<PAGE>
This is filed pursuant to Rule 497(c).
File Nos. 2-10988 and 811-00134.
<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
February 1, 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 OF CONTENTS PAGE
The Funds at a Glance............................................ 2
Expense Information.............................................. 4
Financial Highlights............................................. 7
Glossary......................................................... 17
Description of the Funds......................................... 18
Investment Objectives and Policies.......................... 18
Additional Investment Practices............................. 26
Certain Fundamental Investment Policies..................... 33
Risk Considerations......................................... 36
Purchase and Sale of Shares...................................... 39
Management of the Funds.......................................... 41
Dividends, Distributions and Taxes............................... 44
General Information.............................................. 45
Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return. The Domestic Stock Funds
invest mainly in the United States equity markets and the Global Stock Funds
diversify their investments among equity markets around the world, while the
Total Return Funds invest in both equity and fixed-income securities.
Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, call or write Alliance Fund Services, Inc. at the indicated address
or "Literature" telephone number.
Each Fund offers three classes of shares which may be purchased at the
investor's choice at a price equal to their net asset value (i) plus an initial
sales charge imposed at the time of purchase (the "Class A shares"), (ii) with a
contingent deferred sales charge imposed on most redemptions made within four
years of purchase (the "Class B shares"), or (iii) without any initial or
contingent deferred sales charge (the "Class C shares"). See "Purchase and Sale
of Shares."
An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.
Investors are advised to read this Prospectus carefully and to retain it for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Alliance(R)
Mutual funds without the Mystery. 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 $146 billion in
assets under management as of December 31, 1995. Alliance provides investment
management services to 29 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 non-diversified portfolio of equity securities
that, in the judgment of Alliance, are likely to achieve superior earnings
growth. Normally, approximately 40 companies will be represented in the Fund's
investment portfolio. The Fund's investments in 25 of these companies most
highly regarded at any point in time by Alliance will usually constitute
approximately 70% of the Fund's net assets.
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 and most
banks, insurance companies and brokerage firms nationwide. Shares can be
purchased for a minimum initial investment of $250, and subsequent investments
can be made for as little as $50. For detailed information about purchasing and
selling shares, see "Purchase and Sale of Shares." In addition, the Funds offer
several time and money saving services to investors. Be sure to ask your
financial representative about:
AUTOMATIC REINVESTMENT
AUTOMATIC INVESTMENT PROGRAM
RETIREMENT PLANS
SHAREHOLDER COMMUNICATIONS
DIVIDEND DIRECTION PLANS
AUTO EXCHANGE
SYSTEMATIC WITHDRAWALS
A CHOICE OF PURCHASE PLANS
TELEPHONE TRANSACTIONS
24 HOUR INFORMATION
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 a Fund and annual expenses for each class of shares of each
Fund. For each Fund, the "Examples" to the right of the table below show the
cumulative expenses attributable to a hypothetical $1,000 investment in each
class for the periods specified.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
Maximum sales charge imposed on purchases (as a percentage of
offering price)................................................ 4.25%(a) None None
Sales charge imposed on dividend reinvestments................. None None None
Deferred sales charge (as a
percentage of original purchase
price or redemption proceeds,
whichever is lower)............................................ None(a) 4.0% None
during the
first year,
decreasing 1.0%
annually to 0%
after the
fourth year (b)
Exchange fee................................................... None None None
</TABLE>
- --------------------------------------------------------------------------------
(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1% deferred sales
charge on redemptions within one year of purchase. See "Purchase and Sale of
Shares--How to Buy Shares" -page 39.
(b) Class B shares of each Fund other than PREMIER GROWTH FUND automatically
convert to Class A shares after eight years and the Class B shares of PREMIER
GROWTH FUND convert to Class A shares after six years. See "Purchase and Sale
of Shares--How to Buy Shares" -page 39.
<TABLE>
<CAPTION>
OPERATING EXPENSES EXAMPLES
- ----------------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE FUND CLASS A CLASS B CLASS C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
Management fees .71% .71% .71% After 1 year $ 53 $ 59 $ 19 $ 19
12b-1 fees .19% 1.00% 1.00% After 3 years $ 75 $ 80 $ 60 $ 59
Other expenses (a) .18% .19% .18% After 5 years $100 $103 $103 $102
Total fund ----- ----- ----- After 10 years $169 $201(b) $201(b) $221
operating expense 1.08% 1.90% 1.89%
==== ==== ====
GROWTH FUND CLASS A CLASS B CLASS C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
Management fees .75% .75% .75% After 1 year $ 56 $ 61 $ 21 $ 21
12b-1 fees .30% 1.00% 1.00% After 3 years $ 83 $ 84 $ 64 $ 64
Other expenses(a) .30% .30% 1.00% After 5 years $113 $110 $110 $110
Total fund ----- ----- ----- After 10 years $198 $220(b) $220(b) $238
operating expenses 1.35% 2.05% 2.05%
==== ==== ====
PREMIER GROWTH FUND CLASS A CLASS B CLASS C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
Management fees 1.00% 1.00% 1.00% After 1 year $ 60 $ 65 $ 25 $ 25
12b-1 fees .37% 1.00% 1.00% After 3 years $ 95 $ 96 $ 76 $ 75
Other expenses (a) .38% .43% .42% After 5 years $133 $130 $130 $129
Total fund ----- ----- ----- After 10 years $240 $244(b) $244(b) $276
operating expenses 1.75% 2.43% 2.42%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 6.
4
<PAGE>
<TABLE>
OPERATING EXPENSES EXAMPLES
- --------------------------------------------------------- -----------------------------------------------------------
TECHNOLOGY FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 60 $ 65 $ 25 $ 25
12b-1 fees .30% 1.00% 1.00% After 3 years $ 95 $ 97 $ 77 $ 77
Other expenses (a) .45% .48% .47% After 5 years $133 $132 $132 $132
---- ---- ---- After 10 years $240 $264(b) $264(b) $281
Total fund
operating expenses 1.75% 2.48% 2.47%
==== ==== ====
<CAPTION>
QUASAR FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 60 $ 67 $ 27 $ 27
12b-1 fees .21% 1.00% 1.00% After 3 years $ 98 $102 $ 82 $ 82
Other expenses (a) .62% .65% .64% After 5 years $137 $141 $141 $140
---- ---- ---- After 10 years $248 $278(b) $278(b) $297
Total fund
operating expenses 1.83% 2.65% 2.64%
==== ==== ====
<CAPTION>
INTERNATIONAL FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 66 $ 26 $ 26
12b-1 fees .18% 1.00% 1.00% After 3 years $ 95 $100 $ 80 $ 79
Other expenses (a) .55% .57% .54% After 5 years $132 $137 $137 $135
---- ---- ---- After 10 years $238 $270(b) $270(b) $288
Total fund
operating expenses 1.73% 2.57% 2.54%
==== ==== ====
<CAPTION>
WORLDWIDE PRIVATIZATION FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 60 $ 65 $ 25 $ 25
12b-1 fees .30% 1.00% 1.00% After 3 years $ 96 $ 97 $ 77 $ 77
Other expenses (a) .48% .48% .48% After 5 years $135 $132 $132 $132
---- ---- ---- After 10 years $243 $264(b) $264(b) $282
Total fund
operating expenses 1.78% 2.48% 2.48%
==== ==== ====
<CAPTION>
NEW EUROPE FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.07% 1.07% 1.07% After 1 year $ 63 $ 68 $ 28 $ 28
12b-1 fees .30% 1.00% 1.00% After 3 years $105 $107 $ 87 $ 86
Other expenses (a) .72% .72% .71 % After 5 years $150 $147 $147 $147
---- ---- ---- After 10 years $274 $295(b) $295(b) $311
Total fund
operating expenses 2.09% 2.79% 2.78%
==== ==== ====
<CAPTION>
ALL-ASIA INVESTMENT FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees After 1 year $ 85 $ 92 $ 52 $ 58
after waiver) (c) 0.00% 0.00% 0.00% After 3 years $171 $176 $156 $173
12b-1 fees .30% 1.00% 1.00% After 5 years $257 $259 $259 $286
Other expenses After 10 years $478 $500(b) $500(b) $560
Administration fees
(after waiver) (f) 0.00% 0.00% 0.00%
Other operating
expenses (a)
(after reimbursement) (d) 4.12% 4.20% 4.84%
---- ---- ----
Total other expenses 4.12% 4.20% 4.84%
---- ---- -----
Total fund
operating expenses (d) 4.42% 5.20% 5.84%
==== ==== ====
<CAPTION>
GLOBAL SMALL CAP FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 67 $ 72 $ 32 $ 33
12b-1 fees .30% 1.00% 1.00% After 3 years $118 $119 $ 99 $100
Other expenses (a) 1.24% 1.20% 1.25% After 5 years $172 $167 $167 $170
---- ---- ---- After 10 years $318 $335(b) $335(b) $355
Total fund
operating expenses (g) 2.54% 3.20% 3.25%
==== ==== ====
<CAPTION>
STRATEGIC BALANCED FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees
(after waiver) (c) .45% .45% .45% After 1 year $ 56 $ 61 $ 21 $ 21
12b-1 fees .30% 1.00% 1.00% After 3 years $ 85 $ 86 $ 66 $ 66
Other expenses (a) After 5 years $116 $113 $113 $113
(after reimbursement) (d) .65% .65% .65% After 10 years $203 $225(b) $225(b) $243
---- ---- ----
Total fund
operating expenses (d) 1.40% 2.10% 2.10%
==== ==== ====
</TABLE>
Please refer to the footnotes on page 6.
5
<PAGE>
<TABLE>
<CAPTION>
OPERATING EXPENSES EXAMPLES
- -------------------------------------------------------- --------------------------------------------------------------
BALANCED SHARES CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .63% .63% .63% After 1 year $ 55 $ 61 $ 21 $ 21
12b-1 fees .24% 1.00% 1.00% After 3 years $ 83 $ 86 $ 66 $ 65
Other expenses (a) .45% .48% .46% After 5 years $112 $113 $113 $112
----- ----- ----- After 10 years $195 $224(b) $224(b) $242
Total fund
operating expenses 1.32% 2.11% 2.09%
===== ===== =====
<CAPTION>
INCOME BUILDER FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .75% .75% .75% After 1 year $ 66 $ 71 $ 31 $ 30
12b-1 fees .30% 1.00% 1.00% After 3 years $114 $115 $ 95 $ 93
Other expenses (a) 1.33% 1.34% 1.27% After 5 years $164 $162 $162 $159
----- ----- ----- After 10 years $303 $324(b) $324(b) $334
Total fund
operating expenses 2.38% 3.09% 3.02%
===== ===== =====
<CAPTION>
UTILITY INCOME FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .75% .75% .75% After 1 year $ 57 $ 62 $ 22 $ 22
12b-1 fees .30% 1.00% 1.00% After 3 years $ 88 $ 89 $ 69 $ 69
Other expenses (a) .45% .45% .45% After 5 years $121 $118 $118 $118
----- ----- ----- After 10 years $214 $236(b) $236(b) $253
Total fund
operating expenses(e) 1.50% 2.20% 2.20%
===== ===== =====
<CAPTION>
GROWTH AND INCOME FUND CLASS A CLASS B CLASS C CLASS A CLASS B+ CLASS B++ CLASS C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees .53% .53% .53% After 1 year $ 53 $ 59 $ 19 $ 19
12b-1 fees .20% 1.00% 1.00% After 3 years $ 74 $ 78 $ 58 $ 58
Other expenses (a) .32% .33% .31% After 5 years $ 98 $101 $101 $100
----- ----- ----- After 10 years $165 $197(b) $197(b) $216
Total fund
operating expenses 1.05% 1.86% 1.84%
===== ===== =====
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Assumes redemption at end of period.
++ Assumes no redemption at end of period.
(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance, based on a fixed dollar amount
charged to the Fund for each shareholder's account.
(b) Assumes Class B shares converted to Class A shares after eight years, or
six years with respect to PREMIER GROWTH FUND
(c) Net of voluntary fee waiver. In the absence of such waiver, management
fees would be .75% for STRATEGIC BALANCED FUND and 1.00% for ALL-ASIA
INVESTMENT FUND.
(d) Net of voluntary fee waiver and expense reimbursement. In the absence of
such waiver and reimbursement, other expenses for STRATEGIC BALANCED FUND
would have been .76%, .74% and .75%, respectively, for Class A, Class B
and Class C shares, and total fund operating expenses for STRATEGIC
BALANCED FUND would have been 1.81%, 2.49% and 2.50%, respectively, for
Class A, Class B and Class C shares. In the absence of such waiver and
reimbursements, other expenses for ALL-ASIA INVESTMENT FUND would
have been 5.79%, 9.32% and 9.38%, respectively for Class A, Class B and
Class C shares, and total fund operating expenses for ALL-ASIA INVESTMENT
FUND would have been 9.79%, 11.32% and 11.38%, respectively, for Class A,
Class B and Class C shares annualized.
(e) Net of expense reimbursements. Absent expense reimbursements, total fund
operating expenses for UTILITY INCOME FUND would be 4.44%, 6.52% and
4.08%, respectively, for Class A, Class B and Class C shares.
(f) Reflects the fees payable by ALL-ASIA INVESTMENT FUND to Alliance
pursuant to an administration agreement net of voluntary fee waiver. In
the absence of such fee waiver, the administration fee would be .15%.
(g) Net of expense reimbursements. Absent expense reimbursements, total fund
operating expenses for GLOBAL SMALL CAP FUND would be 2.61%, 3.27% and
3.31%, respectively, for Class A, Class B and Class C shares.
The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly
or indirectly. Long-term shareholders of a Fund may pay aggregate sales
charges totaling more than the economic equivalent of the maximum initial
sales charges permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. See "Management of the
Funds--Distribution Services Agreements." The Rule 12b-1 fee for each class
comprises a service fee not exceeding .25% of the aggregate average daily net
assets of the Fund attributable to the class and an asset-based sales charge
equal to the remaining portion of the Rule 12b-1 fee. The information shown in
the table for ALLIANCE FUND, GROWTH FUND and TECHNOLOGY FUND reflects
annualized expenses based on the Fund's most recent fiscal periods. The
information shown in the table for PREMIER GROWTH FUND reflects estimated
annualized expenses for that Fund's current fiscal period. "Total Fund
Operating Expenses" for UTILITY INCOME FUND are based on estimated amounts
for the Fund's current fiscal year. See "Management of the Funds."
"Other Expenses" for Class A, Class B and Class C shares of ALL-ASIA
INVESTMENT FUND and WORLDWIDE PRIVATIZATION FUND are based on estimated
amounts for each Fund's current fiscal year. The management fee rates of
GROWTH FUND, PREMIER GROWTH FUND, 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 expense ratios for Class B
and Class C shares of TECHNOLOGY FUND and QUASAR FUND, and for each Class of
shares of GLOBAL SMALL CAP FUND and WORLDWIDE PRIVATIZATION FUND, are higher
than the expense ratios of most other mutual funds, but are comparable to the
expense ratios of mutual funds whose shares are similarly priced. The examples
set forth above assume reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Commission regulations. The
examples should not be considered representative of past or future expenses;
actual expenses may be greater or less than those shown.
6
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, per share income and
capital changes for a share outstanding throughout each period indicated. The
information in the tables for ALLIANCE FUND, GROWTH FUND, PREMIER GROWTH FUND,
STRATEGIC BALANCED FUND, BALANCED SHARES, UTILITY INCOME FUND, WORLDWIDE
PRIVATIZATION FUND and GROWTH AND INCOME FUND has been audited by Price
Waterhouse LLP, the independent accountants for each Fund, and for ALL-ASIA
INVESTMENT FUND, TECHNOLOGY FUND, QUASAR FUND, INTERNATIONAL FUND, NEW EUROPE
FUND, GLOBAL SMALL CAP FUND and INCOME BUILDER FUND by Ernst & Young LLP, the
independent auditors for each Fund. A report of Price Waterhouse LLP or Ernst
& Young LLP, as the case may be, on the information with respect to each Fund,
appears in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are included in the Fund's Statement of
Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge by
contacting Alliance Fund Services, Inc. at the address or the "Literature"
telephone number shown on the cover of this Prospectus.
7
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
- --------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE FUND
CLASS A
Year ended 11/30/95.... $ 6.63 $ .02 $ 2.08 $ 2.10 $ (.01) $(1.00)
1/1/94 to 11/30/94**... 6.85 .01 (.23) (.22) 0.00 0.00
Year ended 12/31/93.... 6.68 .02 .93 .95 (.02) (.76)
Year ended 12/31/92.... 6.29 .05 .87 .92 (.05) (.48)
Year ended 12/31/91.... 5.22 .07 1.70 1.77 (.07) (.63)
Year ended 12/31/90.... 6.87 .09 (.32) (.23) (.18) (1.24)
Year ended 12/31/89.... 5.60 .12 1.19 1.31 (.04) 0.00
Year ended 12/31/88.... 5.15 .08 .80 .88 (.08) (.35)
Year ended 12/31/87.... 6.87 .08 .27 .35 (.13) (1.94)
Year ended 12/31/86.... 11.15 .11 .87 .98 (.10) (5.16)
Year ended 12/31/85.... 9.18 .20 2.51 2.71 (.23) (.51)
CLASS B
Year ended 11/30/95.... $ 6.50 $ (.01) $ 2.00 $ 1.99 $ 0.00 $(1.00)
1/1/94 to 11/30/94**... 6.76 (.03) (.23) (.26) 0.00 0.00
Year ended 12/31/93.... 6.64 (.03) .91 .88 0.00 (.76)
Year ended 12/31/92.... 6.27 (.01) (b) .87 .86 (.01) (.48)
3/4/91++ to 12/31/91... 6.14 .01 (b) .79 .80 (.04) (.63)
CLASS C
Year ended 11/30/95..... $ 6.50 $ (.02) $ 2.02 $ 2.00 $ 0.00 $(1.00)
1/1/94 to 11/30/94**.... 6.77 (.03) (.24) (.27) 0.00 0.00
5/3/93++ to 12/31/93.... 6.67 (.02) .88 .86 0.00 (.76)
GROWTH FUND (I)
CLASS A
Year ended 10/31/95..... $ 25.08 $ .12 $ 4.80 $ 4.92 $ (.11) $ (.41)
5/1/94 to 10/31/94**.... 23.89 .09 1.10 1.19 0.00 0.00
Year ended 4/30/94...... 22.67 (.01) (c) 3.55 3.54 0.00 (2.32)
Year ended 4/30/93...... 20.31 .05 (c) 3.68 3.73 (.14) (1.23)
Year ended 4/30/92...... 17.94 .29 (c) 3.95 4.24 (.26) (1.61)
9/4/90++ to 4/30/91..... 13.61 .17 (c) 4.22 4.39 (.06) 0.00
CLASS B
Year ended 10/31/95..... $ 21.21 $ (.02) $ 4.01 $ 3.99 $ (.01) $ (.41)
5/1/94 to 10/31/94**.... 20.27 .01 .93 .94 0.00 0.00
Year ended 4/30/94...... 19.68 (.07) (c) 2.98 2.91 0.00 (2.32)
Year ended 4/30/93...... 18.16 (.06) (c) 3.23 3.17 (.03) (1.62)
Year ended 4/30/92...... 16.88 .17 (c) 3.67 3.84 (.21) (2.35)
Year ended 4/30/91...... 14.38 .08 (c) 3.22 3.30 (.09) (.71)
Year ended 4/30/90...... 14.13 .01 (b)(c) 1.26 1.27 0.00 (1.02)
Year ended 4/30/89...... 12.76 (.01) (c) 2.44 2.43 0.00 (1.06)
10/23/87+ to 4/30/88.... 10.00 (.02) (c) 2.78 2.76 0.00 0.00
CLASS C
Year ended 10/31/95..... $ 21.22 $ (.03) $ 4.02 $ 3.99 $ (.01) $ (.41)
5/1/94 to 10/31/94**.... 20.28 .01 .93 .94 0.00 0.00
8/2/93++ to 4/30/94..... 21.47 (.02) (c) 1.15 1.13 0.00 (2.32)
PREMIER GROWTH FUND
CLASS A
Year ended 11/30/95..... $ 11.41 $ (.03) $ 5.38 $ 5.35 $ 0.00 $ (.67)
Year ended 11/30/94..... 11.78 (.09) (.28) (.37) 0.00 0.00
Year ended 11/30/93..... 10.79 (.05) 1.05 1.00 (.01) 0.00
9/28/92+ to 11/30/92.... 10.00 .01 .78 .79 0.00 0.00
CLASS B
Year ended 11/30/95..... $ 11.29 $ (.11) $ 5.30 $ 5.19 $ 0.00 $ (.67)
Year ended 11/30/94..... 11.72 (.15) (.28) (.43) 0.00 0.00
Year ended 11/30/93..... 10.79 (.10) 1.03 .93 0.00 0.00
9/28/92+ to 11/30/92.... 10.00 0.00 .79 .79 0.00 0.00
CLASS C
Year ended 11/30/95..... $ 11.30 $ (.08) $ 5.27 $ 5.19 $ 0.00 $ (.67)
Year ended 11/30/94..... 11.72 (.09) (.33) (.42) 0.00 0.00
5/3/93++ to 11/30/93.... 10.48 (.05) 1.29 1.24 0.00 0.00
TECHNOLOGY FUND
CLASS A
Year ended 11/30/95..... $31.98 $(.30) $18.13 $17.83 $0.00 $(3.17)
1/1/94 to 11/30/94**.... 26.12 (.32) 6.18 5.86 0.00 0.00
Year ended 12/31/93..... 28.20 (.29) 6.39 6.10 0.00 (8.18)
Year ended 12/31/92..... 26.38 (.22)(b) 4.31 4.09 0.00 (2.27)
Year ended 12/31/91..... 19.44 (.02) 10.57 10.55 0.00 (3.61)
Year ended 12/31/90..... 21.57 (.03) (.56) (.59) 0.00 (1.54)
Year ended 12/31/89..... 20.35 0.00 1.22 1.22 0.00 0.00
Year ended 12/31/88..... 20.22 (.03) .16 .13 0.00 0.00
Year ended 12/31/87..... 23.11 (.10) 4.54 4.44 0.00 (7.33)
Year ended 12/31/86..... 20.64 (.14) 2.62 2.48 (.01) 0.00
Year ended 12/31/85..... 16.52 .02 4.30 4.32 (.20) 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
8
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets Ratio Of Net
Total Net Asset Investment At End Of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of on Net Asset (000's To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- ------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$(1.01) $ 7.72 37.87% $ 945,309 1.08% .31% 81%
0.00 6.63 (3.21) 760,679 1.05* .21* 63
(.78) 6.85 14.26 831,814 1.01 .27 66
(.53) 6.68 14.70 794,733 .81 .79 58
(.70) 6.29 33.91 748,226 .83 1.03 74
(1.42) 5.22 (4.36) 620,374 .81 1.56 71
(.04) 6.87 23.42 837,429 .75 1.79 81
(.43) 5.60 17.10 760,619 .82 1.38 65
(2.07) 5.15 4.90 695,812 .76 1.03 100
(5.26) 6.87 12.60 652,009 .61 1.39 46
(.74) 11.15 31.52 710,851 .59 1.96 62
$(1.00) $ 7.49 36.61% $ 31,738 1.90% (.53)% 81%
0.00 6.50 (3.85) 18,138 1.89* (.60)* 63
(.76) 6.76 13.28 12,402 1.90 (.64) 66
(.49) 6.64 13.75 3,825 1.64 (.04) 58
(.67) 6.27 13.10 852 1.64* .10* 74
$(1.00) $ 7.50 36.79% $ 10,078 1.89% (.51)% 81%
0.00 6.50 (3.99) 6,230 1.87* (.59)* 63
(.76) 6.77 13.95 4,006 1.94* (.74)* 66
$ (.52) $29.48 20.18% $ 285,161 1.35% .56% 61%
0.00 25.08 4.98 167,800 1.35* .86* 24
(2.32) 23.89 15.66 102,406 1.40 (f) .32 87
(1.37) 22.67 18.89 13,889 1.40 (f) .20 124
(1.87) 20.31 23.61 8,228 1.40 (f) 1.44 137
(.06) 17.94 32.40 713 1.40*(f) 1.99* 130
$ (.42) $24.78 19.33% $1,052,020 2.05% (.15)% 61%
0.00 21.21 4.64 751,521 2.05* .16* 24
(2.32) 20.27 14.79 394,227 2.10 (f) (.36) 87
(1.65) 19.68 18.16 56,704 2.15 (f) (.53) 124
(2.56) 18.16 22.75 37,845 2.15 (f) .78 137
(.80) 16.88 24.72 22,710 2.10 (f) .56 130
(1.02) 14.38 8.81 15,800 2.00 (f) .07 165
(1.06) 14.13 20.31 7,672 2.00 (f) (.03) 139
0.00 12.76 27.60 1,938 2.00*(f) (.40)* 52
$ (.42) $24.79 19.32% $ 226,662 2.05% (.15)% 61%
0.00 21.22 4.64 114,455 2.05* .16* 24
(2.32) 20.28 5.27 64,030 2.10*(f) (.31)* 87
$ (.67) $16.09 49.95% $ 72,366 1.75% (.28)% 114%
0.00 11.41 (3.14) 35,146 1.96 (.67) 98
(.01) 11.78 9.26 40,415 2.18 (.61) 68
0.00 10.79 7.90 4,893 2.17*(f) .91*(f) 0
$ (.67) $15.81 49.01% $ 238,088 2.43% (.95)% 114%
0.00 11.29 (3.67) 139,988 2.47 (1.19) 98
0.00 11.72 8.64 151,600 2.70 (1.14) 68
0.00 10.79 7.90 19,941 2.68*(f) .35*(f) 0
$ (.67) $15.82 48.96% $ 20,679 2.42% (.97)% 114%
0.00 11.30 (3.58) 7,332 2.47 (1.16) 98
0.00 11.72 11.83 3,899 2.79* (1.35)* 68
$(3.17) $46.64 61.93% $ 398,262 1.75% (.77)% 55%
0.00 31.98 22.43 202,929 1.66* (1.22)* 55
(8.18) 26.12 21.63 173,732 1.73 (1.32) 64
(2.27) 28.20 15.50 173,566 1.61 (.90) 73
(3.61) 26.38 54.24 191,693 1.71 (.20) 134
(1.54) 19.44 (3.08) 131,843 1.77 (.18) 147
0.00 21.57 6.00 141,730 1.66 .02 139
0.00 20.35 0.64 169,856 1.42 (f) (.16)(f) 139
(7.33) 20.22 19.16 167,608 1.31 (f) (.56)(f) 248
(.01) 23.11 12.03 147,733 1.13 (f) (.57)(f) 141
(.20) 20.64 26.24 147,114 1.14 (f) .07 (f) 259
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
- --------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
TECHNOLOGY FUND (CONTINUED)
CLASS B
Year ended 11/30/95...... $31.61 $(.60)(b) $17.92 $17.32 $0.00 $(3.17)
1/1/94 to 11/30/94**..... 25.98 (.23) 5.86 5.63 0.00 0.00
5/3/93++ to 12/31/93..... 27.44 (.12) 6.84 6.72 0.00 (8.18)
CLASS C
Year ended 11/30/95...... $31.61 $(.58)(b) $17.91 $17.33 $0.00 $(3.17)
1/1/94 to 11/30/94**..... 25.98 (.24) 5.87 5.63 0.00 0.00
5/3/93++ to 12/31/93..... 27.44 (.13) 6.85 6.72 0.00 (8.18)
QUASAR FUND
CLASS A
Year ended 9/30/95....... $22.65 $(.22)(b) $ 5.59 $ 5.37 $0.00 $(3.86)
Year ended 9/30/94....... 24.43 (.60) (.36) (.96) 0.00 (.82)
Year ended 9/30/93....... 19.34 (.41) 6.38 5.97 0.00 (.88)
Year ended 9/30/92....... 21.27 (.24) (1.53) (1.77) 0.00 (.16)
Year ended 9/30/91....... 15.67 (.05) 5.71 5.66 (.06) 0.00
Year ended 9/30/90....... 24.84 .03 (b) (7.18) (7.15) 0.00 (2.02)
Year ended 9/30/89....... 17.60 .02 (b) 7.40 7.42 0.00 (.18)
Year ended 9/30/88....... 24.47 (.08) (2.08) (2.16) 0.00 (4.71)
Year ended 9/30/87(d).... 21.80 (.14) 5.88 5.74 0.00 (3.07)
Year ended 9/30/86(d).... 17.25 0.00 5.54 5.54 (.03) (.96)
Year ended 9/30/85(d).... 14.67 .04 2.87 2.91 (.11) (.22)
CLASS B
Year ended 9/30/95....... $21.92 $(.37)(b) $ 5.34 $ 4.97 $0.00 $(3.86)
Year ended 9/30/94....... 23.88 (.53) (.61) (1.14) 0.00 (.82)
Year ended 9/30/93....... 19.07 (.18) 5.87 5.69 0.00 (.88)
Year ended 9/30/92....... 21.14 (.39) (1.52) (1.91) 0.00 (.16)
Year ended 9/30/91....... 15.66 (.13) 5.67 5.54 (.06) 0.00
9/17/90++ to 9/30/90..... 17.17 (.01) (1.50) (1.51) 0.00 0.00
CLASS C
Year ended 9/30/95....... $21.92 $(.37)(b) $ 5.36 $ 4.99 $0.00 $(3.86)
Year ended 9/30/94....... 23.88 (.36) (.78) (1.14) 0.00 (.82)
5/3/93++ to 9/30/93...... 20.33 (.10) 3.65 3.55 0.00 0.00
INTERNATIONAL FUND
CLASS A
Year ended 6/30/95....... $18.38 $ .04 $ .01 $ .05 $0.00 $(1.62)
Year ended 6/30/94....... 16.01 (.09) 3.02 2.93 0.00 (.56)
Year ended 6/30/93....... 14.98 (.01) 1.17 1.16 (.04) (.09)
Year ended 6/30/92....... 14.00 .01 (b) 1.04 1.05 (.07) 0.00
Year ended 6/30/91....... 17.99 .05 (3.54) (3.49) (.03) (.47)
Year ended 6/30/90....... 17.24 .03 2.87 2.90 (.04) (2.11)
Year ended 6/30/89....... 16.09 .05 3.73 3.78 (.13) (2.50)
Year ended 6/30/88....... 23.70 .17 (1.22) (1.05) (.21) (6.35)
Year ended 6/30/87....... 22.02 .15 4.31 4.46 (.03) (2.75)
Year ended 6/30/86....... 11.94 .02 10.50 10.52 (.03) (.41)
CLASS B
Year ended 6/30/95....... $17.90 $(.01) $ (.08) $ (.09) $0.00 $(1.62)
Year ended 6/30/94....... 15.74 (.19)(b) 2.91 2.72 0.00 (.56)
Year ended 6/30/93....... 14.81 (.12) 1.14 1.02 0.00 (.09)
Year ended 6/30/92....... 13.93 (.11)(b) 1.02 .91 (.03) 0.00
9/17/90++ to 6/30/91.... 15.52 .03 (1.12) (1.09) (.03) (.47)
CLASS C
Year ended 6/30/95....... $17.91 $(.14) $ .05 $ (.09) $0.00 $(1.62)
Year ended 6/30/94....... 15.74 (.11) 2.84 2.73 0.00 (.56)
5/3/93++ to 6/30/93...... 15.93 0.00 (.19) (.19) 0.00 0.00
WORLDWIDE PRIVITIZATION FUND
CLASS A
Year ended 6/30/95....... $ 9.75 $ .06 $ .37 $ .43 $0.00 $ 0.00
6/2/94+ to 6/30/94....... 10.00 .01 (.26) (.25) 0.00 0.00
CLASS B
Year ended 6/30/95....... $ 9.74 $ .02 $ .34 $ .36 $0.00 $ 0.00
6/2/94+ to 6/30/94....... 10.00 .00 (.26) (.26) 0.00 0.00
CLASS C
2/8/95++ to 6/30/95...... $ 9.53 $ .05 $ .52 $ .57 $0.00 $ 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
10
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets Ratio Of Net
Total Net Asset Investment At End Of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of on Net Asset (000's To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- ------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$(3.17) $45.76 60.95% $277,111 2.48% (1.47)% 55%
0.00 31.61 21.67 18,397 2.43* (1.95)* 55
(8.18) 25.98 24.49 1,645 2.57* (2.30)* 64
$(3.17) $45.77 60.98% $ 43,161 2.47% (1.46)% 55%
0.00 31.61 21.67 7,470 2.41* (1.94)* 55
(8.18) 25.98 24.49 1,096 2.52* (2.25)* 64
$(3.86) $24.16 30.73% $146,663 1.83% (1.06)% 160%
(.82) 22.65 (4.05) 155,470 1.67 (1.15) 110
(.88) 24.43 31.58 228,874 1.65 (1.00) 102
(.16) 19.34 (8.34) 252,140 1.62 (.89) 128
(.06) 21.27 36.28 333,806 1.64 (.22) 118
(2.02) 15.67 (30.81) 251,102 1.66 .16 90
(.18) 24.84 42.68 263,099 1.73 .10 90
(4.71) 17.60 (8.61) 90,713 1.28(f) (.40)(f) 58
(3.07) 24.47 29.61 134,676 1.18(f) (.56)(f) 76
(.99) 21.80 33.79 144,959 1.18 .02 84
(.33) 17.25 20.29 77,067 1.18 .22 77
$(3.86) $23.03 29.78% $ 16,604 2.65% (1.88)% 160%
(.82) 21.92 (4.92) 13,901 2.50 (1.98) 110
(.88) 23.88 30.53 16,779 2.46 (1.81) 102
(.16) 19.07 (9.05) 9,454 2.42 (1.67) 128
(.06) 21.14 35.54 7,346 2.41 (1.28) 118
0.00 15.66 (8.79) 71 2.09* (.26)* 90
$(3.86) $23.05 29.87% $ 1,611 2.64%* (1.76)%* 160%
(.82) 21.92 (4.92) 1,220 2.48 (1.96) 110
0.00 23.88 17.46 118 2.49* (1.90)* 102
$(1.62) $16.81 .59% $165,584 1.73% .26% 119%
(.56) 18.38 18.68 201,916 1.90 (.50) 97
(.13) 16.01 7.86 161,048 1.88 (.14) 94
(.07) 14.98 7.52 179,807 1.82 .07 72
(.50) 14.00 (19.34) 214,442 1.73 .37 71
(2.15) 17.99 16.98 265,999 1.45 .33 37
(2.63) 17.24 27.65 166,003 1.41 .39 87
(6.56) 16.09 (4.20) 132,319 1.41 .84 55
(2.78) 23.70 23.05 194,716 1.30 .77 58
(.44) 22.02 90.87 139,326 1.29 .16 62
$(1.62) $16.19 (.22)% $ 48,998 2.57% (.62)% 119%
(.56) 17.90 17.65 29,943 2.78 (1.15) 97
(.09) 15.74 6.98 6,363 2.70 (.96) 94
(.03) 14.81 6.54 5,585 2.68 (.70) 72
(.50) 13.93 (6.97) 3,515 3.39* .84* 71
$(1.62) $16.20 (.22)% $ 19,395 2.54% (.88)% 119%
(.56) 17.91 17.72 13,503 2.78 (1.12) 97
0.00 15.74 (1.19) 229 2.57* .08* 94
$0.00 $10.18 4.41% $ 13,535 2.56% .66% 36%
0.00 9.75 (2.50) 4,990 2.75* 1.03* 0
$0.00 $10.10 3.70% $ 79,359 3.27% .01% 36%
0.00 9.74 (2.60) 22,859 3.45* .33* 0
$0.00 $10.10 5.98% $ 338 3.27%* 2.65%* 36%
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year Period Period Income (Loss) Investments From Operations Income Realized Gains
- ------------------ ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
NEW EUROPE FUND
CLASS A
Year ended 7/31/95.... $12.66 $ .04 $ 2.50 $ 2.54 $ (.09) $ 0.00
Period ended 7/31/94** 12.53 .09 .04 .13 0.00 0.00
Year ended 2/28/94.... 9.37 .02 (b) 3.14 3.16 0.00 0.00
Year ended 2/28/93.... 9.81 .04 (.33) (.29) (.15) 0.00
Year ended 2/29/92.... 9.76 .02 (b) .05 .07 (.02) 0.00
4/2/90+ to 2/28/91.... 11.11 (e) .26 (.91) (.65) (.26) (.44)
CLASS B
Year ended 7/31/95.... $12.41 $(.05) $ 2.44 $ 2.39 $ (.09) $0.00
Period ended 7/31/94** 12.32 .07 .02 .09 0.00 0.00
Year ended 2/28/94.... 9.28 (.05) (b) 3.09 3.04 0.00 0.00
Year ended 2/28/93.... 9.74 (.02) (.33) (.35) (.11) 0.00
3/5/91++ to 2/29/92... 9.84 (.04) (b) (.04) (.08) (.02) 0.00
CLASS C
Year ended 7/31/95.... $12.42 $(.07) $ 2.46 $ 2.39 $ (.09) $ 0.00
Period ended 7/31/94** 12.33 .06 .03 .09 0.00 0.00
5/3/93++ to 2/28/94... 10.21 (.04)(b) 2.16 2.12 0.00 0.00
ALL-ASIA INVESTMENT FUND
CLASS A
11/28/94+ to 10/31/95. $ 10.00 $ (.19)(c) $ .64 $ .45 $ 0.00 $ 0.00
CLASS B
11/28/94+ to 10/31/95. $ 10.00 $ (.25)(c) $ .66 $ .41 $ 0.00 $ 0.00
CLASS C
11/28/94+ to 10/31/95. $ 10.00 $ (.35)(c) $ .76 $ .41 $ 0.00 $ 0.00
GLOBAL SMALL CAP FUND
CLASS A
Year ended 7/31/95.... $ 11.08 $ (.09) $ 1.50 $ 1.41 $ 0.00 $ (2.11)(k)
Period ended 7/31/94** 11.24 (.15) (.01) (.16) 0.00 0.00
Year ended 9/30/93.... 9.33 (.15) 2.49 2.34 0.00 (.43)
Year ended 9/30/92.... 10.55 (.16) (1.03) (1.19) 0.00 (.03)
Year ended 9/30/91.... 8.26 (.06) 2.35 2.29 0.00 0.00
Year ended 9/30/90.... 15.54 (.05)(b) (4.12) (4.17) 0.00 (3.11)
Year ended 9/30/89.... 11.41 (.03) 4.25 4.22 0.00 (.09)
Year ended 9/30/88.... 15.07 (.05) (1.83) (1.88) 0.00 (1.78)
Year ended 9/30/87.... 15.47 (.07) 4.19 4.12 (.04) (4.48)
Year ended 9/30/86.... 12.94 .05 3.74 3.79 (.04) (1.22)
CLASS B
Year ended 7/31/95.... $10.78 $(.12) $ 1.40 $ 1.28 $0.00 $ (2.11)(k)
Period ended 7/31/94** 11.00 (.17)(b) (.05) (.22) 0.00 0.00
Year ended 9/30/93.... 9.20 (.15) 2.38 2.23 0.00 (.43)
Year ended 9/30/92.... 10.49 (.20) (1.06) (1.26) 0.00 (.03)
Year ended 9/30/91.... 8.26 (.07) 2.30 2.23 0.00 0.00
9/17/90++ to 9/30/90.. 9.12 (.01) (.85) (.86) 0.00 0.00
CLASS C
Year ended 7/31/95.... $10.79 $(.17) $ 1.45 $ 1.28 $0.00 $ (2.11)(k)
Period ended 7/31/94** 11.00 (.17)(b) (.04) (.21) 0.00 0.00
5/3/93++ to 9/30/93... 9.86 (.05) 1.19 1.14 0.00 0.00
STRATEGIC BALANCED FUND (I)
CLASS A
Year ended 7/31/95.... $16.26 $ .34 (c) $ 1.64 $ 1.98 $ (.22) $ (.04)
Period ended 7/31/94** 16.46 .07 (c) (.27) (.20) 0.00 0.00
Year ended 4/30/94.... 16.97 .16 (c) .74 .90 (.24) (1.17)
Year ended 4/30/93.... 17.06 .39 (c) .59 .98 (.42) (.65)
Year ended 4/30/92.... 14.48 .27 (c) 2.80 3.07 (.17) (.32)
9/4/90++ to 4/30/91... 12.51 .34 (c) 1.66 2.00 (.03) 0.00
CLASS B
Year ended 7/31/95.... $14.10 $ .22 (c) $ 1.40 $ 1.62 $ (.12) $ (.04)
Period ended 7/31/94** 14.30 .03 (c) (.23) (.20) 0.00 0.00
Year ended 4/30/94.... 14.92 .06 (c) .63 .69 (.14) (1.17)
Year ended 4/30/93.... 15.51 .23 (c) .53 .76 (.25) (1.10)
Year ended 4/30/92.... 13.96 .22 (c) 2.70 2.92 (.29) (1.08)
Year ended 4/30/91.... 12.40 .43 (c) 1.60 2.03 (.47) 0.00
Year ended 4/30/90.... 11.97 .50 (b) (c) .60 1.10 (.25) (.42)
Year ended 4/30/89.... 11.45 .48 (c) 1.11 1.59 (.30) (.77)
10/23/87+ to 4/30/88.. 10.00 .13 (c) 1.38 1.51 (.06) 0.00
CLASS C
Year ended 7/31/95.... $14.11 $ .16 (c) $1.46 $ 1.62 $ (.12) $ (.04)
Period ended 7/31/94** 14.31 .03 (c) (.23) (.20) 0.00 0.00
8/2/93++ to 4/30/94... 15.64 .15 (c) (.17) (.02) (.14) (1.17)
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
12
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets Ratio Of Net
Total Net Asset Investment At End Of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of On Net Asset (000's To Average To Average Portfolio
Distributions Period Values(a) omitted) Net Assets Net Assets Turnover Rate
- ------------- --------- ------------ --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (.09) $15.11 20.22% $ 86,112 2.09% .37% 74%
0.00 12.66 1.04 86,739 2.06* 1.85* 35
0.00 12.53 33.73 90,372 2.30 .17 94
(.15) 9.37 (2.82) 79,285 2.25 .47 125
(.02) 9.81 .74 108,510 2.24 .16 34
(.70) 9.76 (5.63) 188,016 1.52* 2.71* 48
$ (.09) $14.71 19.42% $ 34,527 2.79% (.33)% 74%
0.00 12.41 .73 31,404 2.76* 1.15* 35
0.00 12.32 32.76 20,729 3.02 (.52) 94
(.11) 9.28 (3.49) 1,732 3.00 (.50) 125
(.02) 9.74 .03 1,423 3.02* (.71)* 34
$ (.09) $14.72 19.40% $ 7,802 2.78% (.33)% 74%
0.00 12.42 .73 11,875 2.76* 1.15* 35
0.00 12.33 20.77 10,886 3.00* (.52)* 94
$ 0.00 $10.45 4.50% $ 2,870 4.42%* (1.87)%*(f) 90%
$ 0.00 $10.41 4.10% $ 5,170 5.20%* (2.64)%*(f) 90%
$ 0.00 $10.41 4.10% $ 597 5.84%* (3.41)%*(f) 90%
$(2.11) $10.38 16.62% $ 60,057 2.54%(f) (1.17)%(f) 128%
0.00 11.08 (1.42) 61,372 2.42* (1.26)* 78
(.43) 11.24 25.83 65,713 2.53 (1.13) 97
(.03) 9.33 (11.30) 58,491 2.34 (.85) 108
0.00 10.55 27.72 84,370 2.29 (.55) 104
(3.11) 8.26 (31.90) 68,316 1.73 (.46) 89
(.09) 15.54 37.34 113,583 1.56 (.17) 106
(1.78) 11.41 (8.11) 90,071 1.54 (f) (.50) (f) 74
(4.52) 15.07 34.11 113,305 1.41 (f) (.44) (f) 98
(1.26) 15.47 31.76 90,354 1.22 (f) .30 (f) 107
$(2.11) $ 9.95 15.77% $ 5,164 3.20%(f) (1.92)%(f) 128%
0.00 10.78 (2.00) 3,889 3.15* (1.93)* 78
(.43) 11.00 24.97 1,150 3.26 (1.85) 97
(.03) 9.20 (12.03) 819 3.11 (1.31) 108
0.00 10.49 27.00 121 2.98 (1.39) 104
0.00 8.26 (9.43) 183 2.61* (1.30)* 89
$(2.11) $ 9.96 15.75% $ 1,407 3.25%(f) (2.10)%(f) 128%
0.00 10.79 (1.91) 1,330 3.13* (1.92)* 78
0.00 11.00 11.56 261 3.75* (2.51)* 97
$ (.26) $17.98 12.40% $ 10,952 1.40%(f) 2.07% 172%
0.00 16.26 (1.22) 9,640 1.40*(f) 1.63* 21
(1.41) 16.46 5.06 9,822 1.40 (f) 1.67 139
(1.07) 16.97 5.85 8,637 1.40 (f) 2.29 98
(.49) 17.06 20.96 6,843 1.40 (f) 1.92 103
(.03) 14.48 16.00 443 1.40*(f) 3.54* 137
$ (.16) $15.56 11.63% $ 37,301 2.10%(f) 1.38% 172%
0.00 14.10 (1.40) 43,578 2.10*(f) .92* 21
(1.31) 14.30 4.29 43,616 2.10 (f) .93 139
(1.35) 14.92 4.96 36,155 2.15 (f) 1.55 98
(1.37) 15.51 20.14 31,842 2.15 (f) 1.34 103
(.47) 13.96 16.73 22,552 2.10 (f) 3.23 137
(.67) 12.40 8.85 19,523 2.00 (f) 3.85 120
(1.07) 11.97 14.66 5,128 2.00 (f) 4.31 103
(.06) 11.45 15.10 2,344 2.00*(f) 2.44* 72
$ (.16) $15.56 11.63% $ 37,301 2.10%(f) 1.38% 172%
0.00 14.10 (1.40) 43,578 2.10*(f) .92* 21
(1.31) 14.30 4.29 43,616 2.10 (f) .93 139
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
<TABLE>
<CAPTION>
Net Net Net
Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
- --------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCED SHARES
CLASS A
Year ended 7/31/95..... $ 13.38 $ .46 $ 1.62 $ 2.08 $ (.36) $ (.02)
Period ended 7/31/94**. 14.40 .29 (.74) (.45) (.28) (.29)
Year ended 9/30/93..... 13.20 .34 1.29 1.63 (.43) 0.00
Year ended 9/30/92..... 12.64 .44 .57 1.01 (.45) 0.00
Year ended 9/30/91..... 10.41 .46 2.17 2.63 (.40) 0.00
Year ended 9/30/90..... 14.13 .45 (2.14) (1.69) (.40) (1.63)
Year ended 9/30/89..... 12.53 .42 2.18 2.60 (.46) (.54)
Year ended 9/30/88..... 16.33 .46 (1.07) (.61) (.44) (2.75)
Year ended 9/30/87..... 14.64 .67 1.62 2.29 (.60) 0.00
Year ended 9/30/86..... 11.74 .68 3.40 4.08 (.65) (.53)
CLASS B
Year ended 7/31/95..... $ 13.23 $ .30 $ 1.65 $ 1.95 $ (.28) $ (.02)
Period ended 7/3/94**.. 14.27 .22 (.75) (.53) (.22) (.29)
Year ended 9/30/93..... 13.13 .29 1.22 1.51 (.37) 0.00
Year ended 9/30/92..... 12.61 .37 .54 .91 (.39) 0.00
2/4/91++ to 9/30/91.... 11.84 .25 .80 1.05 (.28) 0.00
CLASS C
Year ended 7/31/95...... $ 13.24 $ .30 $ 1.65 $ 1.95 $ (.28) $ (.02)
Period ended 7/31/94**.. 14.28 .24 (.77) (.53) (.22) (.29)
5/3/93++ to 9/30/93..... 13.63 .11 .71 .82 (.17) 0.00
INCOME BUILDER FUND (H)
CLASS A
Year ended 10/31/95..... $ 9.69 $ .93(b) $ .59 $ 1.52 $ (.51) $ 0.00
3/25/94++ to 10/31/94... 10.00 .96 (1.02) (.06) (.05)(g) (.20)
CLASS B
Year ended 10/31/95..... $ 9.68 $ (.63)(b) $ .83 $ 1.46 $ (.44) $ (.41)
3/25/94++ to 10/31/91... 10.00 .88 (.98) (.10) (.06)(g) (.16)
CLASS C
Year ended 10/31/95..... $ 9.66 $ .40 (b) $ 1.05 $ 1.45 $ (.44) $ 0.00
Year ended 10/31/94..... 10.47 .50 (.85) (.35) (.11)(g) (.35)
Year ended 10/31/93..... 9.80 .52 .51 1.03 (.36) 0.00
Year ended 10/31/92..... 10.00 .55 (.28) .27 (.47) 0.00
10/25/91+ to 10/31/91... 10.00 .01 0.00 .01 (.01) 0.00
UTILITY INCOME FUND
CLASS A
Year ended 11/30/95..... $ 8.97 $ .30 (c) $ 1.40 $ 1.70 $ (.45) $ 0.00
Year ended 11/30/94..... 9.92 .42 (c) (.89) (.47) (.48) 0.00
10/18/93+ to 11/30/93... 10.00 .02 (c) (.10) (.08) 0.00 0.00
CLASS B
Year ended 11/30/95..... $ 8.96 $ .27 (c) $ 1.36 $ 1.63 $ (.39) $ 0.00
Year ended 11/30/94..... 9.91 .37 (c) (.91) (.54) (.41) 0.00
10/18/93+ to 11/30/93... 10.00 .01 (c) (.10) (.09) 0.00 0.00
CLASS C
Year ended 11/30/95..... $ 8.97 $ .17 (c) $ 1.47 $ 1.64 $ (.39) $ 0.00
Year ended 11/30/94..... 9.92 .39 (c) (.93) (.54) (.41) 0.00
10/27/93+ to 11/30/93... 10.00 .01 (c) (.09) (.08) 0.00 0.00
GROWTH AND INCOME FUND
CLASS A
Year ended 10/31/95..... $ 2.35 $ .02 $ .52 $ .54 $(.06) $ (.12)
Year ended 10/31/94..... 2.61 .06 (.08) (.02) (.06) (.18)
Year ended 10/31/93..... 2.48 .06 .29 .35 (.06) (.16)
Year ended 10/31/92..... 2.52 .06 .11 .17 (.06) (.15)
Year ended 10/31/91..... 2.28 .07 .56 .63 (.09) (.30)
Year ended 10/31/90..... 3.02 .09 (.30) (.21) (.10) (.43)
Year ended 10/31/89..... 3.05 .10 .43 .53 (.08) (.48)
Year ended 10/31/88..... 3.48 .10 .33 .43 (.08) (.78)
Year ended 10/31/87..... 3.52 .11 (.03) .08 (.12) 0.00
Year ended 10/31/86..... 3.01 .12 .92 1.04 (.13) (.40)
Year ended 10/31/85..... 2.93 .14 .42 .56 (.15) (.33)
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 16.
14
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets Ratio Of Net
Total Net Asset Investment At End Of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of on Net Asset (000's To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- ------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (.38) $15.08 15.99% $122,033 1.32% 3.12% 179%
(.57) 13.38 (3.21) 157,637 1.27* 2.50* 116
(.43) 14.40 12.52 172,484 1.35 2.50 188
(.45) 13.20 8.14 143,883 1.40 3.26 204
(.40) 12.64 25.52 154,230 1.44 3.75 70
(2.03) 10.41 (13.12) 140,913 1.36 4.01 169
(1.00) 14.13 22.27 159,290 1.42 3.29 132
(3.19) 12.53 (1.10) 111,515 1.42 3.74 190
(.60) 16.33 15.80 129,786 1.17 4.14 136
(1.18) 14.64 35.01 78,900 .99 4.78 26
$ (.30) $14.88 15.07% $ 15,080 2.11% 2.30% 179%
(.51) 13.23 (3.80) 14,347 2.05* 1.73* 116
(.37) 14.27 11.65 12,789 2.13 1.72 188
(.39) 13.13 7.32 6,499 2.16 2.46 204
(.28) 12.61 8.96 1,830 2.13* 3.19* 70
$ (.30) $14.89 15.06% $ 5,108 2.09% 2.32% 179%
(.51) 13.24 (3.80) 6,254 2.03* 1.81* 116
(.137) 14.28 6.01 1,487 2.29 1.47* 188
$ (.51) $10.70 16.22% $ 1,398 2.38% 5.44% 92%
(.25) 9.69 (.54) 600 2.52* 6.11* 126
$ (.44) $10.70 15.55% $ 3,769 3.09% 4.73% 92%
(.22) 9.68 (.99) 1,998 3.09* 5.07* 126
$ (.44) $10.67 15.47% $ 49,107 3.02% 4.81% 92%
(.46) 9.66 (3.44) 64,027 2.67 3.82* 126
(.36) 10.47 10.65 106,034 2.32 6.85 101
(.47) 9.80 2.70 152,617 2.33 5.47 108
(.01) 10.00 .11 41,813 0.00*(f) .94* 0
$ (.45) $10.22 19.32% $ 2,748 1.50%(f) 2.48%(f) 162%
(.48) 8.97 (4.86) 1,068 1.50 (f) 4.13 30
0.00 9.92 (.80) 229 1.50*(f) 2.35* 11
$ (.39) $10.20 18.40% $ 10,988 2.20%(f) 1.60%(f) 162%
(.41) 8.96 (5.59) 2,353 2.20 (f) 3.53 30
0.00 9.91 (.90) 244 2.20*(f) 2.84* 11
$ (.39) $10.22 18.63% $ 3,500 2.20%(f) 1.88%(f) 162%
(.41) 8.97 (5.58) 2,651 2.20 (f) 3.60 30
0.00 9.92 (.80) 18 2.20*(f) 3.08* 11
$ (.18) $ 2.71 24.21% $458,158 1.05% 1.88% 142%
(.24) 2.35 (.67) 414,386 1.03 2.36 68
(.22) 2.61 14.98 459,372 1.07 2.38 91
(.21) 2.48 7.23 417,018 1.09 2.63 104
(.39) 2.52 31.03 409,597 1.14 2.74 84
(.53) 2.28 (8.55) 314,670 1.09 3.40 76
(.56) 3.02 21.59 377,168 1.08 3.49 79
(.86) 3.05 16.45 350,510 1.09 3.09 66
(.12) 3.48 2.04 348,375 .86 2.77 60
(.53) 3.52 34.92 347,679 .81 3.31 11
(.48) 3.01 19.53 275,681 .95 3.78 15
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE>
<TABLE>
<CAPTION>
NET NET NET
ASSET REALIZED AND INCREASE
VALUE UNREALIZED (DECREASE) IN DIVIDENDS FROM DISTRIBUTION
BEGINNING INVESTMENT GAIN (LOSS) ON NET ASSET VALUE NET INVESTMENT FROM NET
FISCAL YEAR OR PERIOD OF PERIOD INCOME (LOSS) INVESTMENTS FROM OPERATIONS INCOME REALIZED GAINS
- ------------------------ --------- ------------- -------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME FUND
(CONTINUED)
CLASS B
Year ended 10/31/95... $2.34 $.01 $ .49 $ .50 $(.03) $(.12)
Year ended 10/31/94... 2.60 .04 (.08) (.04) (.04) (.18)
Year ended 10/31/93... 2.47 .05 .28 .33 (.04) (.16)
Year ended 10/31/92... 2.52 .04 .11 .15 (.05) (.15)
2/8/91++ to 10/31/91.. 2.40 .04 .12 .16 (.04) 0.00
CLASS C
Year ended 10/31/95... $2.34 $.01 $ .50 $ .51 $(.03) $(.12)
Year ended 10/31/94... 2.60 .04 (.08) (.04) (.04) (.18)
5/3/93++ to 10/31/93.. 2.43 .02 .17 .19 (.02) 0.00
</TABLE>
- --------------------------------------------------------------------------------
+ Commencement of operations.
++ Commencement of distribution.
* Annualized.
** Reflects a change in fiscal year end.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment returns calculated for periods of
less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waiver and/or expense reimbursement.
(d) Adjusted for a 200% stock dividend paid to shareholders of record on
January 15, 1988.
(e) Net of offering costs of ($.05).
(f) Net of expenses assumed and/or waived/reimbursed. If the following Funds
had borne all expenses in their most recent five fiscal years, their
expense ratios would have been as follows:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
ALL-ASIA INVESTMENT FUND
<S> <C> <C> <C> <C> <C> <C>
Class A _ _ _ _ _ 9.79%#
Class B _ _ _ _ _ 11.32%#
Class C _ _ _ _ _ 11.38%#
<CAPTION>
GROWTH FUND
<S> <C> <C> <C> <C> <C> <C>
Class A _ 8.79%# 1.94% 1.84% 1.46% _
Class B 3.62% 3.06% 2.65% 2.52% 2.13% _
Class C _ _ _ _ 2.13# _
<CAPTION>
PREMIER GROWTH
<S> <C> <C> <C> <C> <C> <C>
Class A _ _ 3.33%# _ _ _
Class B _ _ 3.78%# _ _ _
</TABLE>
Net investment income ratios for Premier Growth would have been
(.25%#) for Class A and (.75%#) for Class B for this same period.
<TABLE>
<CAPTION>
GLOBAL SMALL CAP FUND
<S> <C> <C> <C> <C> <C> <C>
Class A _ _ _ _ _ 2.61%
Class B _ _ _ _ _ 3.27%
Class C _ _ _ _ _ 3.31%
<CAPTION>
STRATEGIC BALANCED FUND
<S> <C> <C> <C> <C> <C> <C>
Class A _ 11.59%# 2.05% 1.85% 1.70%1 1.81%
1.94%#2
Class B 3.59% 2.93% 2.70% 2.56% 2.42%1 2.49%
2.64%#2
Class C _ _ _ _ 2.07%#1 2.50%
2.64%#2
<CAPTION>
INCOME BUILDER FUND
<S> <C> <C> <C> <C> <C> <C>
Class A _ _ _ _ _ _
Class B _ _ _ _ _ _
Class C _ 1.99%# _ _ _ _
<CAPTION>
UTILITY INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
Class A _ _ _ 145.63%# 13.72% 4.44%#
Class B _ _ _ 133.62%# 14.42% 6.52%#
Class C _ _ _ 148.03%# 14.42% 4.08%#
</TABLE>
----------
# annualized
1. For the period ended April 30, 1994
2. For the period ended July 31, 1994
For the expense ratios of the Funds in years prior to fiscal year 1990,
assuming the Funds had borne all expenses, please see the Financial
Statements in each Fund's Statement of Additional Information.
(g) "Dividends from Net Investment Income" includes a return of capital. INCOME
BUILDER FUND had a return of capital with respect to Class A shares, for
the period ended October 31, 1994, of $(.01); with respect to Class B
shares, $(.01); and with respect to Class C shares, for the year ended
October 31, 1994, $(.02).
(h) On March 25, 1994, all existing shares of INCOME BUILDER FUND, previously
known as Alliance Multi-Market Income and Growth Trust, were converted into
Class C shares.
(i) Prior to July 22, 1993, Equitable Capital Management Corporation
("Equitable Capital") served as the investment adviser to the predecessor
to The Alliance Portfolios, of which GROWTH FUND and STRATEGIC BALANCED
FUND are series. On July 22, 1993, Alliance acquired the business and
substantially all assets of Equitable Capital and became investment adviser
to the Funds.
(j) Includes $(.08) distribution from paid-in capital.
(k) "Distributions from Net Realized Gains" includes a return of capital.
GLOBAL SMALL CAP FUND had a return of capital with respect to Class A
shares, for the year ended July 31, 1995, of $(.12); with respect to Class
B shares, $(.12); and with respect to Class C shares, $(.12).
16
<PAGE>
<TABLE>
<CAPTION>
Total Net Assets Ratio Of Net
Total Net Asset Investment At End Of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of on Net Asset (000's To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- ------------- --------- ------------ ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ (.15) $ 2.69 22.84% $136,758 1.86% 1.05% 142%
(.22) 2.34 (1.50) 102,546 1.85 1.56 68
(.20) 2.60 14.22 76,633 1.90 1.58 91
(.20) 2.47 6.22 29,656 1.90 1.69 104
(.04) 2.52 6.83 10,221 1.99* 1.67* 84
$ (.15) $ 2.70 23.30% $ 35,835 1.84% 1.04% 142%
(.22) 2.34 (1.50) 19,395 1.84 1.61 68
(.02) 2.60 7.85 7,774 1.96* 1.45* 91
</TABLE>
------------------------------------------------------------
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.
17
<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 Considerations-Securities Ratings"
and "-Investment in Lower-Rated Fixed-Income Securities." The Fund generally
will not invest in securities with ratings below Caa- by Moody's and CCC- by
S&P, Duff & Phelps or Fitch or in securities judged by Alliance to be of
comparable investment quality. However, from time to time, the Fund may invest
in securities rated in the lowest grades (i.e., C by Moody's or D or equivalent
by S&P, Duff & Phelps or Fitch), or securities Alliance judges to be of
comparable investment quality, if there are prospects for an upgrade or a
favorable conversion into equity securities. For the 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 non-diversified
investment company that seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth. Normally, about 40 companies will be represented in the Fund's
portfolio, with the 25 most highly regarded of these companies usually
constituting approximately 70% of the Fund's net assets. The Fund is thus
atypical from most equity mutual funds in its focus on a relatively small number
of intensively researched companies and is designed for those seeking to
accumulate capital over time with less volatility than that associated with
investment in smaller companies.
As a matter of fundamental policy, the Fund normally invests at least 85% of its
total assets in the equity securities of U.S. companies. These are companies (i)
organized under U.S. law that have their principal office in the U.S., and (ii)
the equity securities of which are traded principally in the U.S.
Alliance's investment strategy for the Fund emphasizes stock selection and
investment in the securities of a limited number of issuers. Alliance relies
heavily upon the fundamental analysis and research of its large internal
research staff, which generally
18
<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
19
<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,
20
<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
21
<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-ASISA 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
22
<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
23
<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
Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." In the event that the rating of any debt securities
held by the Fund falls below investment grade, the Fund will not be obligated
to dispose of such obligations and may continue to hold them if considered
appropriate under the circumstances.
The Fund may also: (i) invest in foreign securities, although the Fund will not
generally invest more than 15% of its total assets in foreign securities; (ii)
invest, without regard to this 15% limit, in Eurodollar CDs, which are
dollar-denominated certificates of deposit issued by foreign branches of U.S.
banks that are not insured by any agency or instrumentality of the U.S.
Government; (iii) write covered call and put options on securities it owns or
in which it may invest; (iv) buy and sell put and call options and buy and
sell combinations of put and call options on the same underlying securities;
(v) lend portfolio securities amounting to not more than 25% of its total
assets; (vi) enter into repurchase agreements on up to 25% of its total assets;
(vii) purchase and sell securities on a forward commitment basis; (viii) buy
or sell foreign currencies, options on foreign currencies, foreign currency
futures contracts (and related options) and deal in forward foreign exchange
contracts; (ix) buy and sell stock index futures contracts and buy and sell
options on those contracts and on stock indices; (x) purchase and sell futures
contracts, options thereon and options with respect to U.S. Treasury securities;
and (xi) invest in securities that are not publicly traded, including Rule 144A
securities. For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices."
ALLIANCE BALANCED SHARES
Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment
company that seeks a high return through a combination of current income and
capital appreciation. Although the Fund's investment objective is not
fundamental, the Fund is a "balanced fund" as a matter of fundamental policy.
The Fund will not purchase a security if as a result less than 25% of its
total assets will be in fixed-income senior securities (including short- and
long-term debt securities, preferred stocks, and convertible debt securities
and convertible preferred stocks to the extent that their values are
attributable to their fixed-income characteristics). Subject to these
restrictions, the percentage of the Fund's assets invested in each type of
security will vary. The Fund's assets are invested in U.S. Government
securities, 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.
24
<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
25
<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
Practices--Options." The Fund also invests in foreign securities. Since the
purchase of foreign securities entails certain political and economic risks,
the Fund has restricted its investments in securities in this category to
issues of high quality. See "Risk Considerations--Foreign Investment."
ADDITIONAL INVESTMENT PRACTICES
Some or all of the Funds may engage in the following investment practices to
the extent described above.
Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which provide
a stable stream of income with generally higher yields than those of equity
securities of the same or similar issuers. The price of a convertible security
will normally vary with changes in the price of the underlying stock, although
the higher yield tends to make the convertible security less volatile than the
underlying common stock. As with debt securities, the market value of
convertible securities tends to decline as interest rates increase and increase
as interest rates decline. While convertible securities generally offer lower
interest or dividend yields than non-convertible debt securities of similar
quality, they enable investors to benefit from increases in the market price
of the underlying common stock. Convertible debt securities that are rated Baa
or lower by Moody s or BBB or lower by S&P, Duff & Phelps or Fitch and
comparable unrated securities as determined by Alliance may share some or all
of the risks of non-convertible debt securities with those ratings. For a
description of these risks, see "Risk Considerations--Securities Ratings" and
"--Investment in Lower-Rated Fixed-Income Securities."
26
<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
27
<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 borrower's 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.
28
<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
29
<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"
30
<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.
31
<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
32
<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. Portfolio turnover rates are set forth under "Financial
Highlights." These portfolio turnover rates are greater than those of most other
investment companies, including those which emphasize capital appreciation as a
basic policy. A high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be borne by the Fund
and its shareholders. High portfolio turnover also may result in the realization
of substantial net short-term capital gains. See "Dividends, Distributions and
Taxes" in each Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement of
Additional Information.
ALLIANCE FUND may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government); (ii) acquire more
than 10% of the voting or other securities of any one issuer; or (iii) buy
securities of any company that (including its predecessors) has not been in
business at least three continuous years. Pursuant to investment policies which
are not fundamental, the Fund does not invest (i) in puts or calls (except as
discussed above); (ii) in straddles, spreads, or any combination thereof; (iii)
in oil, gas or other mineral exploration or development programs; or (iv) more
than 5% of its gross assets in securities the disposition of which would be
subject to restrictions under the federal securities laws.
GROWTH FUND and STRATEGIC BALANCED FUND 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.
33
<PAGE>
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
Funds 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 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
34
<PAGE>
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 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.
35
<PAGE>
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 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.
36
<PAGE>
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 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
37
<PAGE>
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.
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-
38
<PAGE>
rated securities, a Fund may experience difficulty in valuing such securities
and, in turn, the Fund's assets. In addition, adverse publicity and investor
perceptions about lower-rated securities, whether or not factual, may tend to
impair their market value and liquidity.
Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political conditions.
However, there can be no assurance that losses will not occur. Since the risk of
default is higher for lower-rated securities, Alliance's research and credit
analysis are a correspondingly more important aspect of its program for managing
a Fund's securities than would be the case if a Fund did not invest in lower-
rated securities.
In seeking to achieve a Fund's investment objective, there will be times, such
as during periods of rising interest rates, when depreciation and realization of
capital losses on securities in a Fund's portfolio will be unavoidable.
Moreover, medium- and lower-rated securities and non-rated securities of
comparable quality may be subject to wider fluctuations in yield and market
values than higher-rated securities under certain market conditions. Such
fluctuations after a security is acquired do not affect the cash income received
from that security but are reflected in the net asset value of a Fund. See the
Statement of Additional Information for each Fund that invests in lower-rated
securities for a description of the bond ratings of Moody's, S&P, Duff & Phelps
and Fitch.
Certain lower-rated securities in which GROWTH FUND, INCOME BUILDER FUND and
UTILITY INCOME FUND may invest may contain call or buy-back features that permit
the issuers thereof to call or repurchase such securities. Such securities may
present risks based on prepayment expectations. If an issuer exercises such a
provision, a Fund may have to replace the called security with a lower yielding
security, resulting in a decreased rate of return to the Fund.
Non-Diversified Status. Each of PREMIER GROWTH FUND, WORLDWIDE PRIVATIZATION
FUND, NEW EUROPE FUND, ALL-ASIA 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 PREMIER GROWTH FUND, 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
You can purchase shares of any of the Funds through broker-dealers, banks or
other financial intermediaries, or directly through Alliance Fund Distributors,
Inc. ("AFD"), each Fund's principal underwriter. The minimum initial investment
in each Fund is $250. The minimum for subsequent investments in each Fund is
$50. Investments of $25 or more are allowed under the automatic investment
program of each Fund. Share certificates are issued only upon request. See the
Subscription Application and Statement of Additional Information for more
information.
Existing shareholders may make subsequent purchases by electronic funds transfer
if they have completed the Telephone Transactions section of the Subscription
Application or the Shareholder Options form obtained from Alliance Fund
Services, Inc. ("AFS"), each Fund's registrar, transfer agent and dividend
disbursing agent. Telephone purchase orders can be made by calling (800) 221-
5672, may not exceed $500,000, must be received by the Fund by 3:00 p.m. Eastern
time on a Fund business day and will be made at the next day's net asset value
(less any applicable sales charge).
Each Fund offers three classes of shares, Class A, Class B and Class C.
CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE
You can purchase Class A shares at net asset value plus an initial sales charge,
as follows:
<TABLE>
<CAPTION>
Initial Sales Charge
as % of Commission to
Net Amount as % of Dealer/Agent as %
Amount Purchased Invested Offering Price of Offering Price
- -------------------------------- ---------- -------- -----------------------
<S> <C> <C> <C>
Less than $100,000 4.44% 4.25% 4.00%
$100,000 to less than $250,000 3.36 3.25 3.00
$250,000 to less than $500,000 2.30 2.25 2.00
$500,000 to less than $1,000,000 1.78 1.75 1.50
</TABLE>
On purchases of $1,000,000 or more, you pay no initial sales charge but may pay
a contingent deferred sales charge
39
<PAGE>
("CDSC") equal to 1% of the lesser of net asset value at the time of redemption
or original cost if you redeem within one year; Alliance may pay the dealer or
agent a fee of up to 1% of the dollar amount purchased. Certain purchases of
Class A shares may qualify for reduced or eliminated sales charges in accordance
with a Fund's Combined Purchase Privilege, Cumulative Quantity Discount,
Statement of Intention, Privilege for Certain Retirement Plans, Reinstatement
Privilege and Sales at Net Asset Value programs. Consult the Subscription
Application and Statement of Additional Information.
CLASS B SHARES--DEFERRED SALES CHARGE ALTERNATIVE
You can purchase Class B shares at net asset value without an initial sales
charge. However, you may pay a CDSC if you redeem shares within four years after
purchase. The amount of the CDSC (expressed as a percentage of the lesser of the
current net asset value or original cost) will vary according to the number of
years from the purchase of Class B shares until the redemption of those shares.
The amount of the CDSC for each Fund is as set forth below. Class B shares of a
Fund purchased prior to the date of this Prospectus may be subject to a
different CDSC schedule, which was disclosed in the Fund's prospectus in use at
the time of purchase and is set forth in the Fund's current Statement of
Additional Information.
Year Since Purchase CDSC
------------------------
First........... 4.0%
Second.......... 3.0%
Third........... 2.0%
Fourth.......... 1.0%
Fifth........... None
Class B shares are subject to higher distribution fees than Class A shares for a
period (after which they convert to Class A shares) of eight years, or six years
with respect to PREMIER GROWTH FUND. The higher fees mean a higher expense
ratio, so Class B shares pay correspondingly lower dividends and may have a
lower net asset value than Class A shares.
CLASS C SHARES--ASSET-BASED SALES CHARGE ALTERNATIVE
You can purchase Class C shares without any initial sales charge or a CDSC. A
Fund will thus receive the full amount of your purchase, and you will receive
the entire net asset value of your shares upon redemption. Class C shares incur
higher distribution fees than Class A shares and do not convert to any other
class of shares of the Fund. The higher fees mean a higher expense ratio, so
Class C shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares.
APPLICATION OF THE CDSC
Shares obtained from dividend or distribution reinvestment are not subject to
the CDSC on Class A and Class B shares. The CDSC is deducted from the amount of
the redemption and is paid to AFD. The CDSC will be waived on redemptions of
shares following the death or disability of a shareholder, to meet the
requirements of certain qualified retirement plans or pursuant to a monthly,
bimonthly or quarterly systematic withdrawal plan. See the Statements of
Additional Information.
HOW THE FUNDS VALUE THEIR SHARES
The net asset value of each Class of shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to that Class by the outstanding
shares of that Class. Shares are valued each day the New York Stock Exchange
(the "Exchange") is open as of the close of regular trading (currently 4:00 p.m.
Eastern time). The securities in a Fund are valued at their current market value
determined on the basis of market quotations or, if such quotations are not
readily available, such other methods as the Fund's Directors believe would
accurately reflect fair market value.
GENERAL
The decision as to which Class of shares is more beneficial to you depends on
the amount and intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might consider Class
A shares. If you are making a smaller investment, you might consider Class B
shares because 100% of your purchase is invested immediately. If you are unsure
of the length of your investment, you might consider Class C shares because
there are no initial or contingent deferred sales charges. Consult your
financial agent. Dealers and agents may receive differing compensation for
selling Class A, Class B or Class C shares. There is no size limit on purchases
of Class A shares. The maximum purchase of Class C shares is $5,000,000. The
maximum purchase of Class B shares is $250,000. The Funds may refuse any order
to purchase shares.
In addition to the discount or commission paid to dealers or agents, AFD from
time to time pays additional cash or other incentives to dealers or agents,
including Equico Securities, Inc., an affiliate of AFD, in connection with the
sale of shares of the Funds. Such additional amounts may be utilized, in whole
or in part, in some cases together with other revenues of such dealers or
agents, to provide additional compensation to registered representatives who
sell shares of the Funds. On some occasions, such cash or other incentives will
be conditioned upon the sale of a specified minimum dollar amount of the shares
of a Fund and/or other Alliance Mutual Funds during a specific period of time.
Such incentives may take the form of payment for attendance at seminars, meals,
sporting events or theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel by persons associated with a
dealer or agent and their immediate family members to urban or resort locations
within or outside the United States. Such dealer or agent may elect to receive
cash incentives of equivalent amount in lieu of such payments.
HOW TO SELL SHARES
You may "redeem", i.e., sell your shares in a Fund to the Fund on any day the
Exchange is open, either directly or through your financial intermediary. The
price you will receive is the net asset value (less any applicable CDSC for
Class A and Class B shares) next calculated after the Fund receives your request
in proper form. Proceeds generally will be sent to you within seven days.
However, for shares recently purchased by check or electronic funds transfer, a
Fund will not send proceeds until it
40
<PAGE>
is reasonably satisfied that the check or electronic funds transfer has been
collected (which may take up to 15 days).
SELLING SHARES THROUGH YOUR BROKER
Your broker must receive your request before 4:00 p.m. Eastern time, and your
broker must transmit your request to the Fund by 5:00 p.m. Eastern time, for you
to receive that day's net asset value (less any applicable CDSC for Class A and
Class B shares). Your broker is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service.
SELLING SHARES DIRECTLY TO A FUND
Send a signed letter of instruction or stock power form to AFS along with
certificates, if any, that represent the shares you want to sell. For your
protection, signatures must be guaranteed by a bank, a member firm of a national
stock exchange or other eligible guarantor institution. Stock power forms are
available from your financial intermediary, AFS, and many commercial banks.
Additional documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
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 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.
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. Some
services are described in the attached Application. A shareholder's manual
explaining all available services will be provided upon request. To request a
shareholder manual, call 800-227-4618.
HOW TO EXCHANGE SHARES
You may exchange your shares of any Fund for shares of the same class of other
Alliance Mutual Funds (which include AFD Exchange Reserves, a money market fund
managed by Alliance). Exchanges of shares are made at the net asset values next
determined, without sales or service charges. Exchanges may be made by telephone
or written request. 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.
Class A and Class B shares will continue to age without regard to
exchanges for purposes of determining the CDSC, if any, upon redemption and, in
the case of Class B shares, for the purposes of conversion to Class A shares.
After an exchange, your Class B shares will automatically convert to Class A
shares in accordance with the conversion schedule applicable to the Class B
shares of the Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the original shares is
applied.
Please read carefully the Prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to exchange
uncertificated shares. An exchange is a taxable capital transaction for federal
tax purposes. The exchange service may be changed, suspended, or terminated on
60 days, written notice.
------------------------------------------------------------
MANAGEMENT OF THE FUNDS
------------------------------------------------------------
ADVISER
Alliance, which is a Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been retained under an
advisory agreement (the "Advisory Agreement") to provide investment advice and,
in general, to conduct the management and investment program of each Fund,
subject to the general supervision and control of the Directors of the Fund.
41
<PAGE>
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.
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
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 ***
Principal occupation
during the past
Fund Employee; year; title five years
- --------------------------------------------------------------------------------
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 Bruce W. Calvert since 1990-- Associated with
Fund Fund Vice Chairman and the Chief Alliance
Investment Officer of ACMC
Balanced Shares Bruce W. Calvert since 1990-- (see above)
(see above)
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
- --------------------------------------------------------------------------------
* 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 December 31, 1995 totaling more than $146 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 51 registered investment companies managed by Alliance
comprising 107 separate investment portfolios currently have over two million
shareholders. As of December 31, 1995, Alliance was retained as an investment
manager for 29 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
42
<PAGE>
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
Rule 12b-1 adopted by the Commission under the 1940 Act permits an investment
company to pay expenses associated with the distribution of its shares in
accordance with a duly adopted plan. Each Fund has adopted one or more
"Rule 12b-1 plans" (for each Fund, a "Plan") and has entered into a Distribution
Services Agreement (the "Agreement") with AFD. Pursuant to its Plan, a Fund pays
to AFD a Rule 12b-1 distribution services fee, which may not exceed an annual
rate of .30% (.50% with respect to GROWTH FUND, PREMIER GROWTH FUND and
STRATEGIC BALANCED FUND) of the Fund's aggregate average daily net assets
attributable to the Class A shares, 1.00% of the Fund's aggregate average daily
net assets attributable to the Class B shares and 1.00% of the Fund's aggregate
average daily net assets attributable to the Class C shares, for distribution
expenses. The Directors of GROWTH FUND and STRATEGIC BALANCED FUND currently
limit payments with respect to Class A shares under the Plan to .30% of each
Fund's aggregate average daily net assets attributable to Class A shares. The
Directors of PREMIER GROWTH FUND currently limit payments under the Plan with
respect to sales of Class A shares made after November 1993 to .30% of the
Fund's aggregate average daily net assets. The Plans provide that a portion of
the distribution services fee in an amount not to exceed .25% of the aggregate
average daily net assets of each Fund attributable to each class of shares
constitutes a service fee used for personal service and/or the maintenance of
shareholder accounts.
The Plans provide that AFD will use the distribution services fee received from
a Fund in its entirety for payments (i) to compensate broker-dealers or other
persons for providing distribution assistance, (ii) to otherwise promote the
sale of shares of the Fund, and (iii) to compensate broker-dealers, depository
institutions and other financial intermediaries for providing administrative,
accounting and other services with respect to the Fund's shareholders. In this
regard, some payments under the Plans are used to compensate financial
intermediaries with trail or maintenance commissions in an amount equal to .25%,
annualized, with respect to Class A shares and Class B shares, and 1.00%,
annualized, with respect to Class C shares, of the assets maintained in a Fund
by their customers. Distribution services fees received from the Funds, except
GROWTH FUND and STRATEGIC BALANCED FUND, with respect to Class A shares will not
be used to pay any interest expenses, carrying charges or other financing costs
or allocation of overhead of AFD. Distribution services fees received from the
Funds, with respect to Class B and Class C shares, may be used for these
purposes. The Plans also provide that Alliance may use its own resources to
finance the distribution of each Fund's shares.
The Funds are not obligated under the Plans to pay any distribution services fee
in excess of the amounts set forth above. Except as noted below for GROWTH FUND
and STRATEGIC BALANCED FUND, with respect to Class A shares of each Fund,
distribution expenses accrued by AFD in one fiscal year may not be paid from
distribution services fees received from the Fund in subsequent fiscal years.
Except as noted below for GROWTH FUND and STRATEGIC BALANCED FUND, AFD's
compensation with respect to Class B and Class C shares under the Plans of the
other Funds is directly tied to its expenses incurred. Actual distribution
expenses for such Class B and Class C shares for any given year, however, will
probably exceed the distribution services fees payable under the applicable Plan
with respect to the class involved and, in the case of Class B shares, payments
received from CDSCs. The excess will be carried forward by AFD and reimbursed
from distribution services fees payable under the Plan with respect to the class
involved and, in the case of Class B shares, payments subsequently received
through CDSCs, so long as the Plan and the Agreement are in effect. Since AFD's
compensation under the Plans of GROWTH FUND and STRATEGIC BALANCED FUND is not
directly tied to the expenses incurred by AFD, the amount of compensation
received by it under the applicable Plan during any year may be more or less
than its actual expenses.
43
<PAGE>
Unreimbursed distribution expenses incurred as of the end of each Fund's most
recently completed fiscal period, and carried over for reimbursement in future
years in respect of the Class B and Class C shares for all Funds (except GROWTH
FUND and STRATEGIC BALANCED FUND) were, as of that time, as follows:
<TABLE>
<CAPTION>
Amount of Unreimbursed Distribution Expenses
(as % of Net Assets of Class)
-------------------------------------------------------
Class B Class C
------------------------- ------------------------
<S> <C> <C> <C> <C>
Alliance Fund................... $ 1,985,734 (6.26%) $ 581,997 (5.77%)
Growth Fund..................... $43,429,599 (2.89%) $1,079,385 (0.48%)
Premier Growth Fund............. $ 5,101,361 (2.14%) $ 267,542 (1.29%)
Technology Fund................. $ 9,244,048 (3.34%) $ 398,864 (0.92%)
Quasar Fund..................... $ 764,753 (4.61%) $ 159,240 (9.88%)
International Fund.............. $ 1,672,131 (3.41%) $ 455,492 (2.35%)
Worldwide Privatization Fund.... $ 138,862 (0.17%) $ 569 (0.17%)
New Europe Fund................. $ 1,630,288 (4.72%) $ 298,375 (3.82%)
All-Asia Investment Fund........ $ 552,379 (10.68%) $ 25,680 (4.30%)
Global Small Cap Fund........... $ 922,746 (17.87%) $ 327,084 (23.25%)
Strategic Balanced Fund......... $ 759,314 (2.04%) $ 219,442 (5.34%)
Balanced Shares................. $ 965,505 (6.40%) $ 262,338 (5.14%)
Income Builder Fund............. $ 526,493 (13.97%) $1,642,685 (3.35%)
Utility Income Fund............. $ 725,771 (6.6%) $ 293,252 (8.4%)
Growth and Income Fund.......... $ 3,367,375 (2.46%) $ 638,657 (1.78%)
</TABLE>
The Plans are in compliance with rules of the National Association of Securities
Dealers, Inc. which effectively limit the annual asset-based sales charges and
service fees that a mutual fund may pay on a class of shares to .75% and .25%,
respectively, of the average annual net assets attributable to that class. The
rules also limit the aggregate of all front-end, deferred and asset-based sales
charges imposed with respect to a class of shares by a mutual fund that also
charges a service fee to 6.25% of cumulative gross sales of shares of that
class, plus interest at the prime rate plus 1% per annum.
The Glass-Steagall Act and other applicable laws may limit the ability of a bank
or other depository institution to become an underwriter or distributor of
securities. However, in the opinion of the Fund's 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. Dividends paid by a Fund, if any, with respect to Class A,
Class B and Class C shares will be calculated in the same manner at the same
time on the same day and will be in the same amount, except that the higher
distribution services fees applicable to Class B and C shares, and any
incremental transfer agency costs relating to Class B shares, will be borne
exclusively by the class to which they relate.
While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by such Fund of income and capital gains
from investments. There is no fixed dividend rate, and there can be no assurance
that a Fund will pay any dividends or realize any capital gains.
If you buy shares just before a Fund deducts a distribution from its net asset
value, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.
FOREIGN INCOME TAXES
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. To the extent that
any Fund is liable for foreign income taxes withheld at the source, each Fund
intends, if possible, to operate so as to meet the requirements of the Code to
"pass through" to the Fund's shareholders credits for foreign income taxes paid,
but there can be no assurance that any Fund will be able to do so.
U.S. FEDERAL INCOME TAXES
Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. To the extent that a Fund distributes its taxable income and net
capital gain to its shareholders, qualification as a regulated investment
company relieves that Fund of federal income and excise taxes on that part of
its taxable income including net capital gains which it
44
<PAGE>
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 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
45
<PAGE>
assets and, upon redeeming shares, will receive the then current net asset value
of the Fund represented by the redeemed shares less any applicable CDSC. The
Funds are empowered to establish, without shareholder approval, additional
portfolios, which may have different investment objectives, and additional
classes of shares. If an additional portfolio or class were established in a
Fund, each share of the portfolio or class would normally be entitled to one
vote for all purposes. Generally, shares of each portfolio and class would vote
together as a single class on matters, such as the election of Directors, that
affect each portfolio and class in substantially the same manner. Class A, B and
C shares have identical voting, dividend, liquidation and other rights, except
that each class bears its own distribution and transfer agency expenses. Each
class of shares votes separately with respect to a Fund's Rule 12b-1
distribution plan and other matters for which separate class voting is
appropriate under applicable law. Shares are freely transferable, are entitled
to dividends as determined by the Directors and, in liquidation of a Fund, are
entitled to receive the net assets of the Fund. Since this Prospectus sets forth
information about all the Funds, it is theoretically possible that a Fund might
be liable for any materially inaccurate or incomplete disclosure in this
Prospectus concerning another Fund. Based on the advice of counsel, however, the
Funds believe that the potential liability of each Fund with respect to the
disclosure in this Prospectus extends only to the disclosure relating to that
Fund. Certain additional matters relating to a Fund's organization are discussed
in its Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer agent
and dividend-disbursing agent for a fee based upon the number of shareholder
accounts maintained for the Funds. The transfer agency fee with respect to the
Class B shares will be higher than the transfer agency fee with respect to the
Class A shares or Class C shares.
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue of
the Americas, New York, New York 10105, is the principal underwriter of shares
of the Funds.
PERFORMANCE INFORMATION
From time to time, the Funds advertise their "total return," which is computed
separately for Class A, Class B and Class C shares. Such advertisements disclose
a Fund's average annual compounded total return for the periods prescribed by
the Commission. A Fund's total return for each such period is computed by
finding, through the use of a formula prescribed by the Commission, the average
annual compounded rate of return over the period that would equate an assumed
initial amount invested to the value of the investment at the end of the period.
For purposes of computing total return, income dividends and capital gains
distributions paid on shares of a Fund are assumed to have been reinvested when
paid and the maximum sales charges applicable to purchases and redemptions of a
Fund's shares are assumed to have been paid.
BALANCED 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 Class A, Class B and Class C shares. A Fund's yield for
any 30-day (or one-month) period is computed by dividing the net investment
income per share earned during such period by the maximum public offering price
per share on the last day of the period, and then annualizing such 30-day (or
one-month) yield in accordance with a formula prescribed by the Commission which
provides for compounding on a semi-annual basis.
STRATEGIC BALANCED FUND, BALANCED SHARES, INCOME BUILDER FUND, UTILITY INCOME
FUND and GROWTH AND INCOME FUND may also state in sales literature an "actual
distribution rate" for each class which is computed in the same manner as yield
except that actual income dividends declared per share during the period in
question are substituted for net investment income per share. The actual
distribution rate is computed separately for Class A, Class B and Class C
shares.
A Fund will include performance data for each class of shares in any
advertisement or sales literature using performance data of that Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
ADDITIONAL INFORMATION
This Prospectus and the Statements of Additional Information, which have been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Funds with the Commission under the
Securities Act. Copies of the Registration Statements may be obtained at a
reasonable charge from the Commission or may be examined, without charge, at the
offices of the Commission in Washington, D.C.
46
<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".
47
<PAGE>
- --------------------------------------------------------------------------------
SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
The Alliance Stock Funds
(see instructions at the front of the application)
1. YOUR ACCOUNT REGISTRATION (Please Print)
-------------------------------------------
[_] INDIVIDUAL OR JOINT ACCOUNT
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Owner's Name (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_]
Social Security Number (Required to open account)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Joint Owner's Name* (First Name) (MI) (Last Name)
*Joint Tenants with right of survivorship unless Alliance Fund Services is
informed otherwise.
[_] GIFT/TRANSFER TO A MINOR
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Custodian - One Name Only (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Minor (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_]
Minor's Social Security Number Under the State of _____ (Minor's Residence)
(Required to open account) Uniform Gifts/Transfer to Minor's Act
[_] TRUST ACCOUNT
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trustee
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trust
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Trust (cont'd)
[_][_][_][_][_][_][_][_][_][_][_] [_][_][_][_][_][_][_][_][_][_][_][_]
Trust Dated Tax ID or Social Security Number
(Required to open account)
[_] OTHER
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name of Corporation, Partnership or other Entity
[_][_][_][_][_][_][_][_][_][_][_][_]
Tax ID Number
2. YOUR ADDRESS
----------------
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Street
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
City State Zip Code
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
If Non-U.S., Specify Country
[_][_][_][-][_][_][_][-][_][_][_][_][_] [_][_][_][-][_][_][_][-][_][_][_][_]
Daytime Phone Evening Phone
I am a: [_] U.S Citizen [_] Non-Resident Alien [_] Resident Alien [_] Other
-- --
For Alliance Use Only
-- --
<PAGE>
3. YOUR INITIAL INVESTMENT
-----------------------
THE MINIMUM INVESTMENT IS $250 PER FUND. THE MAXIMUM INVESTMENT IN CLASS B
IS $250,000; CLASS C IS $5,000,000.
I hereby subscribe for shares of the following Alliance Stock Fund(s) and elect
distribution options as indicated.
DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS:
R REINVEST DISTRIBUTIONS into my fund account.
- - ----------------------
C SEND MY DISTRIBUTIONS IN CASH to the address I have provided in Section 2.
- - -----------------------------
(Complete Section 4D for direct deposit to your bank account. Complete
Section 4E for payment to a third party.)
D DIRECT MY DISTRIBUTIONS TO ANOTHER ALLIANCE FUND. Complete the appropriate
- - ------------------------------------------------
portion of Section 4A to direct your distributions (dividends and capital
gains) to another Alliance Fund (the $250 minimum investment requirement
applies to Funds into which distributions are directed).
BROKER/DEALER USE ONLY
WIRE CONFIRM #
MAKE ALL CHECKS PAYABLE TO:
ALLIANCE FUND SERVICES
<TABLE>
<CAPTION>
Class Of Shares
---------------------------------------------- Distribution Options
Contingent *Circle*
Initial Sales Deferred Asset-Based ---------------------
Charge Sales Charge Sales Charge Capital
A B C Dividends Gains
-------------- ------------ ------------- --------- -------
Alliance Fund Name
<S> <C> <C> <C> <C> <C>
The Alliance Fund $ (44) $ (43) $ (344) R C D R C D
Growth Fund (31) (01) (331) R C D R C D
Premier Growth Fund (78) (79) (378) R C D R C D
Technology Fund (82) (282) (382) R C D R C D
Quasar Fund (26) (29) (326) R C D R C D
International Fund (40) (41) (340) R C D R C D
Worldwide Privatization Fund (112) (212) (312) R C D R C D
New Europe Fund (62) (58) (362) R C D R C D
All-Asia Investment Fund (118) (218) (318) R C D R C D
Global Small Cap Fund (45) (48) (345) R C D R C D
Strategic Balanced Fund (32) (02) (332) R C D R C D
Balanced Shares (96) (75) (396) R C D R C D
Income Builder Fund (111) (211) (311) R C D R C D
Utility Income Fund (09) (209) (309) R C D R C D
Growth & Income Fund (94) (74) (394) R C D R C D
R C D R C D
R C D R C D
------- ------- ---------
Total Investment $ $ $
======= ======= =========
</TABLE>
<PAGE>
MY SOCIAL SECURITY (TAX IDENTIFICATION) NUMBER IS: [_][_][_][_][_][_][_][_][_]
4. YOUR SHAREHOLDER OPTIONS
A. AUTOMATIC INVESTMENT PLANS (AIP)
[_] WITHDRAW FROM MY BANK ACCOUNT
I authorize Alliance to draw on my bank account for reinvestment in my fund
account(s) as indicated below (Complete Section 4D also).
<TABLE>
<CAPTION>
Monthly Dollar Amount Day of Withdrawal*
Fund Name ($25 minimum) (1st thru 31st) Circle "all" or applicable months
<S> <C> <C> <C>
All J F M A M J J A S O N D
- ----------------------- ----------------------- --------------------- ----------------------------
All J F M A M J J A S O N D
- ----------------------- ----------------------- --------------------- ----------------------------
All J F M A M J J A S O N D
- ----------------------- ----------------------- --------------------- ----------------------------
All J F M A M J J A S O N D
- ----------------------- ----------------------- --------------------- ----------------------------
</TABLE>
* If my bank is not a member of the National Automated Clearing House
Association (NACHA), I understand that the withdrawal(s) will occur on or about
the 20th of the month.
[_] DIRECT MY DISTRIBUTIONS
As indicated in Section 3, I would like my dividends and/or capital gains
directed to another Alliance fund.
<TABLE>
<CAPTION>
"From" Fund Account # "To" Fund Account #
"From" Fund Name (if existing) "To" Fund Name (if existing)
<S> <C> <C> <C>
[_] New
[_] Existing
- ----------------------- ----------------------- --------------------- ---------------------------------
[_] New
[_] Existing
- ----------------------- ----------------------- --------------------- ---------------------------------
[_] New
[_] Existing
- ----------------------- ----------------------- --------------------- ---------------------------------
[_] New
[_] Existing
- ----------------------- ----------------------- --------------------- ---------------------------------
</TABLE>
[_] EXCHANGE SHARES MONTHLY
I authorize Alliance to transact monthly exchanges between my fund accounts as
listed below.
<TABLE>
<CAPTION>
"From" Fund Account # Dollar Amount Day of Exchange** "To" Fund Account #
"From" Fund Name (if existing) ($25 minimum) (1st thru 31st) "To" Fund Name (if existing)
<S> <C> <C> <C> <C> <C>
[_] New
[_] Existing
- ------------------- --------------------- ------------- ---------------- -------------- ----------------------------
[_] New
[_] Existing
- ------------------- --------------------- ------------- ---------------- -------------- ----------------------------
[_] New
[_] Existing
- ------------------- --------------------- ------------- ---------------- -------------- ----------------------------
[_] New
[_] Existing
- ------------------- --------------------- ------------- ---------------- -------------- ----------------------------
</TABLE>
**Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" is not a fund business day, the exchange transaction will be processed
on the next business day). The exchange privilege is not available if stock
certificates have been issued.
B. SYSTEMATIC WITHDRAWAL PLAN (SWP)
In order to establish a SWP, you must reinvest all dividends and capital
gains and own or purchase shares of the Fund having a current net asset value of
at least: .$10,000 for monthly payments, .$5,000 for bi-monthly payments
.$4,000 for quarterly or less frequent payments
SWPs on Class B shares of up to approximately 12% (annualized) of the current
market value of an account will be processed free of a contingent deferred sales
charge (CDSC). Under this plan, you may withdraw a maximum of 1% monthly, 2%
bi-monthly or 3% quarterly, of the value of your class B shares acquired after
July 1, 1995, without the imposition of a CDSC. Withdrawals in excess of these
amounts will continue to be charged the applicable CDSC. Your bank must be a
member of the National Automated Clearing House Association (NACHA) in order for
you to receive SWP proceeds directly into your checking account.
[_] I authorize Alliance to transact periodic redemptions from my fund account
and send the proceeds to me as indicated below.
<TABLE>
<CAPTION>
Fund Name and Class of Shares Dollar Amount ($50 minimum) Circle "all" or applicable months
<S> <C> <C>
All J F M A M J J A S O N D
- ---------------------------------- ---------------------------- -----------------------------
All J F M A M J J A S O N D
- ---------------------------------- ---------------------------- -----------------------------
All J F M A M J J A S O N D
- ---------------------------------- ---------------------------- -----------------------------
All J F M A M J J A S O N D
- ---------------------------------- ---------------------------- -----------------------------
</TABLE>
PLEASE SEND MY PROCEEDS TO:
[_] MY CHECKING ACCOUNT (via EFT)--Currently Class A and C only
I would like to have these payments occur on or about the [__] (1st-31st)
of the months circled above. (Complete Section 4D)
[_] MY ADDRESS OF RECORD (via CHECK)
[_] THE PAYEE AND ADDRESS SPECIFIED IN SECTION 4E (via CHECK)
<PAGE>
C. PURCHASES AND REDEMPTIONS VIA EFT
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange shares
for your account. Purchase and redemption requests will be processed via
electronic funds transfer (EFT) to and from your bank account.
Instructions:
. Review the information in the Prospectus about telephone transaction services.
. If you select the telephone purchase or redemption privilege, you must write
"VOID" across the face of a check from the bank account you wish to use and
attach it to Section 4D of this application.
Purchases and Redemption via EFT
[ ] I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from by Broker/Agent, and to withdraw
money or credit money for such shares via EFT from the bank account I have
selected.
D. BANK INFORMATION
This bank account information will be used for:
[ ] Distributions (Section 3) [ ] Automatic Investments (Section 4A)
[ ] Systematic Withdrawals (Section 4B) [ ] Telephone Transactions (Section 4C)
Please attach a voided check:
[ ]
TAPE VOIDED CHECK HERE.
We Cannot Establish These Services Without it.
[ ]
Your bank must be a member of the National Automated Clearing House Association
(NACHA) in order to have EFT transactions processed to your fund account. For
EFT transactions, the fund requires signatures of bank account owners exactly as
they appear on bank records.
E. THIRD PARTY PAYMENT DETAILS
This third party payee information will be used for:
[ ] Distributions (Section 3) [ ] Systematic Withdrawals (Section 4B)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Name
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 1
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 2
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Address - Line 3
F. REDUCED CHARGES (CLASS A ONLY)
If you, your spouse or minor children own shares in other Alliance funds, you
may be eligible for a reduced sales charge. Please complete the Right of
Accumulation section or the Statement of Intent section.
A. Right of Accumulation
[ ] Please link the tax identification numbers or account numbers listed below
for Right of Accumulation privileges, so that this and future purchases will
receive any discount for which they are eligible.
B. Statement of Intent
[ ] I want to reduce my sales charge by agreeing to invest the following amount
over a 13-month period:
[ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
If the full amount indicated is not purchased within 13 months, I understand
that an additional sales charge must be paid from my account.
- ----------------------- ------------------------- ------------------------
Tax ID or Account # Tax ID or Account # Tax ID or Account #
<PAGE>
5. SHAREHOLDER AUTHORIZATION This section MUST be completed
-----------------------------------------------------------
TELEPHONE EXCHANGES AND REDEMPTIONS BY CHECK
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an
authorized employee of an investment dealer or agent requesting a redemption
or exchange on my behalf. (NOTE: Telephone exchanges may only be processed
between accounts that have identical registrations.) Telephone redemption
checks will only be mailed to the name and address of record; and the address
must have no change within the last 30 days. The maximum telephone redemption
amount is $50,000. This service can be enacted once every 30 days.
[_] I do NOT elect the telephone [_] I do NOT elect the telephone
exchange service. redemption by check service.
I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and that
I have not been notified that this account is subject to backup withholding.
By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my behalf,
that the Fund reasonably believes to be genuine, and that neither the Fund nor
any such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Fund at any time. I understand and agree that the Fund
reserves the right to refuse any telephone instructions and that my investment
dealer or agent reserves the right to refuse to issue any telephone instructions
I may request.
For non-residents only: Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.
I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.
- ------------------------------ -------------------
Signature Date
- ------------------------------ ------------------- --------------------------
Signature Date Acceptance Date
DEALER/AGENT AUTHORIZATION For selected Dealers or Agents ONLY.
---------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
- --------------------------------------- ---------------------------------------
Dealer/Agent Firm Authorized Signature
- --------------------------------------- --------- ----------------------------
Representative First Name MI Last Name
- -------------------------------------------------------------------------------
Representative Number
- -------------------------------------------------------------------------------
Branch Office Address
- --------------------------------------- ----------------- ----------------------
City State Zip Code
( )
- --------------------------------------- ---------------------------------------
Branch Number Branch Phone
<PAGE>
ALLIANCE SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
The Alliance Stock Funds
Alliance Fund International Fund Strategic Balanced Fund
Growth Fund Worldwide Privatization Fund Balanced Shares
Premier Growth Fund New Europe Fund Income Builder Fund
Technology Fund All-Asia Investment Fund Utility Income Fund
Quasar Fund Global Small Cap Fund Growth & Income Fund
INFORMATION AND INSTRUCTIONS
----------------------------
<TABLE>
<CAPTION>
TO OPEN YOUR NEW ALLIANCE ACCOUNT...
<S> <C>
Please complete the application and mail it to: For certified or overnight deliveries, send to:
ALLIANCE FUND SERVICES, INC. ALLIANCE FUND SERVICE,INC.
P.O. BOX 1520 500 PLAZA DRIVE
SECAUCUS, NEW JERSEY 07096-1520 SECAUCUS, NEW JERSEY 07094
</TABLE>
[SECTION 1] YOUR ACCOUNT REGISTRATION (REQUIRED)
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
Individuals, Joint Tenants and Gift/Transfer to a Minor:
. Indicate your name(s) exactly as it appears on your social security
Card.
Trust/Other:
. Indicate the name of the entity exactly as it appeared on the notice
you received from the IRS when your Employer Indentification number
was assigned.
[SECTION 2] YOUR ADDRESS (REQUIRED)
Complete in full.
[SECTION 3] Your Initial Investment (REQUIRED)
For each fund in which you are investing: 1) Write the dollar amount of your
initial purchase in the column corresponding to the class of shares you have
chosen (If you are eligible for a reduced sales charge, you must also complete
Section 4F) 2) Circle a distribution option for your dividends 3) Circle a
distribution option for your capital gains. All distributions (dividends and
capital gains) will be reinvested into your fund account unless you direct
otherwise. If you want distributions sent directly to your bank account, then
you must complete Section 4D and attach a voided check for that account. If you
want your distributions sent to a third party you must complete Section 4E.
[SECTION 4] YOUR SHAREHOLDER OPTIONS (COMPLETE ONLY THOSE OPTIONS YOU WANT)
A. AUTOMATIC INVESTMENT PLANS (AIP) - You can make periodic investments into any
of your Alliance Funds in one of three ways. First, by a periodic withdrawl
($25 minimum) directly from your bank account and invested into Alliance
Fund. Second, you can direct your distributions (dividends and capital
gains) from one Alliance Fund into another Fund. Or third, you can
automatically exchange monthly ($25 minimum) shares of one Alliance Fund for
shares of another Fund. To elect one of these options, complete the
appropriate portion of Section 4A.
B. SYSTEMATIC WITHDRAWAL PLANS (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be
made via Electronic Funds Transfer (EFT) to your bank account (currrently
Classes A and C only) or by check.
C. TELEPHONE TRANSACTIONS VIA EFT - Complete this option if you would like to be
able to transact via telephone between your fund account and your bank
account.
D. BANK INFORMATION - If you have elected any options that involve transactions
between your bank account and your fund account or have elected cash
distribution options and would like the payments sent to your bank account,
please tape a voided check to this section of the application.
E. THIRD PARTY PAYMENT DETAILS - If you have chosen cash distributions and/or a
Systematic Withdrawal Plan and would like the payments sent to a person
and/or address other than those provided in section 1 or 2, complete this
option.
F. REDUCED CHARGES (CLASS A ONLY) - Complete if you would like to link fund
accounts that have combined balances that might exceed $100,000 so that
future purchases will receive discounts. Complete if you intend to purchase
over $100,000 within 13 months.
[SECTION 5] SHAREHOLDER AUTHORIZATION (REQUIRED)
All owners must sign. If it is a custodial, corporate, or trust account, the
custodian, an authorized officer, or the trustee respectively must sign.
If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At:
1-(800) 221-5672.
00250027.AE6
