838,691
Klepierre 2,400 282,151
Legris Industries, S.A. 16,500 537,743
PSA Peugeot Citroen 14,400 1,901,942
Societe de Immeubles de France 7,375 440,299
Societe Francaise d'Investissemeants
Immobiliers et de Gestion 9,700 644,551
Salomon, S.A. 2,060 1,200,368
Sanofi, S.A. 15,100 969,104
Seita 32,700 1,186,720
Simco
Ordinary 6,910 656,952
new shares 286 24,945
Societe Television Francaise 10,900 1,170,006
Total, S.A. 37,457 1,273,538
Cl. B 10,575 714,585
Union du Credit - Bail Immobilier 11,410 1,180,425
Union Immobiliere de France 3,860 334,623
Usinor Sacilor * 82,400 1,090,861
----------
23,417,599
GERMANY5.5%
Bayer A.G. (a) 9,650 2,546,822
Deutsche Bank A.G. (a) 52,800 2,502,399
Deutsche Lufthansa A.G.*(a) 10,390 1,430,830
Henkel KGaA-Vorzug 4,800 1,805,669
Klein, Schanz & Beck A.G. 2,280 373,601
Vorzug 5,310 592,407
Schmalbach Lubeca A.G. 5,600 787,979
Suedzucker A.G. (a) 2,601 1,405,554
Varta A.G. 500 95,876
Veba A.G. (a) 47,600 2,021,295
----------
13,562,432
HONG KONG2.7%
Citic Pacific, Ltd. 239,000 817,530
Consolidated Electric Power 601,000 1,092,021
8
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
Dao Heng Bank Group, Ltd. 244,000 $ 878,810
Hong Kong & China Gas Co., Ltd. 178,800 287,884
Hopewell Holdings 1,526,000 878,202
Hysan Development Co., Ltd. 114,000 301,494
Johnson Electric Holdings, Ltd. 254,000 451,665
New World Development Co., Ltd. 76,586 332,789
New World Infrastructure 552 1,057
Sun Hung Kai Properties, Ltd. 55,000 449,887
Television Broadcasting, Ltd. 201,000 716,140
Yizheng Chemical Fibre Co.* 2,131,000 479,527
----------
6,687,006
INDIA0.3%
Bajaj Auto, Ltd. (GDR)(b) 29,100 691,125
INDONESIA1.2%
PT Indosat* 297,000 1,078,111
PT HM Sampoerna 143,000 1,488,476
PT Telekomunikasi Indonesia (ADR) * 13,000 328,250
----------
2,894,837
IRELAND0.5%
Irish Life Plc. 293,669 1,111,596
ITALY2.0%
Ente Nazionale Idrocarburi S.p.A. * 339,000 1,184,820
La Rinascente S.p.A 264,700 1,601,906
Telecom Italia Mobile S.p.A. 204,600 360,120
Telecom Italia S.p.A. 738,000 1,147,924
Telecom Italia Mobile Di Risp* 662,300 696,516
----------
4,991,286
JAPAN38.1%
Amano Corp. 89,000 1,120,581
Aoki International Co., Ltd. 12,000 292,881
Asahi Bank, Ltd. 234,000 2,946,247
Asahi Glass Co., Ltd. 164,000 1,826,634
Bank of Tokyo, Ltd. 76,000 1,332,300
Canon, Inc. 24,000 434,673
Chiba Bank, Ltd. 55,000 495,400
Dai Nippon Printing Co., Ltd. 61,000 1,033,898
Daifuku Co., Ltd. 58,000 820,145
Daito Trust Construction Co., Ltd. 10,800 127,613
Daiwa House Industry Co., Ltd. 28,000 461,017
Daiwa Securities Co., Ltd. 39,000 596,804
DDI Corp. 475 3,680,387
East Japan Railway Co. 336 1,633,627
Fuji Bank 127,000 2,804,455
Fuji Photo Film 20,000 577,240
Furakawa Co., Ltd. 91,000 450,373
Heiwa (a) 51,000 1,328,717
Hokkaido Takushoku Bank 158,000 468,261
Honda Motor Co. 24,000 495,109
House Foods Industry 37,000 666,537
Hoya Corp. 10,000 343,826
Ito-Yokado Co., Ltd. 16,000 985,569
Japan Securities Finance 70,000 1,003,390
Kamigumi Co., Ltd. 73,000 700,659
Kandenko Co., Ltd. 54,000 674,673
Kao Corp. 148,000 1,834,770
Kirin Brewery Co., Ltd. 76,000 898,014
Kokuyo 21,000 488,135
Kuraray Co., Ltd. 112,000 1,225,763
Long-Term Credit Bank of Japan 52,000 443,196
Mabuchi Motor 14,000 870,508
Maeda Road Construction 22,000 406,973
Matsushita Electric Industrial Co. 134,000 2,180,339
Matsushita Electric Works 83,000 876,223
Mitsubishi Bank 129,000 3,036,029
Mitsubishi Heavy Industries, Ltd. 110,000 876,804
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
Mitsubishi Materials Corp. 98,000 $ 507,796
Mitsubishi Oil Co. 109,000 968,068
Mitsui Marine & Fire Insurance Co. 120,000 855,400
Mitsui Trust & Banking (a) 280,000 3,064,407
Mori Seiki 22,000 496,465
National House Industrial 32,000 585,763
NGK Insulators 57,000 568,620
NGK Spark Plug Co. 18,000 226,634
Nikko Securities Co. 81,000 1,043,390
Nintendo Corp., Ltd. 11,700 889,540
Nippon Comsys Corp. 2,000 21,114
Nippon Electric Glass Co., Ltd. 2,000 37,966
Nippon Express Co., Ltd. 81,000 779,797
Nippon Light Metal Co. 79,000 452,959
Nippon Paper Industries Co. 11,000 76,387
Nippon Steel Co.* 254,000 870,857
Nippon Telegraph & Telephone Corp. 114 921,937
Nisshin Steel Co., Ltd. 216,000 872,368
NKK Corp. 324,000 872,368
Nomura Securities Co., Ltd. 146,000 3,181,598
ONO Pharmaceutical Ltd. 2,000 76,901
Osaka Gas Co. 224,000 774,508
Rohm Co. 35,000 1,976,271
Sakura Bank, Ltd. 240,000 3,045,036
Sankyo Co., Ltd. 18,000 404,455
Santen Pharmaceutical 11,000 249,298
Sega Enterprises 17,000 938,499
Seven-Eleven Japan 53,000 3,736,949
Shimano, Inc. 34,000 599,322
Shimizu Corp. 81,000 823,729
Shiseido Co., Ltd. 77,000 917,288
Sumitomo Bank (a) 190,000 4,030,024
Sumitomo Electric Industries 60,000 720,581
Sumitomo Marine & Fire Insurance Co. 102,000 837,734
Sumitomo Realty and Development 119,000 841,356
Sumitomo Rubber Industries 33,000 275,506
Taisho Pharmaceutical 45,000 889,104
Takeda Chemical Industries 55,000 905,569
Tanabe Seiyaku Co, Ltd. 4,000 28,785
Toagosei Co., Ltd. 49,000 260,068
Tokai Bank 99,000 1,380,726
Tokyo Electric Power Co. 46,400 1,240,329
Tokyo Gas Co., Ltd. 412,000 1,452,475
Tokyo Steel Mfg. Co. 85,000 1,564,165
Tostem Corp. 41,000 1,362,034
Toyo Kanetsu 62,000 317,656
Toyota Motor Corp. (a) 159,000 3,372,494
UBE Industries, Ltd. 77,000 290,847
Yakult Honsha 57,000 778,402
Yamanouchi Pharmaceutical 42,000 903,051
Yamazaki Baking Co., Ltd. 37,000 688,039
----------
93,412,405
MALAYSIA2.0%
AMMB Holdings Berhad 45,000 513,840
DCB Holdings Berhad
warrants expiring 12/28/99 * 82,250 81,612
Malakoff Berhad 184,000 655,668
Petronas Gas Berhad 173,000 589,223
Rashid Hussain Berhad 89,000 266,331
Resorts World Berhad 184,000 985,313
Telekom Malaysia Berhad 227,000 1,769,737
----------
4,861,724
MEXICO0.4%
Panamerican Beverages, Inc. 24,400 780,800
Telefonos de Mexico, S.A. (ADR) Cl. L 7,100 226,313
----------
1,007,113
NETHERLANDS3.0%
European Vinyls Corp. International N.V.* 11,900 309,165
Fortis Amev N.V. 48,900 3,275,101
10
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
Heineken N.V. 8,500 $1,507,696
Internationale Nederlanden Groep N.V. 32,885 2,196,342
----------
7,288,304
NEW ZEALAND0.9%
Air New Zealand, Ltd. Cl. B 10,000 33,995
Fletcher Challenge, Ltd. - Forestry Division 232,000 330,641
Lion Nathan, Ltd. 338,000 806,531
Telecom Corp of New Zealand, Ltd. 257,500 1,111,048
----------
2,282,215
NORWAY0.9%
Bergesen d.y. AS 51,400 1,023,189
Christiana Bank OG Kreditkasse 561,000 1,302,874
----------
2,326,063
PEOPLES REPUBLIC OF CHINA 0.4%
Advanced Semiconductor Engineering (GDR) (b) 49,800 658,605
China Steel Corp. (GDS) 16,000 279,600
----------
938,205
PHILIPPINES0.3%
Manila Electric Co. Cl. B 90,000 734,274
Philippine Commerce International Bank 10,070 92,907
----------
827,181
SINGAPORE1.8%
Overseas-Chinese Banking Corp., Ltd. 102,000 1,276,352
Overseas Union Bank 238,000 1,640,509
Singapore Airlines, Ltd. 31,000 289,290
Singapore Press Holdings, Ltd. 64,000 1,131,142
----------
4,337,293
SOUTH KOREA0.8%
Hyundai Motor (GDR) * 3,000 43,500
Korea Electric Power Corp. 15,290 607,067
(ADR) 6,400 169,600
Korea Mobile Telecom
Corp. (GDS) 14,700 650,475
Pohang Iron & Steel Co. 140 10,156
(ADR) 26,000 568,750
----------
2,049,548
SPAIN2.1%
Banco Intercontinental Espanol 16,400 1,592,648
Repsol, S.A. 47,700 1,560,448
Tabacalera, S.A. Series A 37,100 1,404,512
Unidad Editorial, S.A. * (c) 297,500 349,410
Uralita, S.A. 29,500 267,060
----------
5,174,078
SWEDEN2.2%
Astra AB Series A 72,600 2,896,451
Marieberg Tidnings Series A 52,500 1,217,205
Stora Kopparbergs Bergslags Aktiebolag
Series B 100,600 1,204,062
----------
5,317,718
SWITZERLAND3.4%
Baloise Holdings, Ltd. 310 644,714
Ciba-Geigy A.G. (a) 2,700 2,374,783
Forbo Holdings A.G. 3,650 1,559,315
Nestle, S.A. (a) 2,460 2,720,069
Winterthur Schweizerische
Versicherungs - Gesellschaft 1,560 1,103,085
----------
8,401,966
THAILAND0.4%
Bangkok Bank Co., Ltd. 42,000 510,202
The Thai Farmers Bank, Ltd. 52,000 524,335
----------
1,034,537
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
UNITED KINGDOM13.5%
Allied Radio Plc. 966,950 $ 63,842
Anglian Water Plc. 120,000 1,131,569
B.A.T. Industries Plc. 305,163 2,687,980
British Airways Plc. 231,700 1,677,347
British Land Co. Plc. 181,000 1,071,309
British Land Co. Plc. (b) 30,166 175,337
British Telecommunications Plc. 319,700 1,753,188
BTR Plc. 324,700 1,654,502
Enterprise Oil Plc. 93,100 572,738
Forte Plc. 200,100 1,027,377
General Electric Co. Plc. 324,000 1,781,802
Grand Metropolitan Plc. 310,500 2,235,746
Hazlewood Foods Plc. 298,600 459,236
Hepworth Plc. 274,000 1,357,852
House of Fraser Plc. 153,400 421,803
Lex Service 38,300 181,769
Marley Plc. 506,200 872,883
Mowlen (John) & Co. Plc. 864,000 791,912
The Peninsular & Oriental Steam Navigation Co. 172,000 1,271,881
Royal Bank of Scotland Group Plc. 153,000 1,392,837
Rugby Group Plc. 719,700 1,229,859
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- ------------------------------------------------------------------------
Sainsbury (J) Plc. 163,500 $ 996,939
Smith (W.H.) Group Plc. 136,000 895,810
Smithkline Beecham Cl A 75,238 829,864
Tate & Lyle Plc. 285,000 2,089,767
Vodafone Group Plc. 560,000 2,009,607
Wimpey (George) Plc. 1,053,000 2,355,602
-----------
32,990,358
OTHER0.3%
Asesores Bursatiles Capital Fund N.V.* (c) 25 686,938
Total Common Stocks And Other Investments
(cost $224,306,730) 238,885,332
TIME DEPOSIT3.6%
Canadian Imperial Bank of Commerce
5.75%, 1/02/96
(cost $8,700,000) $8,700 8,700,000
TOTAL INVESTMENTS101.1%
(cost $233,006,730) 247,585,332
Other assets less liabilities(1.1%) (2,591,569)
NET ASSETS100% $244,993,763
* Non-income producing security.
(a) Securities or portion thereof, with an aggregate market value of
$39,375,373 have been segregated to collateralize forward exchange currency
contracts.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31, 1995,
these securities amounted to $1,525,067 or .62% of net assets.
(c) Illiquid security, valued at fair value (see Notes A & F).
Glossary of Terms:
ADR - American depository receipt
GDR - Global depository receipt
GDS - Global depository security
See notes to financial statements.
12
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $233,006,730) $247,585,332
Receivable for investment securities sold 14,987,788
Dividends and interest receivable 740,358
Receivable for shares of beneficial interest sold 611,983
Unrealized appreciation of forward exchange currency contracts 308,237
Total assets 264,233,698
LIABILITIES
Due to custodian 122,808
Payable for investment securities purchased 14,397,156
Payable for shares of beneficial interest redeemed 3,341,736
Advisory fee payable 596,308
Distribution fee payable 82,063
Accrued expenses 699,864
Total liabilities 19,239,935
NET ASSETS $244,993,763
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 145,739
Additional paid-in capital 225,076,477
Accumulated net investment loss (1,713,766)
Accumulated net realized gain on investments and foreign
currency transactions 6,594,277
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 14,891,036
-------------
$244,993,763
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share($171,941,838/
10,091,951 shares of beneficial interest issued and outstanding) $17.04
Sales Charge - 4.25% of public offering price .76
Maximum offering price $17.80
CLASS B SHARES
Net asset value and offering price per share($53,655,823/
3,292,714 shares of beneficial interest issued and outstanding) $16.30
CLASS C SHARES
Net asset value, redemption and offering price per share($19,396,102
/1,189,274 shares of beneficial interest issued and outstanding) $16.31
See notes to financial statements.
13
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends(net of foreign taxes withheld of $218,713) $1,725,559
Interest 178,346 $1,903,905
EXPENSES
Advisory fee 1,188,835
Distribution fee - Class A 150,128
Distribution fee - Class B 250,610
Distribution fee - Class C 99,807
Custodian 296,896
Transfer agency 231,186
Registration 85,892
Administrative 82,533
Audit and legal 38,293
Printing 31,627
Trustees' fees 19,110
Miscellaneous 31,022
Total expenses 2,505,939
Net investment loss (602,034)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 11,105,251
Net realized gain on foreign currency transactions 364,162
Net change in unrealized appreciation (depreciation) of:
Investments 5,699,911
Foreign currency denominated assets and liabilities 1,088,021
Net gain on investments and foreign currency transactions 18,257,345
NET INCREASE IN NET ASSETS FROM OPERATIONS $17,655,311
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31,1995 JUNE 30,
(UNAUDITED) 1995
--------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (602,034) $ (8,715)
Net realized gain on investments and foreign
currency transactions 11,469,413 19,693,549
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 6,787,932 (20,658,406)
Net increase (decrease) in net assets from
operations 17,655,311 (973,572)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments and foreign
currency transactions
Class A (10,091,208) (15,878,472)
Class B (3,210,617) (4,457,892)
Class C (1,294,014) (2,832,662)
CAPITAL TRANSACTIONS
Net increase 7,961,814 12,753,910
Total increase (decrease) 11,021,286 (11,388,688)
NET ASSETS
Beginning of period 233,972,477 245,361,165
End of period $244,993,763 $233,972,477
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 (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 and the
same terms and conditions, 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 and illiquid
securities are valued at fair value as determined by the Board of Trustees. In
determining fair value, consideration is given to cost, operation 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 gains of $364,162 represent foreign exchange
gains and losses from sales and maturities of debt securities, holding of
foreign currencies, exchange gains and 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 and are determined in accordance with tax regulations.
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.
16
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 fees,
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 its 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, 1995, no such reimbursement was required. Pursuant to the advisory
agreement, the Fund paid $82,533 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, 1995.
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 $173,788 for the six months ended December 31, 1995.
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 $15,562 from the sale of Class A shares and $148,635
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B for the six months ended December 31, 1995. Brokerage commissions
paid on securities transactions for the six months ended December 31, 1995,
amounted to $494,874, 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 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 $1,795,715 and $508,788, for Class B and Class C shares,
respectively; such costs may be recovered from the Fund in future periods so
long as the Agreement is in effect. In accordance with the Agreement, there is
no provision for recovery of unreimbursed distribution costs, incurred by the
Distributor, beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $101,862,094 and $105,781,129, respectively, for the six months
ended December 31, 1995. There were no purchases or sales of U.S. Government
and government agency obligations for the six months ended December 31, 1995.
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 and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
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, 1995, the Fund had
outstanding forward exchange currency contracts, to sell foreign currencies
against the U.S. dollar as follows:
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
(000) DATE VALUE (DEPRECIATION)
--------- ----------- ----------- --------------
FOREIGN CURRENCY SALE CONTRACTS
Deutsche Marks,
expiring 1/31/96 7,900 $ 5,600,057 $ 5,516,627 $ 83,430
Japanese Yen,
expiring 1/31/96 1,633,500 16,182,447 15,899,339 283,108
French Francs,
expiring 2/29/96 23,600 4,764,760 4,823,061 (58,301)
---------
$308,237
At December 31, 1995, 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 $22,885,155 and gross unrealized
depreciation of investments was $8,306,553, resulting in net unrealized
appreciation of $14,578,602.
18
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
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. Transactions in shares of beneficial interest were as follows:
SHARES AMOUNT
---------------------------- ----------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
DEC. 31,1995 JUNE 30, DEC. 31,1995 JUNE 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
----------- ----------- ------------- -------------
CLASS A
Shares sold 1,212,340 2,705,822 $ 20,831,144 $ 47,501,995
Shares issued in
reinvestment of
dividends and
distributions 532,923 926,842 8,899,875 15,032,351
Shares redeemed (1,502,675) (4,770,741) (25,888,872) (83,532,846)
Net increase(decrease) 242,588 (1,138,077) $ 3,842,147 $(20,998,500)
CLASS B
Shares sold 727,374 2,388,681 $ 12,016,392 $ 40,924,713
Shares issued in
reinvestment of
distributions 141,372 246,119 2,259,131 3,861,611
Shares redeemed (602,544) (1,280,863) (9,996,751) (20,826,680)
Net increase 266,202 1,353,937 $ 4,278,772 $ 23,959,644
CLASS C
Shares sold 593,777 2,500,356 $ 9,771,226 $ 42,839,538
Shares issued in
reinvestment of
distributions 49,342 171,490 789,018 2,692,396
Shares redeemed (651,221) (2,228,318) (10,719,349) (35,739,168)
Net increase(decrease) (8,102) 443,528 $ (159,105) $ 9,792,766
NOTE F: ILLIQUID SECURITIES
DATE
SECURITY ACQUIRED U.S. $COST
- ------------------------------------- -------- ----------
Asesores Bursatiles Capital Fund N.V. 10/29/90 $1,113,819
Unidad Editorial, S.A. 1/20/92 369,591
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, 1995 was $1,036,348 representing 0.4% of net assets.
19
FINANCIAL HIGHLIGHTS ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------------
SIX MONTHS
ENDED
DECEMBER 31, YEAR ENDED JUNE 30,
1995 ---------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------ --------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.81 $18.38 $16.01 $14.98 $14.00 $17.99
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.02)(b) .04 (.09) (.01) .01(b) .05
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.30 .01 3.02 1.17 1.04 (3.54)
Net increase (decrease) in net asset
value from operations 1.28 .05 2.93 1.16 1.05 (3.49)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- (.04) (.07) (.03)
Distributions from net realized gains
on investments and foreign currency
transactions (1.05) (1.62) (.56) (.09) -0- (.47)
Total dividends and distributions (1.05) (1.62) (.56) (.13) (.07) (.50)
Net asset value, end of period $17.04 $16.81 $18.38 $16.01 $14.98 $14.00
TOTAL RETURN
Total investment return based on net
asset value (c) 7.74% .59% 18.68% 7.86% 7.52% (19.34)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(000's omitted) $171,942 $165,584 $201,916 $161,048 $179,807 $214,442
Ratio of expenses to average net assets 1.86%(d) 1.73% 1.90% 1.88% 1.82% 1.73%
Ratio of net investment income (loss)
to average net assets (.26)%(d) .26% (.50)% (.14)% .07% .37%
Portfolio turnover rate 88% 119% 97% 94% 72% 71%
</TABLE>
See footnote summary on page 22.
20
ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------
SIX MONTHS SEPTEMBER 17,
ENDED 1990(A)
DECEMBER 31, YEAR ENDED JUNE 30, TO
1995 -------------------------------------------- JUNE 30,
(UNAUDITED) 1995 1994 1993 1992 1991
------------ --------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.19 $17.90 $15.74 $14.81 $13.93 $15.52
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.09)(b) (.01) (.19)(b) (.12) (.11)(b) .03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.25 (.08) 2.91 1.14 1.02 (1.12)
Net increase (decrease) in net asset
value from operations 1.16 (.09) 2.72 1.02 .91 (1.09)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- -0- -0- -0- (.03) (.03)
Distributions from net realized gains
on investments and foreign currency
transactions (1.05) (1.62) (.56) (.09) -0- (.47)
Total dividends and distributions (1.05) (1.62) (.56) (.09) (.03) (.50)
Net asset value, end of period $16.30 $16.19 $17.90 $15.74 $14.81 $13.93
TOTAL RETURN
Total investment return based on net
asset value (c) 7.30% (.22)% 17.65% 6.98% 6.54% (6.97)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $53,656 $48,998 $29,943 $6,363 $5,585 $3,515
Ratio of expenses to average net assets 2.70%(d) 2.57% 2.78% 2.70% 2.68% 3.39%(d)
Ratio of net investment income (loss)
to average net assets (1.10)%(d) (.62)% (1.15)% (.96)% (.70)% .84%(d)
Portfolio turnover rate 88% 119% 97% 94% 72% 71%
</TABLE>
See footnote summary on page 22.
21
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------
SIX MONTHS
ENDED MAY 3,1993(A)
DECEMBER 31, YEAR ENDED JUNE 30, TO
1995 -------------------- JUNE 30,
(UNAUDITED) 1995 1994 1993
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.20 $17.91 $15.74 $15.93
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.09)(b) (.14) (.11) -0-
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 1.25 .05 2.84 (.19)
Net increase (decrease) in net asset
value from operations 1.16 (.09) 2.73 (.19)
LESS: DIVIDENDS AND DISTRIBUTIONS
Distributions from net realized gains
on investments and foreign currency
transactions (1.05) (1.62) (.56) -0-
Total dividends and distributions (1.05) (1.62) (.56) -0-
Net asset value, end of period $16.31 $16.20 $17.91 $15.74
TOTAL RETURN
Total investment return based on net
asset value (c) 7.29% (.22)% 17.72% (1.19)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $19,396 $19,395 $13,503 $229
Ratio of expenses to average net assets 2.67%(d) 2.54% 2.78% 2.57%(d)
Ratio of net investment loss
to average net assets (1.08)%(d) (.88)% (1.12)% .08%(d)
Portfolio turnover rate 88% 119% 97% 94%
</TABLE>
(a) Commencement of distribution.
(b) Based on average shares outstanding.
(c) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return for a period of less than one year is not
annualized.
(d) Annualized.
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995 ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S.$ VALUE
- ----------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-96.6%
AUSTRALIA-1.2%
Australia & New Zealand Bank Group, Ltd. 11,996 $ 42,631
Coca-Cola Amatil, Ltd. 140,906 871,296
new shares 35,226 175,258
Mayne Nickless, Ltd 258,053 1,065,619
Pacific Dunlop, Ltd 264,000 555,409
2,710,213
BELGIUM-1.3%
Arbed, S.A.* 8,700 1,254,141
Kredietbank, N.V.(c) 7,500 1,782,590
3,036,731
BRAZIL-0.3%
Panamerican Beverages, Inc. Cl.A 10,000 300,000
Usiminas, S.A.(b) 30,000 330,000
630,000
CANADA-0.3%
Imasco, Ltd. 1 18
Renaissance Energy, Ltd.* 33,000 681,818
Rogers Communications, Inc.* 8,900 104,498
786,334
DENMARK-1.0%
Den Danske Bank International, S.A. 38,200 2,398,835
FINLAND-2.0%
Metsa-Serla Oy 32,000 1,424,499
Nokia Corp. pfd. 34,120 1,998,516
Unitas Bank, Ltd. Cl. A.* 395,295 1,278,083
4,701,098
FRANCE-8.6%
Assurance Generale de France(c) 68,300 2,187,853
Banque Nationale de Paris*(c) 40,300 1,943,870
Bouygues, S.A. 13,900 1,664,705
Casino Guichard Perrachon 23,900 697,109
CIE Frananciere de Paribas, S.A.(c) 29,853 1,794,411
new shares 1,302 75,040
Generale des Eaux(c) 17,210 1,915,671
Gruope Danone 8,500 1,429,735
new shares 190 31,332
Klepierre 1,530 185,445
Pechiney, S.A. 19,000 1,095,450
Salomon, S.A. 3,190 1,443,350
SEITA 55,500 1,668,003
SIMCO Union Habit 6,410 556,271
Societe Francaise d'Investissements
Immobiliers et de Gestion 8,420 560,610
Total, S.A. (ADR) 36,560 1,105,940
Cl. B 8,200 493,564
new shares 201 11,767
Unibail 12,160 1,188,114
20,048,240
GERMANY-6.1%
Bayer A.G. 9,650 2,400,550
Deutsche Bank A.G.(c) 54,300 2,638,724
Deutsche Lufthansa
A.G.*(c) 8,500 1,229,345
Henkel KGaA 4,800 1,850,092
Klein, Schanz & Beck 2,200 477,275
pfd. 4,397 779,018
Suedzucker A.G.(c) 2,601 1,519,766
Veba A.G.(c) 6,000 2,358,173
Volkswagen A.G. 3,540 1,022,692
14,275,635
HONG KONG-4.8%
Cheung Kong Hldgs., Ltd 307,000 1,523,534
Citic Pacific, Ltd 372,000 932,668
Dao Heng Bank Group, Ltd 99,000 301,946
Hong Kong & China Gas Co., Ltd 692,800 1,105,751
Hopewell Holdings, Ltd 1,618,000 1,380,082
8
ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S.$ VALUE
- ----------------------------------------------------------------------
Hysan Development Co, Ltd. 278,000 $ 635,917
Johnson Electric Holdings, Ltd 324,000 653,209
New World Development Co., Ltd 478,586 1,592,648
Peregrine Investment Holdings, Ltd 424,000 602,755
Sun Hung Kai Properties, Ltd 192,000 1,420,559
Television Broadcasts, Ltd. 220,000 773,346
Yizheng Chemical Fibre Co., Ltd 915,000 319,277
11,241,692
INDIA-0.1%
Bajaj Auto, Ltd. (GDR)(b) 7,400 202,390
INDONESIA-0.8%
PT H.M. Sampoerna 209,000 1,642,344
PT Indosat* 71,000 269,398
1,911,742
ITALY-1.4%
La Rinascente S.p.A 261,100 1,484,785
Telecom Italia S.p.A 204,600 555,145
Telecom Italia S.p.A-Di Risp 570,000 1,206,586
3,246,516
JAPAN-34.3%
Advantest Corp. 12,000 453,071
Amano Corp. 67,000 790,514
Asahi Bank, Ltd.* 144,000 1,537,608
Bank of Tokyo, Ltd. 79,000 1,267,654
Canon Sales 17,000 471,359
Chiba Bank 55,000 499,676
DDI Corp. 4 32,093
Daifuku 55,000 615,834
Dai Nippon Printing Co., Ltd 70,000 1,114,978
Daito Trust Construction Co 10,800 101,941
Daiwa Securities Co., Ltd 31,000 326,990
East Japan Railway Co. 301 1,544,865
Fuji Photo Film Co.(c) 124,000 2,940,711
Heiwa Corp.(c) 97,000 2,208,837
Hitachi Metals, Ltd. 125,000 1,246,239
House Food Corp. 52,000 1,092,089
Ito-Yokado Co., Ltd. 26,000 1,371,247
Kamigumi Co., Ltd. 43,000 431,243
Kandenko Co., Ltd. 60,000 821,190
Kao Corp. 125,000 1,504,336
Kirin Brewery Co., Ltd. 84,000 891,983
Kokuyo Co. 17,000 381,098
Komatsu, Ltd.* 79,000 603,068
Kuraray Co., Ltd. 215,000 2,336,322
Kurita Water Industries 36,000 925,963
Kyocera Corp. 21,000 1,729,455
Maeda Road Construction Corp. 22,000 425,698
Marui Co., Ltd. 55,000 876,055
Matsushita Electric Works 143,000 1,542,116
Matushita Electric Industrial Co., Ltd 118,000 1,837,768
Mitsubishi Heavy Industries, Ltd. 132,000 897,080
Mitsubishi Materials Corp. 87,000 390,065
Mitsui Marine & Fire Insurance Co. 133,000 872,491
Mitsui Trust & Banking Co., Ltd. 221,000 2,033,862
Mori Seiki Co. 24,000 427,585
NGK Insulators 44,000 399,221
NGK Spark Plug Co. 22,000 243,997
National House Industrial 38,000 703,911
Nikko Securitids Co. 81,000 657,519
Nintendo Corp., Ltd.(c) 50,600 2,907,463
Nippon Electric Glass Co., Ltd. 2,800 44,930
Nippon Express Co., Ltd. 153,000 1,408,059
Nippon Steel Co.* 229,000 745,726
Nippon Telegraph & Telephone Corp. 212 1,775,942
Nomura Securities Co., Ltd 86,000 1,501,740
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S.$ VALUE
- ----------------------------------------------------------------------
Osaka Gas Co. 250,000 $ 923,249
Rohm Co.(c) 78,000 4,030,913
Santen Pharmaceutical Co. 11,000 293,316
Sanyo Electric Co., Ltd 93,000 457,566
Seven-Eleven Japan Co., Ltd.(c) 34,700 2,485,151
Shimizu Corp. 81,000 783,671
Shin-Etsu Chemical Co. 22,000 386,762
Sumitomo Bank, Ltd.(c) 199,000 3,451,478
Sumitomo Electric Industries 67,000 798,419
Sumitomo Marine & Fire Insurance 102,000 809,935
Sumitomo Realty and Development Co., Ltd. 132,000 788,060
Taisho Pharmaceutical Co., Ltd 22,000 425,698
Takara Shuzo Co. 121,000 915,120
Takeda Chemical Industries 61,000 806,088
Tokai Bank 76,000 842,900
Tokio Marine & Fire Insurance Co., Ltd.(c) 235,000 2,695,062
Tokyo Electric Power Co., Ltd 46,000 1,411,126
Tokyo Electron, Ltd. 47,000 1,608,165
Tokyo Gas Co., Ltd 412,000 1,623,597
Tokyo Kanetsu 77,000 325,243
Tokyo Steel Mfg. Co. 23,000 393,487
Tostem Corp. 21,000 646,688
Toyota Motor Corp.*(c) 140,000 2,775,058
UBE Industries, Ltd.* 77,000 268,916
Yakult Honsha Co. 57,000 827,208
Yamanouchi Pharmaceutical Co., Ltd. 67,000 1,509,881
Yamazaki Baking Co., Ltd. 41,000 841,720
80,056,069
KOREA-0.1%
Korea Mobile Telecom (GDS) 3,400 121,550
MALAYSIA-1.9%
Aokam Perdana Berhard 131,000 1,558,244
DCB Holdings Berhad 82,250 94,463
Rashid Hussain Berhard 89,000 284,742
Resorts World Berhad 184,000 1,079,245
Telekom Malaysia 184,000 1,396,226
4,412,920
MEXICO-0.3%
Grupo Financiero
Bancomer, S.A. de C.V. Cl.C 25,933 6,846
Series B 700,200 205,019
Telefonos De Mexico, S.A. (ADR) Cl.L 19,700 583,613
795,478
NETHERLANDS-4.0%
D.S.M. N.V. 12,200 1,051,500
Elsevier N.V. 117,700 1,390,579
Fortis Amev N.V. 65,500 3,573,273
Heineken N.V. 12,025 1,820,523
International Nederlanden Groep N.V. 29,300 1,621,126
9,457,001
NEW ZEALAND-0.8%
Lion Nathan, Ltd. 335,000 662,934
Telecom Corp. of New Zealand 338,100 1,265,806
1,928,740
NORWAY-1.1%
Bergesen D.Y. AS 59,100 1,342,600
Christiana Bank OG 560,000 1,299,437
2,642,037
PHILIPPINES-0.2%
Manila Electric Co.Cl.B 61,000 489,624
PORTUGAL-0.2%
Portucel Industrial Empresa 65,000 464,817
10
ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S.$ VALUE
- ----------------------------------------------------------------------
SINGAPORE-1.8%
First Capital Corp., Ltd. 17,000 $ 52,551
Fraser & Neave 99,000 1,140,537
Oversea-Chinese Banking Corp.,Ltd 67,000 743,113
Overseas Union Bank, Ltd 170,000 1,070,483
Sembawang Corp., Ltd. 18,000 109,481
Singapore Press Hldgs., Ltd 78,000 1,166,512
4,282,677
SPAIN-3.2%
Banco IntercontinentalEspanol 16,400 1,476,435
Corporacion Bancaria de Espana, S.A. 18,000 665,288
Iberdrola, S.A.* 131,000 986,757
Repsol, S.A. 55,900 1,759,060
Tabacalera, S.A. Series A 38,365 1,435,415
Unidad Editorial, S.A.(a) 297,500 350,659
Uralita, S.A. 68,785 829,451
7,503,065
SWEDEN-2.6%
AB Astra Series A 119,100 3,672,091
Hennes & Mauritz AB
Marieberg Tidings Series A 44,500 928,943
SKF International AB Series A* 7,300 146,373
Stora Kopparbergs Series B 98,500 1,332,471
6,079,878
SWITZERLAND-2.9%
BBC Brown Boveri A.G. 1,040 1,076,578
Ciba-Geigy A.G.(c) 2,580 1,891,029
Electrowatt A.G. 2,290 658,263
Forbo Holdings A.G. 2,440 1,190,864
Nestle, S.A.(c) 1,804 1,877,375
6,694,109
THAILAND-0.3%
Bangkok Bank Co., Ltd. 56,000 617,055
Phatra Thanakit 15,000 125,177
742,232
UNITED KINGDOM-14.5%
Allied Radio Plc.* 1,825,950 65,366
Argos Plc. 168,600 1,158,844
B.A.T. Industries Plc.(c) 325,600 2,496,980
Berkley Group Plc. 118,700 671,389
BOC Group Plc. 40,000 511,045
British Airways Plc. 226,200 1,482,769
British Land Co. Plc. 150,000 953,436
British Telecommunications Plc. 165,000 1,029,091
Dixons Group Plc. 388,250 1,581,376
Forte Plc. 463,900 1,679,150
General Electric Plc. 337,000 1,646,084
Grand Metropolitan Plc. 273,000 1,674,444
Hepworth Plc. 224,000 1,003,252
Johnson Matthey Plc. 131,600 1,201,853
Marley Plc. 356,200 654,575
Meyer International Plc. 93,000 460,919
Mowlen (John) & Co. Plc. 864,000 948,520
Queens Moat Houses Plc.* 50,000 7,955
Royal Bank of Scotland Group Plc.(c) 357,000 2,428,220
Rugby Group Plc. 259,200 437,144
Smithkline Beecham Cl.A 207,600 1,879,418
Thorn EMI Plc.(c) 97,000 2,009,400
Unilever Plc.(c) 110,000 2,227,071
Vodafone Group Plc.(c) 596,800 2,217,172
Wimpey (George) Plc.(c) 1,292,100 2,343,606
W.H. Smith Group Plc. 204,500 1,060,705
33,829,784
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S.$ VALUE
- -----------------------------------------------------------------------
OTHER-0.5%
Asesores Bursatiles Capital Fund N.V.*(a) 25 $ 708,981
CLM Insurance Fund Plc.* 123,000 172,215
Taiwan Fund, Inc. 18,000 393,750
Touche Remnant Ecotec Environmental Fund*(a) 1 -0-
1,274,946
Total Common Stocks & Other Investments
(cost $217,085,662) 225,964,353
PRINCIPAL
AMOUNT
COMPANY (000) U.S.$ VALUE
- ----------------------------------------------------------------------
TIME DEPOSIT-1.3%
Sumitomo Bank
6.3125%, 7/03/95
(cost $3,000,000) US$ 3,000 $ 3,000,000
TOTAL INVESTMENTS-97.9%
(cost $220,085,662) 228,964,353
Other assets less liabilities-2.1% 5,008,124
NET ASSETS-100% $233,972,477
* Non-income producing security.
(a) Illiquid security, valued at fair value (see Notes A and F).
(b) These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At June 30, 1995
these securities amounted to $532,390 or 0.23% of net assets.
(c) Securities with an aggregate market value of $58,355,929 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.
12
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995 ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $220,085,662) $228,964,353
Cash, at value (cost $3,245,700) 3,251,186
Receivable for investment securities sold 9,730,034
Dividends and interest receivable 955,097
Receivable for shares of beneficial interest sold 309,509
Foreign taxes receivable and other assets 385,752
Total assets 243,595,931
LIABILITIES
Payable for investment securities purchased 7,065,921
Unrealized depreciation of forward exchange currency contracts 820,653
Advisory fee payable 584,931
Payable for shares of beneficial interest redeemed 406,645
Distribution fee payable 81,336
Accrued expenses 663,968
Total liabilities 9,623,454
NET ASSETS $233,972,477
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 140,733
Additional paid-in capital 217,119,669
Accumulated net investment loss (1,111,732)
Accumulated net realized gain on investments and foreign
currency transactions 9,720,703
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 8,103,104
$233,972,477
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($165,580,342/
9,849,363 shares of beneficial interest issued and outstanding) $16.81
Sales charge-4.25% of public offering price .75
Maximum offering price $17.56
CLASS B SHARES
Net asset value and offering price per share ($48,997,443/
3,026,512 shares of beneficial interest issued and outstanding) $16.19
CLASS C SHARES
Net asset value, redemption and offering price per share($19,394,692
/1,197,376 shares of beneficial interest issued and outstanding) $16.20
See notes to financial statements.
13
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995 ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends(net of foreign taxes withheld of $516,127) $4,321,615
Interest 634,177 $4,955,792
EXPENSES
Advisory fee 2,524,729
Distribution fee-Class A 333,671
Distribution fee-Class B 441,073
Distribution fee-Class C 246,454
Custodian 497,877
Transfer agency 478,620
Administrative 135,604
Audit and legal 105,642
Registration 53,702
Printing 52,883
Trustees' fees 36,028
Miscellaneous 58,224
Total expenses 4,964,507
Net investment loss (8,715)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 21,244,929
Net realized loss on foreign currency transactions (1,551,380)
Net change in unrealized appreciation (depreciation) of:
Investments (20,237,245)
Foreign currency denominated assets and liabilities (421,161)
Net loss on investments and foreign currency transactions (964,857)
NET DECREASE IN NET ASSETS FROM OPERATIONS $(973,572)
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
1995 1994
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (8,715) $(1,189,227)
Net realized gain on investments and
foreign currency transactions 19,693,549 25,178,246
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities (20,658,406) 9,924,850
Net increase (decrease) in net assets from
operations (973,572) 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)
CAPITAL TRANSACTIONS
Net increase 12,753,910 50,062,493
Total increase (decrease) (11,388,688) 77,721,602
NET ASSETS
Beginning of year 245,361,165 167,639,563
End of year $233,972,477 $245,361,165
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995 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. Illiquid 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 $1,551,380 represent foreign exchange
gains and losses from sales and maturities of debt securities, holding of
foreign currencies, exchange gains and 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.
16
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 fees,
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, 1995, no such reimbursement was required. Pursuant to the advisory
agreement, the Fund paid $135,604 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, 1995.
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 $355,426 for the year ended June 30, 1995.
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 $16,704 from the sale of Class A shares and $210,008
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B for the year ended June 30, 1995. Brokerage commissions paid on
securities transactions for the year ended June 30, 1995, amounted to
$1,381,789, 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 $1,672,131 and $455,492, 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 $285,030,757 and $295,643,776, respectively, for the year ended June
30, 1995. There were no purchases or sales of U.S. Government and government
agency obligations for the year ended June 30, 1995.
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 the original contracts and the
closing
17
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
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 net change in unrealized appreciation
(depreciation) of foreign currency denominated assets and liabilities.
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. The face or contract amount, in U.S.
dollars as reflected in the following table, reflects the total exposure the
Fund has in that particular currency contract.
At June 30, 1995, the Fund had outstanding forward exchange currency contracts,
as follows:
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY BUY CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------ ----------- ---------- ---------- ----------
Australian Dollars,
expiring 7/31/95 5,500,000 $3,958,075 $3,904,927 $(53,148)
Belgian Francs,
expiring 9/29/95 20,880,000 728,669 735,883 7,214
British Pounds,
expiring 8/31/95 2,300,000 3,673,962 3,656,309 (17,653)
Deutsche Marks,
expiring 8/31/95 8,600,000 6,218,332 6,227,385 9,053
French Francs, expiring 8/31/95 10,200,000 2,105,393 2,102,551 (2,842)
FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
Australian Dollars,
expiring 7/31/95 5,500,000 3,995,200 3,902,733 92,467
Belgian Francs,
expiring 9/29/95 99,650,000 3,510,966 3,503,803 7,163
British Pounds,
expiring 8/31/95-9/29/95 4,500,000 7,065,875 7,148,030 (82,155)
Deutsche Marks,
expiring 8/31/95 8,600,000 5,953,617 6,227,326 (273,709)
French Francs, expiring 8/31/95 30,700,000 5,996,094 6,321,221 (325,127)
Swiss Francs, expiring 8/31/95 7,500,000 6,358,585 6,540,501 (181,916)
$(820,653)
At June 30, 1995, the cost of investments for federal income tax purposes was
$220,367,994. Accordingly, gross unrealized appreciation of investments was
$16,291,336 and gross unrealized depreciation of investments was $7,694,977,
resulting in net unrealized appreciation of $8,596,359.
18
ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
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:
SHARES AMOUNT
------------------------ ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1994 1995 1994
----------- ----------- ------------- ------------
CLASS A
Shares sold 2,705,822 2,597,434 $47,501,995 $45,812,612
Shares issued in
reinvestment of
distributions 926,842 328,484 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 (4,770,741) (2,744,645) (83,532,846) (48,609,413)
Net increase (decrease) (1,138,077) 928,933 $(20,998,500) $15,345,694
CLASS B
Shares sold 2,388,681 1,519,137 $40,924,713 $26,354,439
Shares issued in
reinvestment of
distributions 246,119 24,318 3,861,611 394,438
Shares redeemed (1,280,863) (275,243) (20,826,680) (4,795,788)
Net increase 1,353,937 1,268,212 $23,959,644 $21,953,089
CLASS C
Shares sold 2,500,356 1,157,061 $42,839,538 $20,136,268
Shares issued in
reinvestment of
distributions 171,490 11,110 2,692,396 180,098
Shares redeemed (2,228,318) (428,880) (35,739,168) (7,552,656)
Net increase 443,528 739,291 $9,792,766 $12,763,710
19
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
NOTE F: ILLIQUID SECURITIES
DATE
SECURITY ACQUIRED U.S. $ COST
- -------- -------- -----------
Asesores Bursatiles Capital Fund N.V. 10/29/90 $1,113,819
Touche Remnant Ecotec Environmental Fund 6/28/90 247,179
Unidad Editorial, S.A. 1/20/92 369,591
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 June 30, 1995 was $1,059,640 representing 0.5% 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.
NOTE H: 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, 1995,
this amounted to $516,127. 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 1996.
20
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,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $18.38 $16.01 $14.98 $14.00 $17.99
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) .04 (.09) (.01) .01(b) .05
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .01 3.02 1.17 1.04 (3.54)
Net increase (decrease) in net asset
value from operations .05 2.93 1.16 1.05 (3.49)
LESS: DISTRIBUTIONS
Dividends from net investment income -0- -0- (.04) (.07) (.03)
Distributions from net realized gains
on investments and foreign currency
transactions (1.62) (.56) (.09) -0- (.47)
Total distributions (1.62) (.56) (.13) (.07) (.50)
Net asset value, end of year $16.81 $18.38 $16.01 $14.98 $14.00
TOTAL RETURN
Total investment return based on net
asset value (c) .59% 18.68% 7.86% 7.52% (19.34)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $165,584 $201,916 $161,048 $179,807 $214,442
Ratio of expenses to average net assets 1.73% 1.90% 1.88% 1.82% 1.73%
Ratio of net investment income (loss)
to average net assets .26% (.50)% (.14)% .07% .37%
Portfolio turnover rate 119% 97% 94% 72% 71%
</TABLE>
See footnote summary on page 23.
21
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------------
SEPTEMBER 17,
YEAR ENDED JUNE 30, 1990 (A)
-------------------------------------------------- TO
1995 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) (.01) (.19)(b) (.12) (.11)(b) .03
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions (.08) 2.91 1.14 1.02 (1.12)
Net increase (decrease) in net asset
value from operations (.09) 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 $16.19 $17.90 $15.74 $14.81 $13.93
TOTAL RETURN
Total investment return based on net
asset value (c) (.22)% 17.65% 6.98% 6.54% (6.97)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $48,998 $29,943 $6,363 $5,585 $3,515
Ratio of expenses to average net assets 2.57% 2.78% 2.70% 2.68% 3.39%(d)
Ratio of net investment income (loss)
to average net assets (.62)% (1.15)% (.96)% (.70)% .84%(d)
Portfolio turnover rate 119% 97% 94% 72% 71%
</TABLE>
See footnote summary on page 23.
22
ALLIANCE INTERNATIONAL FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS C
----------------------------------
YEAR ENDED JUNE 30, MAY 3,1993(A)
-------------------- TO
1995 1994 JUNE 30,1993
-------- ---------- ------------
Net asset value, beginning of period $17.91 $15.74 $15.93
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.14) (.11) -0-
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .05 2.84 (.19)
Net increase (decrease) in net asset
value from operations (.09) 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 $16.20 $17.91 $15.74
TOTAL RETURN
Total investment return based on net
asset value (c) (.22)% 17.72% (1.19)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $19,395 $13,503 $229
Ratio of expenses to average net assets 2.54% 2.78% 2.57%(d)
Ratio of net investment income (loss)
to average net assets (.88)% (1.12)% .08%(d)
Portfolio turnover rate 119% 97% 94%
(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.
23
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, including the portfolio of investments, as of June
30, 1995, 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, 1995, 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, 1995, 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.
Ernst & Young LLP
New York, New York
August 11, 1995
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
During the fiscal year ended June 30, 1995, the Fund paid on Class A, Class B,
and Class C shares long-term capital gains of $.07.
<PAGE>
APPENDIX A
FUTURES CONTRACTS AND OPTIONS ON
FUTURES CONTRACTS AND FOREIGN CURRENCIES
Incorporated by reference from "Appendix A" contained in
the Rule 497 SAI.
A-1
<PAGE>
APPENDIX B
ADDITIONAL INFORMATION ABOUT JAPAN
Incorporated by reference from "Appendix B" contained in
the Rule 497 SAI.
B-1
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional
Information:
Portfolio of Investments - June 30, 1995
Statement of Assets and Liabilities - June 30,
1995
Statement of Operations for the year ended
June 30, 1995
Statement of Changes in Net Assets - years
ended June 30, 1994 and June 30, 1995
Notes to Financial Statements - June 30, 1995
Report of Independent Auditors
Portfolio of Investments - December 31, 1995
(unaudited)
Statement of Assets and Liabilities -
December 31, 1995 (unaudited)
Statement of Operations - six months ended
December 31, 1995 (unaudited)
Statement of Changes in Net Assets - year ended
June 30, 1995 and six months ended December 31,
1995 (unaudited)
Notes to Financial Statements - December 31,
1995 (unaudited)
Financial Highlights - years ended June 30,
1991 through June 30, 1995 and the six months
ended December 31, 1995 (unaudited)
All other schedules are either omitted because they are not
required under the related instructions, they are inapplicable,
or the required information is presented in the financial
statements or notes which are included in the Statement of
Additional Information of the Registration Statement.
(b) Exhibits
(1) First Amended and Restated Agreement and
Declaration of Trust -Incorporated by reference
to Exhibit 1 to Post-Effective Amendment No. 15
of Registrant's Registration Statement on Form
N-1A, filed September 1, 1992.
C-1
<PAGE>
(2) By-Laws - Incorporated by reference to Exhibit 2
to Post-Effective Amendment No. 5 of
Registrant's Registration Statement on Form
N-1A, filed October 31, 1985.
(3) Not applicable.
(4) Specimen of Share Certificates - Class A
Incorporated by reference to Exhibit (4) to
Post-Effective Amendment No. 14 of Registrant's
Registration Statement on Form N-1A, filed
August 30, 1991. Class B and Class C shares -
Incorporated by reference to Exhibit 4 to
Post-Effective Amendment No. 20 of Registrant's
Registration Statement on Form N-1A, filed
October 22, 1993.
(5) Investment Advisory Agreement between the
Registrant and Alliance Capital Management
L.P. - Incorporated by reference to Exhibit (5)
to Post-Effective Amendment No. 16 of
Registrant's Registration Statement on Form
N-1A, filed October 30, 1992.
(6)(a) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors,
Inc. - Incorporated by reference to Exhibit 6
(a) to Post-Effective Amendment No. 20 of
Registrant's Registration Statement on Form
N-1A, filed October 22, 1993.
(b) Selected Dealer Agreement between Alliance Fund
Distributors, Inc. and selected dealers offering
shares of Registrant - Incorporated by reference
to Exhibit (6)(b) to Post-Effective Amendment
No. 17 of Registrant's Registration Statement on
Form N-1A, filed March 2, 1993.
(c) Selected Agent Agreement between Alliance Fund
Distributors, Inc. and selected agents making
available shares of Registrant - Incorporated by
reference to Exhibit (6)(c) to Post-Effective
Amendment No. 17 of Registrant's Registration
Statement on Form N-1A, filed March 2, 1993.
(7) Not applicable.
(8) Custodian Contract between the Registrant and
Brown Brothers Harriman & Co. - Incorporated by
reference to Exhibit 8 to Post-Effective
C-2
<PAGE>
Amendment No. 8 of Registrant's Registration
Statement on Form N-1A, filed October 28, 1988.
(9) Transfer Agency Agreement - Incorporated by
reference to Exhibit 9 to Post-Effective
Amendment No. 10 of Registrant's Registration
Statement on Form N-1A, filed October 27, 1989.
(10) Not applicable.
(11) Consent of Independent Auditors - filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6 hereto.
(16) Schedule for computation for each performance
quotation -Incorporated by reference to
Exhibit (16) to Post-Effective Amendment No. 14
of Registrant's Registration Statement on Form
N-1A, filed August 30, 1991.
(18) Rule 18f-3 Plan - Filed herewith.
(27) Financial Data Schedule - Filed herewith.
ITEM 25. Persons Controlled by or under Common Control with
Registrant
None.
ITEM 26. Number of Holders of Securities
Number of Record Holders
Title of Class (as of April 5, 1996)
______________ ________________________
Shares of Beneficial Class A - 11,909
Interest Class B - 6,925
par value $.01 Class C - 1,861
ITEM 27. Indemnification
It is the Registrant's policy to indemnify its trustees
and officers, employees and other agents as set forth
in Article VIII and Article III of Registrant's
Agreement and Declaration of Trust, filed as Exhibit 1
C-3
<PAGE>
in response to Item 24 and Section 6 of the
Distribution Agreement filed as Exhibit 6 in response
to Item 24, all as set forth below. The liability of
the Registrant's trustees and officers is dealt with in
Article VIII of Registrant's First Amended and Restated
Agreement and Declaration of Trust, as set forth below.
The Adviser's liability for loss suffered by the
Registrant or its shareholders is set forth in
Section 4 of the Advisory Agreement filed as Exhibit 5
in response to Item 24, as set forth below.
Article VIII of Registrant's First Amended and Restated
Agreement and Declaration of Trust reads as follows:
SECTION 8.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice. The Trustees and
officers of the Trust, in incurring any debts,
liabilities or obligations, or in limiting or
omitting any other actions for or in connection
with the Trust, are or shall be deemed to be
acting as Trustees or officers of the Trust and
not in their own capacities. No Shareholder shall
be subject to any personal liability whatsoever in
tort, contract or otherwise to any other Person or
Persons in connection with the assets or the
affairs of the Trust or of any Portfolio, and
subject to Section 8.4 hereof, no Trustee,
officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever in
tort, contract, or otherwise, to any other Person
or Persons in connection with the assets or
affairs of the Trust or of any Portfolio, save
only that arising from his own willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of his office or the discharge of his
functions. The Trust (or if the matter relates
only to a particular Portfolio, that Portfolio)
shall be solely liable for any and all debts,
claims, demands, judgments, decrees, liabilities
or obligations of any and every kind, against or
with respect to the Trust or such Portfolio in
tort, contract or otherwise in connection with the
assets or the affairs of the Trust or such
Portfolio, and all Persons dealing with the Trust
or any Portfolio shall be deemed to have agreed
that resort shall be had solely to the Trust
Property of the Trust or the Portfolio Assets of
such Portfolio, as the case may be, for the
payment or performance thereof.
C-4
<PAGE>
The Trustees shall use their best efforts to
ensure that every note, bond, contract,
instrument, certificate or undertaking made or
issued by the Trustees or by any officers or
officer shall give notice that this Declaration of
Trust is on file with the Secretary of The
Commonwealth of Massachusetts and shall recite to
the effect that the same was executed or made by
or on behalf of the Trust or by them as Trustees
or Trustee or as officers or officer, and not
individually, and that the obligations of such
instrument are not binding upon any of them or the
Shareholders individually but are binding only
upon the assets and property of the Trust, or the
particular Portfolio in question, as the case may
be, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or
officer or Shareholders or Shareholder
individually, or to subject the Portfolio Assets
of any Portfolio to the obligations of any other
Portfolio.
SECTION 8.2 Trustees' Good Faith Action; Expert
Advice; No Bond or Surety. The exercise by the
Trustees of their powers and discretions hereunder
shall be binding upon everyone interested.
Subject to Section 8.4 hereof, a Trustee shall be
liable for his own willful misfeasance, bad faith,
gross negligence or reckless disregard of the
duties involved in the conduct of the office of
Trustee, and for nothing else, and shall not be
liable for errors of judgment or mistakes of fact
or law. Subject to the foregoing, (i) the
Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any
officer, agent, employee, consultant, Adviser,
Administrator, Distributor or Principal
Underwriter, Custodian or Transfer Agent, Dividend
Disbursing Agent, Shareholder Servicing Agent or
Accounting Agent of the Trust, nor shall any
Trustee be responsible for the act or omission of
any other Trustee; (ii) the Trustees may take
advice of counsel or other experts with respect to
the meaning and operation of this Declaration of
Trust and their duties as Trustees, and shall be
under no liability for any act or omission in
accordance with such advice or for failing to
follow such advice; and (iii) in discharging their
duties, the Trustees, when acting in good faith,
shall be entitled to rely upon the books of
account of the Trust and upon written reports made
C-5
<PAGE>
to the Trustees by any officer appointed by them,
any independent public accountant, and (with
respect to the subject matter of the contract
involved) any officer, partner or responsible
employee of a Contracting Party appointed by the
Trustees pursuant to Section 5.2 hereof. The
Trustees as such shall not be required to give any
bond or surety or any other security for the
performance of their duties.
SECTION 8.3 Indemnification of Shareholders. If
any Shareholder (or former Shareholder) of the
Trust shall be charged or held to be personally
liable for any obligation or liability of the
Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's
acts or omissions or for some other reason, the
Trust (upon proper and timely request by the
Shareholder) shall assume the defense against such
charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or the heirs,
executors, administrators or other legal
representatives thereof, or in the case of a
corporation or other entity, its corporate or
other general successor) shall be entitled (but
solely out of the assets of the Portfolio of which
such Shareholder or former Shareholder is or was
the holder of Shares) to be held harmless from and
indemnified against all loss and expense arising
from such liability.
SECTION 8.4 Indemnification of Trustees,
Officers, etc. Subject to the limitations set
forth hereinafter in this Section 8.4, the Trust
shall indemnify (from the assets of the Portfolio
or Portfolios to which the conduct in question
relates) each of its Trustees and officers
(including Persons who serve at the Trust's
request as directors, officers or trustees of
another organization in which the Trust has any
interest as a shareholder, creditor or otherwise
[hereinafter, together with such Person's heirs,
executors, administrators or personal
representative, referred to as a "Covered
Person"]) against all liabilities, including but
not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and
penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or
disposition of any action, suit or other
C-6
<PAGE>
proceeding, whether civil or criminal, before any
court or administrative or legislative body, in
which such Covered Person may be or may have been
involved as a party or otherwise or with which
such Covered Person may be or may have been
threatened, while in office or thereafter, by
reason of being or having been such a Trustee or
officer, director or trustee, except with respect
to any matter as to which it has been determined
that such Covered Person (i) did not act in good
faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best
interests of the Trust or (ii) had acted with
willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in
the conduct of such Covered Person's office
(either and both of the conduct described in (i)
and (ii) being referred to hereafter as "Disabling
Conduct"). A determination that the Covered
Person is entitled to indemnification may be made
by (i) a final decision on the merits by a court
or other body before whom the proceeding was
brought that the Covered Person to be indemnified
was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an
administrative proceeding against a Covered Person
for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination,
based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling
Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of
the Trust as defined in Section 2(a)(19) of the
1940 Act nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees
so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of
judgments, in compromise or as fines or
penalties), may be paid from time to time by the
Portfolio or Portfolios to which the conduct in
question related in advance of the final
disposition of any such action, suit or
proceeding; provided, that the Covered Person
shall have undertaken to repay the amounts so paid
to such Portfolio or Portfolios if it is
ultimately determined that indemnification of such
expenses is not authorized under this Article VIII
and (i) the Covered Person shall have provided
security for such undertaking, (ii) the Trust
shall be insured against losses arising by reason
C-7
<PAGE>
of any lawful advances, or (iii) a majority of a
quorum of the disinterested Trustees, or an
independent legal counsel in a written opinion,
shall have determined, based on a review of
readily available facts (as opposed to a full
trial-type inquiry), that there is reason to
believe that the Covered Person ultimately will be
found entitled to indemnification.
SECTION 8.5 Compromise Payment. As to any matter
disposed of by a compromise payment by any such
Covered Person referred to in Section 8.4 hereof,
pursuant to a consent decree or otherwise, no such
indemnification either for said payment or for any
other expenses shall be provided unless such
indemnification shall be approved (i) by a
majority of a quorum of the disinterested Trustees
or (ii) by an independent legal counsel in a
written opinion. Approval by the Trustees
pursuant to clause (i) or by independent legal
counsel pursuant to clause (ii) shall not prevent
the recovery from any Covered Person of any amount
paid to such Covered Person in accordance with
either of such clauses as indemnification if such
Covered Person is subsequently adjudicated by a
court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such
Covered Person's action was in or not opposed to
the best interests of the Trust or to have been
liable to the Trust or its Shareholders by reason
of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's
office.
SECTION 8.6 Indemnification Not Exclusive, etc.
The right of indemnification provided by this
Article VIII shall not be exclusive of or affect
any other rights to which any such Covered Person
may be entitled. As used in this Article VIII, a
"disinterested" Person is one against whom none of
the actions, suits or other proceedings in
question, and no other action, suit or other
proceeding on the same or similar grounds is then
or has been pending or threatened. Nothing
contained in this Article VIII shall affect any
rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and
other Persons may be entitled by contract or
otherwise under law, nor the power of the Trust to
C-8
<PAGE>
purchase and maintain liability insurance on
behalf of any such Person.
SECTION 8.7 Liability of Third Persons Dealing
with Trustees. No person dealing with the
Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or
to be made by the Trustees or to see to the
application of any payments made or property
transferred to the Trust or upon its order.
Article III of Registrant's First Amended and Restated
Agreement and Declaration of Trust reads, in pertinent
part, as follows:
"Without limiting the foregoing and to the extent
not inconsistent with the 1940 Act or other
applicable law, the Trustees shall have power and
authority:
(s) Indemnification. In addition to the
mandatory indemnification provided for in
Article VIII hereof and to the extent permitted
by law, to indemnify or enter into agreements
with respect to indemnification with any Person
with whom this Trust has dealings, including,
without limitation, any independent contractor,
to such extent as the Trustees shall
determine."
The Advisory Agreement between Registrant and
Alliance Capital Management L.P. provides that
Alliance Capital Management L.P. will not be
liable under such agreement for any mistake of
judgment or in any event whatsoever except for
lack of good faith and that nothing therein shall
be deemed to protect, or purport to protect,
Alliance Capital Management L.P. against any
liability to Registrant or its security holders to
which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence
in the performance of its duties thereunder, or by
reason of reckless disregard of its obligations
and duties thereunder.
The Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.
provides that the Registrant will indemnify,
defend and hold Alliance Fund Distributors, Inc.,
and any person who controls it within the meaning
of Section 15 of the Investment Company Act of
C-9
<PAGE>
1940, free and harmless from and against any and
all claims, demands, liabilities and expenses
which Alliance Fund Distributors, Inc. or any
controlling person may incur arising out of or
based upon any alleged untrue statement of a
material fact contained in Registrant's
Registration Statement or Prospectus and Statement
of Additional Information or arising out of, or
based upon any alleged omission to state a
material fact required to be stated in or
necessary to make the statements in either thereof
any one of the foregoing not misleading, provided
that nothing therein shall be so construed as to
protect Alliance Fund Distributors, Inc. against
any liability to Registrant or its security
holders to which it would otherwise be subject by
reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties
thereunder, or by reason of reckless disregard of
its obligations and duties thereunder.
The foregoing summaries are qualified by the
entire text of Registrant's First Amended and
Restated Agreement and Declaration of Trust, the
Advisory Agreement between Registrant and Alliance
Capital Management L.P. and the Distribution
Services Agreement between Registrant and Alliance
Fund Distributors, Inc.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Securities
Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion
of the Securities and Exchange Commission, such
indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other
than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or
controlling person of the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such trustee, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question of whether such indemnification by it is
C-10
<PAGE>
against public policy as expressed in the
Securities Act and will be governed by the final
adjudication of such issue.
In accordance with Release No. IC-11330
(September 2, 1980), the Registrant will indemnify
its trustees, officers, investment adviser and
principal underwriters only if (1) a final
decision on the merits was issued by the court or
other body before whom the proceeding was brought
that the person to be indemnified (the
"indemnitee") was not liable by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of his office ("disabling conduct") or
(2) a reasonable determination is made, based upon
a review of the facts, that the indemnitee was not
liable by reason of disabling conduct, by (a) the
vote of a majority of a quorum of the trustees who
are neither "interested persons" of the Registrant
as defined in section 2(a)(19) of the Investment
Company Act of 1940 nor parties to the proceeding
("disinterested, non-party trustees"), or (b) an
independent legal counsel in a written opinion.
The Registrant will advance attorneys fees or
other expenses incurred by its trustees, officers,
investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or
on behalf of the indemnitee to repay the advance
unless it is ultimately determined that he is
entitled to indemnification and, as a condition to
the advance, (1) the indemnitee shall provide a
security for his undertaking, (2) the Registrant
shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a
quorum of disinterested, non-party trustees of the
Registrant, or an independent legal counsel in a
written opinion, shall determine, based on a
review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be
found entitled to indemnification.
The Registrant participates in a joint
trustees/directors and officers liability
insurance policy issued by the ICI Mutual
Insurance Company. Coverage under this policy has
been extended to directors, trustees and officers
of the investment companies managed by Alliance
Capital Management L.P. Under this policy,
outside trustees and directors are covered up to
C-11
<PAGE>
the limits specified for any claim against them
for acts committed in their capacities as trustee
or director. A pro rata share of the premium for
this coverage is charged to each investment
company and to the Adviser.
ITEM 28. Business and Other Connections of Adviser
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively,
of this Registration Statement are incorporated by
reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation,
the general partner of Alliance Capital Management
L.P., set forth in Alliance Capital Management L.P.'s
Form ADV filed with the Securities and Exchange
Commission on April 21, 1988 (File No. 801-32361) and
amended through the date hereof, is incorporated by
reference.
ITEM 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc. the Registrant's
Principal Underwriter in connection with the sale
of shares of the Registrant, also acts as
Principal Underwriter or Distributor for the
following investment companies:
ACM Institutional Reserves Inc.
AFD Exchange Reserves Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
C-12
<PAGE>
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.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers
of Alliance Fund Distributors, Inc., the
principal place of business of which is 1345
Avenue of the Americas, New York, New York,
10105.
Positions and Positions and
Offices With Offices With
Name Underwriter Registrant
____ _____________ ______________
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A. Gardner Senior Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel &
Secretary
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumsiek Senior Vice President
Stephen R. Laut Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleonadkis Senior Vice President
C-13
<PAGE>
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willet Senior Vice President
Richard A. Winge Senior Vice President
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
William P. Beanblosson Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President &
Controller
Andrew L. Gangolf Vice President &
Associate General
Counsel
C-14
<PAGE>
Mark D. Gersten Vice President Treasurer
and Chief
Financial
Officer
Joseph W. Gibson Vice President
Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Robert H. Joseph, Jr. Vice President & Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
C-15
<PAGE>
Robert E. Powers Vice President
Domenick Pugliese Vice President & Assistant
Associate General Secretary
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Scalfani Vice President
Richard J. Sidell Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Joseph T. Tocyloski Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President &
Special Counsel
Maria L. Carreras Assistant Vice President
Sarah A. Chodera Assistant Vice President
John W. Cronin Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
Vicky M. Hayes Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Thomas K. Intoccia Assistant Vice President
Edward W. Kelly Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Shawn P. McClain Assistant Vice President
Thomas F. Monnerat Assistant Vice President
C-16
<PAGE>
Jeanette M. Nardella Assistant Vice President
Carol H. Rappa Assistant Vice President
Lisa Robinson-Cronin Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Wesley S. Williams Assistant Vice President
Mark R. Manley Assistant Vice President
(c) Not applicable.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder
are maintained as follows: journals, ledgers,
securities records and other original records are
maintained principally at the offices of Alliance Fund
Services, Inc., 500 Plaza Drive, Secaucus, New Jersey
07094 and at the offices of Brown Brothers Harriman &
Company, the Registrant's Custodian, 40 Water Street,
Boston, Massachusetts 02109. All other records so
required to be maintained are maintained at the offices
of Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York, 10105.
ITEM 31. Management Services
Not applicable.
ITEM 32. Undertakings
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest report to shareholders,
upon request and without charge.
C-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York
and the State of New York on the 22nd day of April, 1996.
ALLIANCE INTERNATIONAL FUND
By: /s/ John D. Carifa
_________________________
John D. Carifa
Chairman
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities
and on the date indicated.
Signature Title Date
_________ _____ ____
(1) Principal Executive
Officer
/s/ John D. Carifa
____________________ Chairman April 22, 1996
John D. Carifa
(2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and April 22, 1996
_____________________ Chief Financial
Mark D. Gersten Officer
C-18
<PAGE>
(3) A Majority of the Trustees
David H. Dievler
John D. Carifa
John H. Dobkin
William H. Henderson
Stig Host
Richard M. Lilly
Alan J. Stoga
Robert C. White
By: /s/ Edmund P. Bergan, Jr. April 22, 1996
_____________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
C-19
<PAGE>
Index to Exhibits
_________________
Page
(11) Consent of Independent Auditors
(18) Rule 18f-3 Plan
(27) Financial Data Schedule
C-20
00250086.AM4
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Shareholder Services - Statements and Reports" and to the use of
our report dated August 11, 1995 included in this Amendment to
the Registration Statement (Form N-1A No. 2-70428) of Alliance
International Fund.
We also consent to the reference to our firm under the caption
"General Information - Independent Auditors" included in the
Statement of Additional Information of Alliance International
Fund filed pursuant to Rule 497(c) on November 9, 1995 which is
incorporated by reference in this Registration Statement.
ERNST & YOUNG LLP
New York, New York
April 19, 1996
00250086.AM9
<PAGE>
ALLIANCE INTERNATIONAL FUND
Plan pursuant to Rule 18f-3 under the
Investment Company Act of 1940
Effective December 14, 1995
This Plan (the "Plan") is adopted by the Alliance
International Fund (the "Fund") pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the "Act") and sets forth the
general characteristics of, and the general conditions under
which the Fund may offer, multiple classes of shares of its now
existing and hereafter created portfolios.1 This Plan may be
revised or amended from time to time as provided below.
Class Designations
The Fund2 may from time to time issue one or more of the
following classes of shares: Class A shares, Class B shares,
Class C shares and Class Y shares. Each of the four classes of
shares will represent interests in the same portfolio of
investments of the Fund and, except as described herein, shall
have the same rights and obligations as each other class. Each
class shall be subject to such investment minimums and other
conditions of eligibility as are set forth in the Fund's
prospectus or statement of additional information as from time to
time in effect (the "Prospectus").
Class Characteristics
Class A shares are offered at a public offering price
that is equal to their net asset value ("NAV") plus an initial
sales charge, as set forth in the Prospectus. Class A shares may
also be subject to a Rule 12b-1 fee, which may include a service
fee and, under certain circumstances, a contingent deferred sales
charge ("CDSC"), as described in the Prospectus.
_________________________
1. Prior to the effectiveness of this Plan, the Fund has been
offering multiple classes of shares pursuant to an exemptive
order of the Securities and Exchange Commission. This Plan
is intended to allow the Fund to offer multiple classes of
shares to the full extent and in the manner permitted by Rule
18f-3 under the Act (the "Rule"), subject to the requirements
and conditions imposed by the Rule.
2. For purposes of this Plan, if the Fund has existing more than
one portfolio pursuant to which multiple classes of shares
are issued, then references in this Plan to the "Fund" shall
be deemed to refer instead to each portfolio.
<PAGE>
Class B shares are offered at their NAV, without an
initial sales charge, but may be subject to a CDSC and a Rule
12b-1 fee, which may include a service fee, as described in the
Prospectus.
Class C shares are offered at their NAV, without an
initial sales charge, and may be subject to a Rule 12b-1 fee,
which may include a service fee, and a CDSC, as described in the
Prospectus.
Class Y Shares are offered at their NAV, without any
initial sales charge, CDSC or Rule 12b-1 fee.
The initial sales charge on Class A shares and CDSC on
Class A, B and C shares are each subject to reduction or waiver
as permitted by the Act, and as described in the Prospectus.
Allocations to Each Class
Expense Allocations
The following expenses shall be allocated, to the extent
practicable, on a class-by-class basis: (i) Rule 12b-1 fees
payable by the Fund to the distributor or principal underwriter
of the Fund's shares (the "Distributor"), and (ii) transfer
agency costs attributable to each class. Subject to the approval
of the Fund's Trustees, including a majority of the independent
Trustees, the following "Class Expenses" may be allocated on a
class-by-class basis: (a) printing and postage expenses related
to preparing and distributing materials such as shareholder
reports, prospectuses and proxy statements to current
shareholders of a specific class,3 (b) SEC registration fees
incurred with respect to a specific class, (c) blue sky and
foreign registration fees and expenses incurred with respect to a
specific class, (d) the expenses of administrative personnel and
services required to support shareholders of a specific class
(including, but not limited to, maintaining telephone lines and
personnel to answer shareholder inquiries about their accounts or
about the Fund), (e) litigation and other legal expenses relating
to a specific class of shares, (f) Trustees' fees or expenses
incurred as a result of issues relating to a specific class of
shares, (g) accounting and consulting expenses relating to a
specific class of shares, (h) any fees imposed pursuant to a non-
Rule 12b-1 shareholder services plan that relate to a specific
_________________________
3. For Class Y shares, the expenses of preparation, printing and
distribution of prospectuses and shareholder reports, as well
as other distribution-related expenses, will be borne by the
investment adviser of the Fund (the "Adviser") or the
Distributor from their own resources.
2
<PAGE>
class of shares, and (i) any additional expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount with respect to a class, or if
services are provided with respect to a class that are of a
different kind or to a different degree than with respect to one
or more other classes.
All expenses not now or hereafter designated as Class
Expenses ("Fund Expenses") will be allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund.
[For daily dividend fixed income funds and AFD Exchange Reserves,
only]
However, notwithstanding the above, the Fund may
allocate all expenses other than Class Expenses on the basis of
relative net assets (settled shares), as permitted by rule
18f-3(c)(2) under the Act.
Waivers and Reimbursements
The Adviser or Distributor may choose to waive or
reimburse Rule 12b-1 fees, transfer agency fees or any Class
Expenses on a voluntary, temporary basis. Such waiver or
reimbursement may be applicable to some or all of the classes and
may be in different amounts for one or more classes.
Income, Gains and Losses
Income, and realized and unrealized capital gains and
losses shall be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of
the Fund.
[For daily dividend fixed income funds and AFD Exchange Reserves,
only]
The Fund may allocate income, and realized and
unrealized capital gains and losses to each share based on
relative net assets (i.e. settled shares), as permitted by Rule
18f-3(c)(2) under the Act.
Conversion and Exchange Features
Conversion Features
Class B shares of the Fund automatically convert to
Class A shares of the Fund after a certain number of months or
years after the end of the calendar month in which the
3
<PAGE>
shareholder's purchase order was accepted as described in the
Prospectus. Class B shares purchased through reinvestment of
dividends and distributions will be treated as Class B shares for
all purposes except that such Class B shares will be considered
held in a separate sub-account. Each time any Class B shares in
the shareholder's account convert to Class A shares, an equal
pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares. The conversion of Class B shares
to Class A shares may be suspended if the opinion of counsel
obtained by the Fund that the conversion does not constitute a
taxable event under current federal income tax law is no longer
available. Class B shares will convert into Class A shares on
the basis of the relative net asset value of the two classes,
without the imposition of any sales load, fee or other charge.
In the event of any material increase in payments
authorized under the Rule 12b-1 Plan (or, if presented to
shareholders, any material increase in payments authorized by a
non-Rule 12b-1 shareholder services plan) applicable to Class A
shares, existing Class B shares will stop converting into Class A
shares unless the Class B shareholders, voting separately as a
class, approve the increase in such payments. Pending approval
of such increase, or if such increase is not approved, the
Trustees shall take such action as is necessary to ensure that
existing Class B shares are exchanged or converted into a new
class of shares ("New Class A") identical in all material
respects to Class A shares as existed prior to the implementation
of the increase in payments, no later than such shares were
previously scheduled to convert to Class A shares. If deemed
advisable by the Trustees to implement the foregoing, such action
may include the exchange of all existing Class B shares for a new
class of shares ("New Class B"), identical to existing Class B
shares, except that New Class B shares shall convert to New
Class A shares. Exchanges or conversions described in this
paragraph shall be effected in a manner that the Trustees
reasonably believe will not be subject to federal taxation. Any
additional cost associated with the creation, exchange or
conversion of New Class A or New Class B shares shall be borne by
the Adviser and the Distributor. Class B shares sold after the
implementation of the fee increase may convert into Class A
shares subject to the higher maximum payment, provided that the
material features of the Class A plan and the relationship of
such plan to the Class B shares are disclosed in an effective
registration statement.
Exchange Features
Shares of each class generally will be permitted to be
exchanged only for shares of a class with similar characteristics
in another Alliance Mutual Fund and shares of certain Alliance
money market funds. Class Y shares may be exchanged for Class Y
4
<PAGE>
shares of another Alliance Mutual Fund and shares of certain
Alliance money market funds. If the aggregate net asset value of
shares of all Alliance Mutual Funds held by an investor in the
Fund reaches the minimum amount at which an investor may purchase
Class A shares at net asset value without a front-end sales load
on or before December 15 in any year, then all Class B and
Class C shares of the Fund held by that investor may thereafter
be exchanged, at the investor's request, at net asset value and
without any front-end sales load or CDSC for Class A shares of
the Fund. All exchange features applicable to each class will be
described in the Prospectus.
Dividends
Dividends paid by the Fund with respect to its Class A,
Class B, Class C and Class Y shares, to the extent any dividends
are paid, will be calculated in the same manner, at the same time
and will be in the same amount, except that any Rule 12b-1 fee
payments relating to a class of shares will be borne exclusively
by that class and any incremental transfer agency costs or, if
applicable, Class Expenses relating to a class shall be borne
exclusively by that class.
Voting Rights
Each share of a Fund entitles the shareholder of record
to one vote. Each class of shares of the Fund will vote
separately as a class with respect to the Rule 12b-1 plan
applicable to that class and on other matters for which class
voting is required under applicable law. Both Class A and
Class B shareholders will vote separately as a class to approve
any material increase in payments authorized under the Rule 12b-1
plan applicable to Class A shares.
Responsibilities of the Trustees
On an ongoing basis, the Trustees will monitor the Fund
for the existence of any material conflicts among the interests
of the four classes of shares. The Trustees shall further
monitor on an ongoing basis the use of waivers or reimbursement
by the Adviser and the Distributor of expenses to guard against
cross-subsidization between classes. The Trustees, including a
majority of the independent Trustees, shall take such action as
is reasonably necessary to eliminate any such conflict that may
develop. If a conflict arises, the Adviser and Distributor, at
their own cost, will remedy such conflict up to and including
establishing one or more new registered management investment
companies.
5
<PAGE>
Reports to the Trustees
The Adviser and Distributor will be responsible for
reporting any potential or existing conflicts among the four
classes of shares to the Trustees. In addition, the Trustees
will receive quarterly and annual statements concerning
distributions and shareholder servicing expenditures complying
with paragraph (b)(3)(ii) of Rule 12b-1. In the statements, only
expenditures properly attributable to the sale or servicing of a
particular class of shares shall be used to justify any
distribution or service fee charged to that class. The
statements, including the allocations upon which they are based,
will be subject to the review of the independent Trustees in the
exercise of their fiduciary duties. At least annually, the
Trustees shall receive a report from an expert, acceptable to the
Trustees, (the "Expert") with respect to the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The report of the Expert
shall also address whether the Fund has adequate facilities in
place to ensure the implementation of the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The Fund and the Adviser
will take immediate corrective measures in the event of any
irregularities reported by the Expert.
Amendments
The Plan may be amended from time to time in accordance
with the provisions and requirements of Rule 18f-3 under the Act.
Adopted this 14th day of December, 1995
By:
Edmund P. Bergan, Jr.
Secretary
6
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000350182
<NAME> ALLIANCE INTERNATIONAL FUND
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Dec-31-1995
<INVESTMENTS-AT-COST> 233006730
<INVESTMENTS-AT-VALUE> 247585332
<RECEIVABLES> 16340129
<ASSETS-OTHER> 308237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 264233698
<PAYABLE-FOR-SECURITIES> 14397156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19117127
<TOTAL-LIABILITIES> 4842779
<SENIOR-EQUITY> 145739
<PAID-IN-CAPITAL-COMMON> 225076477
<SHARES-COMMON-STOCK> 10091951
<SHARES-COMMON-PRIOR> 9849363
<ACCUMULATED-NII-CURRENT> (1713766)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6594277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14891036
<NET-ASSETS> 244993763
<DIVIDEND-INCOME> 1725559
<INTEREST-INCOME> 178346
<OTHER-INCOME> 0
<EXPENSES-NET> 2505939
<NET-INVESTMENT-INCOME> (602034)
<REALIZED-GAINS-CURRENT> 11469413
<APPREC-INCREASE-CURRENT> 6787932
<NET-CHANGE-FROM-OPS> 17655311
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (10091208)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20831144
<NUMBER-OF-SHARES-REDEEMED> 25888872
<SHARES-REINVESTED> 8899875
<NET-CHANGE-IN-ASSETS> 11021286
<ACCUMULATED-NII-PRIOR> (1111732)
<ACCUMULATED-GAINS-PRIOR> 9720703
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1188835
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2505939
<AVERAGE-NET-ASSETS> 238320684
<PER-SHARE-NAV-BEGIN> 17
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 1.30
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.04
<EXPENSE-RATIO> 1.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000350182
<NAME> ALLIANCE INTERNATIONAL FUND
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Dec-31-1995
<INVESTMENTS-AT-COST> 233006730
<INVESTMENTS-AT-VALUE> 247585332
<RECEIVABLES> 16340129
<ASSETS-OTHER> 308237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 264233698
<PAYABLE-FOR-SECURITIES> 14397156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19117127
<TOTAL-LIABILITIES> 4842779
<SENIOR-EQUITY> 145739
<PAID-IN-CAPITAL-COMMON> 225076477
<SHARES-COMMON-STOCK> 3292714
<SHARES-COMMON-PRIOR> 3026512
<ACCUMULATED-NII-CURRENT> (1713766)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6594277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14891036
<NET-ASSETS> 244993763
<DIVIDEND-INCOME> 1725559
<INTEREST-INCOME> 178346
<OTHER-INCOME> 0
<EXPENSES-NET> 2505939
<NET-INVESTMENT-INCOME> (602034)
<REALIZED-GAINS-CURRENT> 11469413
<APPREC-INCREASE-CURRENT> 6787932
<NET-CHANGE-FROM-OPS> 17655311
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (3210617)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12016392
<NUMBER-OF-SHARES-REDEEMED> 9996751
<SHARES-REINVESTED> 2259131
<NET-CHANGE-IN-ASSETS> 11021286
<ACCUMULATED-NII-PRIOR> (1111732)
<ACCUMULATED-GAINS-PRIOR> 9720703
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1188835
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2505939
<AVERAGE-NET-ASSETS> 238320684
<PER-SHARE-NAV-BEGIN> 16.19
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 1.25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.30
<EXPENSE-RATIO> 2.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000350182
<NAME> ALLIANCE INTERNATIONAL FUND
<SERIES>
<NUMBER> 003
<NAME> CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Dec-31-1995
<INVESTMENTS-AT-COST> 233006730
<INVESTMENTS-AT-VALUE> 247585332
<RECEIVABLES> 16340129
<ASSETS-OTHER> 308237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 264233698
<PAYABLE-FOR-SECURITIES> 14397156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19117127
<TOTAL-LIABILITIES> 4842779
<SENIOR-EQUITY> 145739
<PAID-IN-CAPITAL-COMMON> 225076477
<SHARES-COMMON-STOCK> 1189274
<SHARES-COMMON-PRIOR> 1197376
<ACCUMULATED-NII-CURRENT> (1713766)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6594277
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14891036
<NET-ASSETS> 244993763
<DIVIDEND-INCOME> 1725559
<INTEREST-INCOME> 178346
<OTHER-INCOME> 0
<EXPENSES-NET> 2505939
<NET-INVESTMENT-INCOME> (602034)
<REALIZED-GAINS-CURRENT> 11469413
<APPREC-INCREASE-CURRENT> 6787932
<NET-CHANGE-FROM-OPS> 17655311
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1294014)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9771226
<NUMBER-OF-SHARES-REDEEMED> 10719349
<SHARES-REINVESTED> 789018
<NET-CHANGE-IN-ASSETS> 11021286
<ACCUMULATED-NII-PRIOR> (1111732)
<ACCUMULATED-GAINS-PRIOR> 9720703
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1188835
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2505939
<AVERAGE-NET-ASSETS> 238320684
<PER-SHARE-NAV-BEGIN> 16.20
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 1.25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.30
<EXPENSE-RATIO> 2.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
