<PAGE>
As filed with the Securities and Exchange
Commission on January 31, 1996
File No. 2-94093
811-4139
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-lA
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933
Pre-Effective Amendment No.
Post-Effective Amendment No. 21 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940
Amendment No. 20 X
Alliance Counterpoint Fund
(Exact Name of Registrant as Specified in Charter)
Alliance Capital Management L.P.
1345 Avenue of the Americas, New York, New York l0105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(800) 221-5672
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York l0105
(Name and address of agent for service)
Copies of communications to:
Thomas G. MacDonald
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
<PAGE>
It is proposed that this filing will become effective
(check appropriate box)
x immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (1)
on (date) pursuant to paragraph (a) (1)
75 days after filing pursuant to paragraph (a) (2)
on (date) pursuant to paragraph (a) (2) of rule 485
If appropiate, check the following box:
this post-effective amendment designates a new
effective date for a previously filed post-
effective amendment.
Registrant has registered an indefinite number of shares of
beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed a notice pursuant to such
Rule for its fiscal year ended September 30, 1995 on November 29,
1995.
2
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
N-lA Item No. Location in Prospectus
(Caption)
PART A
Item l. Cover Page.................. Cover Page
Item 2. Synopsis.................... Expense Information
Item 3. Condensed Financial
Information................ Financial Highlights
Item 4. General Description of
Registrant................. Description of the Fund
Item 5. Management of the Fund...... Management of the Fund;
General Information
Item 6. Capital Stock and Other
Securities................. General Information;
Dividends, Distributions
and Taxes
Item 7. Purchase of Securities
Being Offered.............. Purchase and Sale of
Shares; General
Information
Item 8. Redemption or Repurchase.... Purchase and Sale of
Shares
Item 9. Pending Legal Proceedings... Not Applicable
Location in Statement of
Additional Information
PART B (Caption)
Item l0. Cover Page.................. Cover Page
Item ll. Table of Contents........... Cover Page
Item l2. General Information and
History.................... Management of the Fund;
General Information
Item l3. Investment Objectives and
Policies................... Investment Objective,
Policies and Restrictions
3
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
Location in Statement of
PART B (continued) Additional Information
(Caption)
Item l4. Management of the
Registrant................. Management of the Fund
Item l5. Control Persons and
Principal Holders of
Securities................. Management of the Fund;
General Information
Item l6. Investment Advisory and
Other Services............. Management of the Fund
Item l7. Brokerage Allocation ....... Allocation of Portfolio
Brokerage
Item l8. Capital Stock and
Other Securities........... General Information
Item l9. Purchase, Redemption and
Pricing of Securities
being offered.............. Purchase and Redemption
of Shares; Net Asset
Value
Item 20. Tax Status.................. Investment Objective,
Policies and
Restrictions; Dividends,
Distributions and Taxes
Item 21. Underwriters................ General Information
Item 22. Calculation of Performance
Data....................... Not Applicable
Item 23. Financial Statements........ Financial Statements;
Report of Independent
Auditors
4
<PAGE>
Alliance Capital [Logo] (R) ALLIANCE COUNTERPOINT FUND
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature:
Toll Free (800) 227-4618
________________________________________________________________
Prospectus Dated February 1, 1996>
Alliance Counterpoint Fund (the "Fund") is a
diversified, open-end investment company which seeks long-term
capital growth, primarily, and current income, secondarily. The
Fund invests principally in a diversified portfolio of price-
depressed, undervalued or out-of-favor equity securities.
This Prospectus, when read in conjunction with the
prospectus dated February 1, 1996 of The Alliance Stock Funds
(the "Stock Funds Prospectus"), sets forth concisely the
information which a prospective investor should know about the
Fund before investing. A "Statement of Additional Information"
for the Fund which provides further information regarding certain
matters discussed in this Prospectus and other matters which may
be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by
reference. For a free copy, write or call Alliance Fund
Services, Inc. at the indicated address or "Literature" telephone
number set forth above.
The 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" in the Stock Funds
Prospectus.
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 of any other agency.
Investors are advised to read this Prospectus and the
Stock Fund's Prospectus carefully and to retain them 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
5
<PAGE>
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(R) This registered mark used under license from the owner,
Alliance Capital Management L.P.
6
<PAGE>
EXPENSE INFORMATION
Shareholder Transaction Expenses are one of several
factors to consider when you invest in the Fund. The following
table summarizes your maximum transaction costs from investing in
the Fund and annual expenses for each class of shares of the
Fund. The "Example" underneath the table below shows the
cumulative expenses attributable to a hypothetical $1,000
investment in each class for the periods specified.
Class A Class B Class C
Shares Shares Shares
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
__________________________________________
(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" in the Stock Funds Prospectus.
(b) Class B shares of the Fund automatically convert to Class A
shares after eight years. See "Purchase and Sale of
Shares--How to Buy Shares" in the Stock Funds Prospectus.
2
<PAGE>
Operating Expenses
Class A Class B Class C
Shares Shares Shares
Management fees .75% .75% .75%
12b-1 fees .30% 1.00% 1.00%
Other expenses(a) 1.23% 1.30% 1.24%
Total fund operating expenses 2.28% 3.05 % 2.99%
Example
Class A Class B+ Class B++ Class C
After 1 year $ 65 $ 71 $ 31 $ 30
After 3 years $111 $114 $ 94 $ 92
After 5 years $159 $160 $160 $157
After 10 years $293 $319(b) $319(b) $331
___________________________________
+ 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
Capital Management L.P., the Fund's investment adviser,
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.
The purpose of the foregoing table is to assist the
investor in understanding the various costs and expenses that an
investor in the Fund will bear directly or indirectly. Long-term
shareholders of the 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" in the Stock Funds
Prospectus. The Rule 12b-1 fee for each class of shares of the
Fund 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 management fee rate of the Fund is
higher than that paid by most other investment companies, but
Alliance Capital Management L.P., the Fund's invetment adviser
("Alliance") believes that 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 the Fund are
3
<PAGE>
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 Securities and Exchange
Commission regulations. THE EXAMPLES SHOULD NOT BE CONSIDERED
REPRESENTATIVE OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The table on the following page presents, for the Fund,
per share income and capital charges for a share outstanding
throughout each period indicated. The information in the tables
has been audited by Ernst & Young LLP, the independent auditors
for the Fund. A report of Ernst & Young LLP on the information
with respect to the Fund appears in the Fund's Statement of
Additional Information. The following information for the 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 the 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.
4
<PAGE>
<TABLE>
CLASS A
__________________________________________________________________________________________
YEAR ENDED SEPTEMBER 30,
__________________________________________________________________________________________
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $17.14 $20.89 $19.45 $19.08 $15.18 $19.86 $15.02 $18.05 $14.26 $10.98
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.15)(D) (.10) (.01) .13 .17 .23 .21 .27 .26 .37
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 4.54 (.82) 2.60 1.76 4.92 (3.63) 5.30 (2.09) 4.20 3.31
NET INCREASE (DECREASE) IN NET
ASSET VALUE FROM OPERATIONS 4.39 (.92) 2.59 1.89 5.09 (3.40) 5.51 (1.82) 4.46 3.68
LESS: DISTRIBUTIONS
DIVIDENDS FROM NET INVESTMENT
INCOME -0- -0- (.04) (.16) (.20) (.20) (.23) (.26) (.36) (.35)
DISTRIBUTIONS FROM NET REALIZED
GAINS (2.62) (2.83) (1.11) (1.36) (.99) (1.08) (.44) (.95) (.31) (.05)
TOTAL DIVIDENDS AND DISTRIBUTIONS (2.62) (2.83) (1.15) (1.52) (1.19) (1.28) (.67) (1.21) (.67) (.40)
NET ASSET VALUE, END OF YEAR $18.91 $17.14 $20.89 $19.45 $19.08 $15.18 $19.86 $15.02 $18.05 $14.26
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
TOTAL INVESTMENT RETURN BASED
ON NET ASSET VALUE(A) 30.87% (4.91)% 13.76% 10.76% 35.39% (17.91)% 38.25% (8.94)% 32.24% 34.00%
======= ======= ====== ====== ====== ======= ====== ======= ====== ======
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF YEAR
(000'S OMITTED) $40,815 $42,712 $67,356 $70,876 $59,690 $49,198 $60,478 $44,789 $57,752 $36,713
RATIO OF EXPENSES TO AVERAGE
NET ASSETS 2.28% 1.94% 1.79% 1.62% 1.64% 1.72% 1.69% 1.76% 1.64%(B) 1.55%(B)
RATIO OF NET INVESTMENT INCOME
(LOSS) TO AVERAGE NET ASSETS (.89)% (.43)% (.04)% .79% 1.02% 1.38% 1.28% 1.93% 1.68%(B) 2.88%(B)
PORTFOLIO TURNOVER RATE 30% 25% 48% 39% 38% 57% 37% 33% 24% 17%
</TABLE>
<TABLE>
Class B Class C
May 3, 1993(c) May 3, 1993(c)
5
<PAGE>
To To
September September
Year Ended September 30, 30, Year Ended September 30, 30,
<CAPTION>
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.94 $20.82 $18.51 $16.95 $20.83 $18.51
Income From Investment Operations
Net investment loss (.27)(d) (.08) (.07) (.26)(d) (.14) (.05)
Net realized and unrealized gain (loss)
on investments 4.46 (.97) 2.38 4.46 (.91) 2.37
Net increase (decrease) in net asset
value from operations 4.19 (1.05) 2.31 4.20 (1.05) 2.32
Less: Distributions
Distributions from net realized gains (2.62) (2.83) -0- (2.62) (2.83) -0-
Net asset value, end of period $18.51 $16.94 $20.82 $18.53 $16.95 $20.83
======= ======= ======= ======= ======= =======
Total Return
Total investment return based on net
asset value (a) 29.94% (5.63)% 12.48% 29.99% (5.62)% 12.53%
======= ======= ======= ======= ======= =======
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $2,491 $527 $120 $665 $418 $242
Ratio of expenses to average
net assets 3.05% 2.73% 3.35%(e) 2.99% 2.66% 3.22%(e)
Ratio of net investment loss
to average net assets (1.64)% (1.17)% (1.60)%(e) (1.60)% (1.11)% (1.34)%(e)
Portfolio turnover rate 30% 25% 48% 30% .25% 48%
_______________
Please refer to the footnotes on page 6.
6
<PAGE>
(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 charged 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) Net of fee waived and expenses reimbursed by Alliance. If
the Fund had borne all expenses, the expense ratios for the
periods ended September 30, would have been 1.60% for 1986
and 1.73% for 1987 and the investment income ratios would
have been 2.83% for 1986 and 1.51% for 1987.
(c) Commencement of distribution.
(d) Based on average shares outstanding.
(e) Annualized.
</TABLE>
7
<PAGE>
PROPOSED ACQUISITION OF FUND ASSETS BY
ALLIANCE PREMIER GROWTH FUND, INC.
-----------------
Suspension of Sales of Shares Other
Than to Existing Shareholders
The Fund has suspended sales of its shares effective as
of the close of business on December 6, 1995, other than sales to
existing shareholders as of the close of business on such date.
This action followed approval by the Trustees of the Fund, and
recommendation to the shareholders of the Fund for their
approval, of the acquisition of the Fund's assets by and in
exchange for shares of Alliance Premier Growth Fund, Inc., a
non-diversified open-end investment company sponsored by Alliance
("Premier Growth Fund"). Premier Growth Fund, which has a lower
expense ratio than the Fund, 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.
The Trustees have called a special meeting of the Fund's
shareholders to be held on February 29, 1996. Proxy materials
describing Premier Growth Fund and the terms of the proposed
acquisition have been mailed prior to the meeting to persons who
were shareholders of record of the Fund as of the close of
business on January 8, 1996. If approved at the meeting, it is
expected that the acquisition will occur shortly thereafter.
The Fund intends to sell portfolio securities prior to
the acquisition to the extent desirable from the perspective of
the portfolio of Premier Growth Fund. Purchases of portfolio
securities by the Fund prior to the acquisition will be
consistent with the investment policies and objectives of both
the Fund and Premier Growth Fund. It is expected that, as a
consequence of such transactions, the Fund will experience a
portfolio turnover of approximately 40% to 50% between the date
of this Prospectus and the closing of the acquisition and, in
addition, will realize significant capital gains and incur
related transaction costs. The Fund also intends, prior to the
closing of the acquisition, to declare and pay a special dividend
to its shareholders of record as of a date prior thereto.
8
<PAGE>
DESCRIPTION OF THE FUND
Investment Objectives and Policies
The Fund is a diversified investment company that seeks
long-term capital growth by investing principally in price-
depressed, undervalued or out-of-favor equity securities.
Secondarily, the Fund seeks current income. The Fund follows a
flexible investment policy which allows it to shift among equity
alternatives depending on such factors as relative growth rates,
normalized price-earnings ratios and yields. It selects
securities based on fundamental business and financial factors
(e.g., financial strength, book values, asset values, earnings
and dividends) and reasonable current valuations (weighing the
factors against market prices) and focuses on the relationship of
a company's earning power and dividend payout to the price of its
stock. The Fund's investment strategy can be characterized as
unconventional or "contrarian" in that its holdings often have
relatively low normalized price-earnings ratios and, when
purchased, are often believed by Alliance to be overlooked or
undervalued in the marketplace. (A "normalized" price-earnings
ratio is one that has been adjusted to eliminate the effects of
the economic cycle. Alliance may conclude that a company's
normalized price-earnings ratio is low in comparison to either
the company's price-earnings history or the price-earnings ratios
of comparable companies.)
Because it evaluates securities based on their long-term
potential, the Fund is best suited for investors who understand
and can accept the risk that the securities held by the Fund may
not appreciate or yield significant income over the shorter term.
The Fund invests in companies experiencing poor operating
results, which may include companies whose earnings have been
severely depressed by unfavorable operating conditions or special
competitive or product obsolescence problems, if it believes that
they will react positively to changing economic conditions or
will restructure or take other actions to overcome adversity.
The Fund invests in listed and unlisted securities, and will
invest in any company and industry and in any type of security
that may help it achieve its objectives. While its strategy
normally emphasizes equity securities, the Fund also invests in
fixed-income securities when such investments can provide capital
growth, such as when interest rates decline, and to generate
income.
The Fund may also: (i) invest up to 5% of its total
assets in warrants; (ii) invest up to 15% of its total assets in
foreign securities; (iii) invest in restricted securities and in
9
<PAGE>
other assets having no ready market if as a result no more than
5% of its nets assets would be invested in such securities and
assets; (iv) write exchange-listed covered call options, unless
as a result the amount of its securities subject to call options
would exceed 5% of its total assets; (v) lend portfolio
securities equal in value to not more than 15% of its total
assets; (vi) purchase and sell stock index futures contracts and
(vii) enter into repurchase agreements on U.S. Government
securities with member banks of the Federal Reserve System or
primary dealers in such securities. The Fund will not purchase
or sell a stock index future it immediately thereafter more than
30% of its total assets would be hedged by stock index futures.
For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices" in
the Stock Funds Prospectus.
Certain Fundamental Investment
Policies
The Fund may not: (i) purchase the securities of any
one issuer, other than the U.S. Government or any of its agencies
or instrumentalities, if as a result more than 5% of the value of
its total assets would be invested in such issuer or the Fund
would own more than 10% of the outstanding voting securities of
such issuer, except that up to 25% of the Fund's total assets may
be invested without regard to these 5% and 10% limitations;
(ii) invest 25% or more of its total assets in a particular
industry; (iii) borrow money except for temporary or emergency
purposes, including meeting redemption requests which might
require the untimely disposition of securities; borrowing in the
aggregate may not exceed 15%, and borrowing for purposes other
than meeting redemptions may not exceed 5% of its total assets at
the time the borrowing is made; (iv) invest more than 10% of its
net assets in the aggregate in restricted and not readily
marketable securities; (v) invest more than 10% of its total
assets in the securities of any issuer that has a record of less
than three years of continuous operation (including the operation
of any predecessor); or (vi) invest more than 10% of the value of
its total assets in the aggregate in illiquid securities or
repurchase agreements not terminable with seven days.
Portfolio Management.
The person who is primarily responsible for the day-to-
day management of the Fund's portfolio is David P. Handke, Jr.
Mr. Handke, who has been primarily responsible for management of
the Fund's portfolio since the Fund's inception, has been
associated with Alliance since prior to 1991.
10
<PAGE>
Unreimbursed Distribution Expenses.
The amount of unreimbursed distribution expenses (as a %
of net assets of a class) as of September 30, 1995, and carried
over for reimbursement in future years in respect of the Class B
and Class C shares of the Fund, was $369,497 (14.8%) for Class B
shares and $193,244 (29.1%) for Class C shares, respectively.
Organization.
The Fund was organized in 1984 as a Maryland
corporation.
11
00250043.AF0
<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 $140 billion in
assets under management as of September 30, 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
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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,
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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
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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
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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
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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.
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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
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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."
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<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
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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.
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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
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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"
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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.
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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
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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.
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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
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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
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<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
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<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.
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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 September 30, 1995 totaling more than $140 billion
(of which approximately $47 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 September 30, 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>
- --------------------------------------------------------------------------------
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
----------------------------
TO OPEN YOUR NEW ALLIANCE ACCOUNT
Please complete the application and mail it to:
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520
SIGNATURES - PLEASE BE SURE TO SIGN THE APPLICATION (SECTION 7)
If shares are registered in the name of:
. an individual, the individual should sign.
. joint tenants, both should sign.
. a custodian for a minor, the custodian should sign.
. a corporation or other organization, an authorized officer should sign (please
indicate corporate office or title).
. a trustee or other fiduciary, the fiduciary or fiduciaries should sign (please
indicate capacity).
REGISTRATION
To ensure proper tax reporting to the IRS:
. Individuals, Joint Tenants and Gift/Transfer to a Minor:
- Indicate your name exactly as it appears on your social security card.
. Trust/Other:
- Indicate the name of the entity exactly as it appeared on the notice you
received from the IRS when your Employer Identification number was assigned.
PLEASE NOTE:
. Certain legal documents will be required from corporations or other
organizations, executors and trustees, or if a redemption is requested by
anyone other than the shareholder of record. If you have any questions
concerning a redemption, contact the Fund at the number below:
. In the case of redemptions or repurchase of shares recently purchased by
check, redemption proceeds will not be made available until the Fund is
reasonably assumed that the check has cleared, normally up to 15 calendar days
following the purchase date.
IF WE CAN ASSIST YOU IN ANY WAY, PLEASE DO NOT HESITATE TO CALL US AT:
1-(800) 221-5672.
<PAGE>
- --------------------------------------------------------------------------------
SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
Alliance Stock Funds
(see instructions at the front of the application)
1. YOUR ACCOUNT REGISTRATION (Please Print)
-------------------------------------------
[_] INDIVIDUAL OR JOINT ACCOUNT
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Owner's Name (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_]
Social Security Number (Required to open account)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Joint Owner's Name* (First Name) (MI) (Last Name)
*Joint Tenants with right of survivorship unless otherwise indicated
[_] GIFT/TRANSFER TO A MINOR
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Custodian - One Name Only (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Minor (First Name) (MI) (Last Name)
[_][_][_][_][_][_][_]
Minor's Social Security Number 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. ADDRESS
----------
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
Street
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
City State Zip Code
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_]
If Non-U.S., Specify Country
[_][_][_][-][_][_][_][-][_][_][_][_][_] [_][_][_][-][_][_][_][-][_][_][_][_]
Daytime Phone Evening Phone
I am a: [_] U.S Citizen [_] Non-Resident Alien [_] Resident Alien [_] Other
-- --
For Alliance Use Only
-- --
<PAGE>
3. INITIAL INVESTMENT
---------------------
Minimum: $250; Maximum: Class B only - $250,000; Class C only - $5,000,000.
Make all checks payable to The Alliance Stock Fund in which you are investing.
I hereby subscribe for shares of the following Alliance Stock Funds(s):
<TABLE>
<CAPTION>
Class C
Class A Class B (Asset-based)
(Initial Sales) Dollar (Contingent Deferred) Dollar Sales Dollar
Charge Amount Sales Charge) Amount Charge) Amount
--------------- ------ -------------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
[_] Alliance Fund [_](44) ______ [_](43) ______ [_](344) ______
[_] Growth Fund [_](31) ______ [_](01) ______ [_](331) ______
[_] Premier Growth Fund [_](78) ______ [_](79) ______ [_](378) ______
[_] Technology Fund [_](82) ______ [_](282) ______ [_](382) ______
[_] Quasar Fund [_](26) ______ [_](29) ______ [_](326) ______
[_] International Fund [_](40) ______ [_](41) ______ [_](340) ______
[_] Worldwide Privatization Fund [_](112) ______ [_](212) ______ [_](312) ______
[_] New Europe Fund [_](62) ______ [_](58) ______ [_](362) ______
[_] All-Asia Investment Fund [_](118) ______ [_](218) ______ [_](318) ______
[_] Global Small Cap Fund [_](45) ______ [_](48) ______ [_](345) ______
[_] Strategic Balance Fund [_](32) ______ [_](02) ______ [_](332) ______
[_] Balanced Shares [_](96) ______ [_](75) ______ [_](396) ______
[_] Income Builder Fund [_](111) ______ [_](211) ______ [_](311) ______
[_] Utility Income Fund [_](9) ______ [_](209) ______ [_](309) ______
[_] Growth & Income Fund [_](94) ______ [_](74) ______ [_](394) ______
</TABLE>
to be purchased with the enclosed check or draft for $_____
DEALER USE ONLY
Wire Confirm No.:
4. REDUCED CHARGES (Class A Only)
---------------------------------
If you, your spouse or minor children own shares in other Alliance funds, you
may be eligible for a reduced sales charge. Please list below any existing
accounts to be considered and complete the Right of Accumulation section or the
Statement of Intent section.
- --------------------- -------------- --------------------- --------------
Fund Account Number Fund Account Number
A. RIGHT OF ACCUMULATION
[_] Please line the account listed above for Right of Accumulation privileges,
so that this and future purchases will receive any discount for which they
are eligible.
B. STATEMENT OF INTENT
[_] I want to reduce my sales charge by agreeing to invest the following amount
over a 13-month period:
[_] $100,000 [_] $250,000 [_] $500,000 [_] $1,000,000
If the full amount indicated is not purchased within 13 months, I understand an
additional sales charge must be paid from my account.
- --------------------- -------------- --------------------- --------------
Name on Account Account Number Name on Account Account Number
5. DISTRIBUTION OPTIONS
-----------------------
If no box is checked, all distributions will be reinvested in additional shares
of the Fund
Income Dividend:(elect one) [_] Reinvest dividends
[_] Pay dividends in cash
[_] Use Dividends Direction Plan
Capital Gains Distribution:(elect one) [_] Reinvest capital gains
[_] Pay capital gains in cash
[_] Use Dividends Direction Plan
If you elect to receive your income dividends or capital gains distributions in
cash, please enclose a PREPRINTED VOIDED CHECK from the bank account you wish to
have your dividends deposited into.**
If you wish to utilize the Dividend Direction Plan, please designate the
Alliance account you wish to have your dividends reinvested in:
- ----------------------------------- -----------------------------------
Fund Name Existing Account No.
SPECIAL DISTRIBUTION INSTRUCTIONS: [_] Please pay my distributions via check and
send to the address indicated in Section
2.
[_] Please mail my distributions to the
person and/or address designated below:
- ----------------------------------- -----------------------------------
Name Address
- ----------------------------------- ---------------- ---------------
City State Zip
6. SHAREHOLDER OPTIONS
----------------------
A. AUTOMATIC INVESTMENT PROGRAM (AIP)**
I hereby authorized Alliance Fund Services, Inc. to draw on my bank account, on
or about the ____ day of each month for a monthly investment in my Fund account
in the amount of $________ (minimum $25 per month). Please attach a PREPRINTED
VOIDED CHECK from the bank account you wish to use.
NOTE: If your bank is not a member of the NACHA, your Alliance account will be
credited on or about the 20th of each month.
The Fund requires signatures of bank account owners exactly as they appear on
bank records.
- --------------------- -------------- --------------------- --------------
Individual Account Date Joint Account Date
**Your bank must be a member of the National Automated Clearing House
Association (NACHA).
<PAGE>
B. TELEPHONE TRANSACTIONS
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.
Instructions: . Review the information in the Prospectus about telephone
transaction services.
. Check the box next to the telephone transaction service(s)
you desire.
. If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face of a check
from the bank account you wish to use and attach it to this
application.
PURCHASES AND REDEMPTIONS VIA EFT**
[_] I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from my Broker/Agent, and to
withdraw money or credit money for such shares via EFT from the bank
account I have selected.
The fund requires signatures of bank account owners exactly as they appear on
bank records.
--------------------------- -------- ------------------------ --------
Individual Account Owner Date Joint Account Owner Date
TELEPHONE EXCHANGES AND REDEMPTIONS BY CHECK
Unless I have checked on 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 to 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 per check. 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.
C. SYSTEMATIC WITHDRAWAL PLAN (SWP)**
In order to establish a SWP, an investor must own or purchase shares of the
Fund having a current net asset value of at least:
. $10,000 for monthly payments; . $5,000 for bi-monthly payments; . $4,000
for quarterly or less frequent payments.
[_] I authorize this service to begin in _________, 19__, for the amount of
Month
$___________ ($50.00 minimum).
Frequency: (Please select one) [_] Monthly [_] Bi-Monthly [_] Quarterly
[_] Annually [_] In the months circled: J F M A M J J A S O N D
Please send payments to: (please select one)
[_] My check account. Select the date of the month on or about which you wish
the EFT payments to be made: ______. Please enclose a preprinted voided
check to ensure accuracy. EFT not available to Class B shareowners other
than retirement plans.
[_] My address of record designated in Section 2.
[_] The payee and address specified below:
-------------------------------------- -----------------------------------
Name of Payee Address
-------------------------------------- ------------------- ------------
City State Zip
D. AUTO EXCHANGE
[_] I authorize Alliance Fund Services, Inc. to initiate a monthly exchange
for $_______ ($25.00 minimum) on the _______ day of the month, into the
Alliance Fund noted below:
Fund Name: _____________________________________
[_] Existing account number: ___________________ [_] New account
Shares exchanged will be redeemed at net asset value computed on the date
of the month selected. (If the date selected is not a fund business day
the transaction will be processed on the next fund business day.)
Certificates must remain unissued.
7. SHAREHOLDER AUTHORIZATION This section MUST be completed
-----------------------------------------------------------
I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and that
I have not been notified that this account is subject to backup withholding.
By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my behalf,
that the Fund reasonably believes to be genuine, and that neither the Fund nor
any such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Fund at any time. I understand and agree that the Fund
reserves the right to refuse any telephone instructions and that my investment
dealer or agent reserves the right to refuse to issue any telephone instructions
I may request.
For non-residents only: Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.
I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.
- ------------------------------ -------------------
Signature Date
- ------------------------------ ------------------- --------------------------
Signature Date Acceptance Date:
DEALER/AGENT AUTHORIZATION For selected Dealers or Agents ONLY
--------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 7, as well as the legal capacity of the
shareholder.
Dealer/Agent Firm _____________________ Authorized Signature ___________________
Representative First Name _____________ MI _______ Last Name ___________________
Representative Number __________________________________________________________
Branch Office Address __________________________________________________________
City __________________________________ State ___________ Zip Code _____________
Branch Number _________________________ Branch Phone (___)______________________
**Your bank must be a member of the National Automated Clearing House
Association (NACHA).
<PAGE>
(LOGO) ALLIANCE COUNTERPOINT FUND
____________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 221-5672
____________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1996
____________________________________________________________
This Statement of Additional Information is not a
prospectus but supplements and should be read in conjunction with
the Fund's current Prospectus. A copy of the Prospectus may be
obtained by contacting Alliance Fund Services, Inc. at the
address or telephone numbers listed above.
TABLE OF CONTENTS
Page
Description of the Fund
Management of the Fund
Expenses of the Fund
Purchase of Shares
Redemption and Repurchase of Shares
Shareholder Services
Net Asset Value
Dividends, Distributions and Taxes
Portfolio Transactions
General Information
Report of Independent Auditors and Financial
Statements
Appendix A: Bond and Commercial Paper Ratings A-1
Appendix B: Stock Index Futures B-1
2
<PAGE>
______________________
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
3
<PAGE>
____________________________________________________________
DESCRIPTION OF THE FUND
____________________________________________________________
Current Developments
On November 28, 1995 Alliance Counterpoint Fund (the
"Fund") suspended sales of shares of the Fund, effective as of
the close of business on December 6, 1995, other than sales to
shareholders as of the close of business on December 6. This
action followed approval by the Trustees of the Fund, and
recommendation to the shareholders of the Fund for their
approval, of the acquisition of the Fund's assets by and in
exchange for shares of Alliance Premier Growth Fund, Inc.
("Premier Growth"), a non-diversified open-end investment company
sponsored by Alliance. Premier Growth, which has a lower expense
ratio than the Fund, 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.
The Trustees have called a special meeting of the Fund's
shareholders to be held on February 29, 1996. Proxy materials
describing Premier Growth and the terms of the proposed
acquisition will be mailed prior to the meeting to shareholders
of record of the Fund as of the close of business on January 8,
1996. If approved at the meeting, it is expected that the
acquisition will occur shortly thereafter.
The Fund intends to sell portfolio securities prior to
the acquisition to the extent desirable from the perspective of
the portfolio of Premier Growth. Purchases of portfolio
securities by the Fund prior to the acquisition will be
consistent with the investment policies and objectives of both
the Fund and Premier Growth. It is expected that, as a
consequence of such transactions, the Fund will experience a
portfolio turnover of approximately 40% to 50% between December
4, 1995 and the closing of the acquisition and, in addition, will
realize significant capital gains and incur related transaction
costs.
Except as otherwise indicated, the investment policies
of the Fund are not "fundamental policies" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act"),
and may, therefore, be changed by the Trustees without a
shareholder vote. However, the Fund will not change its
investment policies without contemporaneous written notice to its
shareholders. The Fund's investment objectives may not be
changed without shareholder approval. There can be, of course,
4
<PAGE>
no assurance that the Fund will achieve its investment
objectives.
Investment Objectives
The primary investment objective of the Fund is long-
term capital growth. The Fund seeks to achieve this objective by
investing principally in price-depressed, undervalued or out-of-
favor equity securities (common stocks and securities convertible
into common stocks). The Fund's secondary objective is to
provide current income.
How The Fund Pursues Its Objectives
In seeking to achieve long-term capital growth, the Fund
follows a flexible investment policy which normally emphasizes
equity securities. Emphasis may be shifted among equity
alternatives depending on such factors as relative growth rates,
normalized price-earnings ratios and yields. Securities are
selected on the basis of fundamental business and financial
factors (financial strength, book values, asset values, earnings,
dividends) and reasonable current valuations (the measurement of
these factors relative to the price of the security). In this
regard, Alliance Capital Management L.P., the Fund's Adviser (the
"Adviser"), gives particular consideration to the relationship of
a company's underlying earning power and dividend payout to the
market price of its stock. Thus, the Fund's holdings are often
characterized by relatively low normalized price-earnings ratios
and, at the time of purchase, are often deemed by the Adviser to
be overlooked or undervalued in the marketplace. In this sense,
the Fund's investment strategy can be characterized as
unconventional or "contrarian" in nature.
A "normalized" price-earnings ratio is one that has been
adjusted to eliminate the effects of the economic cycle. The
Adviser may conclude that a company's normalized price-earnings-
ratio is low relative to either that company's price-earnings
history or the current price- earnings ratios of the other
companies.
Because the Adviser evaluates potential portfolio
securities on the basis of their growth and income potential over
the long term, the Fund is most suitable for investors who
understand and are willing to accept the risk that, over the
shorter term, securities held by the Fund may not appreciate or
yield significant income. The Fund may invest in the equity
securities of companies which are deemed financially sound but
which are experiencing relatively poor operating results.
Issuers experiencing poor operating results may include companies
whose earnings have been severely depressed by periods of
unfavorable operating conditions or which face special
5
<PAGE>
competitive or product obsolescence problems. The Fund invests
in companies experiencing relatively poor operating results in
the belief that they will react positively to changing economic
conditions or that management will take actions designed to
overcome adversity, such as the restructuring of current business
operations.
Within this basic framework, and consistent with its
"contrarian" investment strategy, the policy of the Fund is to
invest in any company and industry and in any type of securities
which are believed to offer possibilities for achievement of its
investment objectives. Investments may be made in well-known and
established companies as well as in new and unseasoned companies.
Additional Investment Policies And Practices
The following additional investment policies supplement
those set forth above.
Warrants. The Fund may invest up to 5% of its total
assets in warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time, but
will do so only if such equity securities are deemed appropriate
for inclusion in the Fund's portfolio. Warrants may be considered
more speculative than certain other types of investments in that
they do not entitle a holder to dividends or voting rights with
respect to the securities which may be purchased nor do they
represent any rights in the assets of the issuing company. Also,
the value of a warrant does not necessarily change with the value
of the underlying securities and a warrant ceases to have value
if it is not exercised prior to the expiration date.
Foreign Securities. The Fund will invest in both listed
and unlisted securities and in foreign securities as well as
domestic securities. Investing in securities of non-United
States companies which are generally denominated in foreign
currencies involves certain considerations comprising both risk
and opportunity not typically associated with investing in United
States companies. These considerations include changes in
exchange rates and exchange control regulation, political and
social instability, expropriation, imposition of foreign taxes,
less liquid markets and less available information than are
generally the case in the United States, higher transaction
costs, less government supervision of exchanges and brokers and
issuers, difficulty in enforcing contractual obligations, lack of
uniform accounting and auditing standards and greater price
volatility. Additional risks may be incurred in investing in
particular countries. The Fund may invest up to 15% of the value
of its total assets in foreign securities.
6
<PAGE>
Restricted Securities. The Fund may invest in
restricted securities and in other assets having no ready market
if such purchases at the time thereof would not cause more than
5% of the value of the Fund's net assets to be invested in all
such restricted securities. Restricted securities may be sold
only in privately negotiated transactions, in a public offering
with respect to which a registration statement is in effect under
the Securities Act of 1933, as amended (the "Securities Act") or
pursuant to Rule 144 or 144A promulgated under such Act. Where
registration is required, the Fund may be obligated to pay all or
part of the registration expense, and a considerable period may
elapse between the time of the decision to sell and the time the
Fund may be permitted to sell a security under an effective
registration statement. If during such a period adverse market
conditions were to develop, the Fund might obtain a less
favorable price than that which prevailed when it decided to
sell. Restricted securities will be valued in such manner as the
Trustees of the Fund in good faith deem appropriate to reflect
their fair market value.
Call Options. In seeking to attain its investment
objectives, the Fund may also write covered call options listed
on one or more national securities exchanges. A call option
gives the purchaser of the option, upon payment of a premium to
the writer of the option, the right to purchase from the writer
of the option a specified number of shares of a specified
security on or before a fixed date, at a predetermined price.
When calls written by the Fund are exercised, the Fund will be
obligated to sell stocks below the current market price. The
writing of call options will, therefore, involve a potential loss
of opportunity to sell securities at high prices. In exchange
for receiving a premium, the writer of a fully covered call
option assumes the full downside risk of the securities subject
to such option. In addition, the writer of the call gives up the
gain possibility of the stock protecting the call. Generally, the
opportunity for profit from the writing of options is higher, and
consequently the risks are greater, when the stocks involved are
lower priced or volatile, or both. While an option that has been
written is in force, the maximum profit that may be derived from
the optioned stock is the premium less brokerage commissions and
fees.
The Fund may not write a call option unless the Fund at
all times during the option period owns the optioned securities,
or securities convertible into or carrying rights to acquire the
optioned securities at no additional cost. In addition, the Fund
may not write a call option if, as a result thereof, 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 5% of the Fund's
total assets. It is the Fund's policy not to write a call option
7
<PAGE>
if the premium to be received by the Fund in connection with such
option would not produce an annualized return of at least 5% of
the then market value of the securities subject to option
(without giving effect to commissions, stock transfer taxes and
other expenses of the Fund which are deducted from such premium
receipts). The actual return earned by the Fund from writing a
call option depends on factors such as the amount of the
transaction costs and whether or not the option is exercised.
Option premiums vary widely depending primarily on supply and
demand.
If the Fund desires to sell a particular security from
its portfolio on which it has written an option, the Fund seeks
to effect a closing purchase transaction prior to or concurrently
with the sale of the security. A closing purchase transaction is
a transaction in which an investor who is obligated as a writer
of an option terminates his obligation by purchasing an option of
the same series as the option previously written. (Such a
purchase does not result in the ownership of an option.) The
Fund may enter into a closing purchase transaction to realize a
profit on a previously written option or to enable the Fund to
write another option on the underlying security with either a
different exercise price or expiration date or both. The Fund
realizes a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more than the premium
received from the writing of the option. The Fund will not
purchase call options except in closing purchase transactions.
Securities Lending. The Fund may seek to increase
income by lending portfolio securities. Under present regulatory
policies, such loans are required to be secured continuously by
collateral consisting of cash, cash equivalents or United States
Treasury bills maintained in an amount at least equal to the
market value of the securities loaned. The Fund has the right to
call such a loan and obtain the securities loaned or equivalent
securities at any time on five days' notice. During the
existence of a loan, the Fund will receive the income earned on
investment of the collateral. The aggregate value of securities
loaned by the Fund may not exceed 15% of the value of the Fund's
total assets.
Stock Index Futures. The Fund may seek to hedge itself
against changes resulting from market conditions in the values of
securities held in the Fund's portfolio or which the Fund intends
to purchase by purchasing and selling stock index futures
contracts. A stock index assigns relative values to the common
stocks comprising the index. A stock index futures contract is a
bilateral agreement pursuant to which two parties agree to take
or make delivery of an amount of cash equal to a specified dollar
amount multiplied by the difference between the stock index value
at the close of the last trading day of the contract and the
8
<PAGE>
price at which the futures contract is originally struck. No
physical delivery of the underlying stocks in the index is made.
The Fund may not purchase or sell stock index futures
if, immediately thereafter, more than 30% of its total assets
would be hedged by such futures. In addition, the Fund may not
purchase or sell stock index futures 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. In connection with its purchase of stock
index futures contracts, the Fund will deposit an amount of cash
and cash equivalents, equal to the market value of the futures
contracts in a segregated account with the Fund's Custodian
and/or in a margin account with a broker. For a more detailed
description of stock index futures contracts, see Appendix B.
Fixed Income Securities. While the Fund's investment
strategy will normally emphasize equity securities, the Fund may
also invest in fixed income securities when the Adviser concludes
that such investments afford the opportunity for capital growth,
such as in periods of declining interest rates. The Fund may
also use fixed income securities and cash equivalents to generate
sufficient portfolio income to enable the Fund to achieve its
secondary objective of providing current income. For these
purposes, the Fund may invest without restriction in the
following types of fixed income securities:
(1) Non-convertible debt securities which are
rated Aaa, Aa, A or Baa by Moody's Investors Service,
Inc. ("Moody's") or AAA, AA, A or BBB by Standard &
Poor's Ratings Services ("S&P");
(2) Obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities;
(3) Obligations of, or guaranteed by, national or
state bank holding companies, which obligations,
although not rated as a matter of policy by either
Moody's or S&P, are rated AAA, AA, or A by Fitch
Investors Services, Inc. ("Fitch");
(4) Commercial paper rated Prime-1, Prime-2 or
Prime-3 by Moody's or A-1 +, A-1, A-2 or A-3 by S&P; and
(5) Bankers' acceptances or negotiable
certificates of deposit issued by banks rated AAA, AA or
A by Fitch, including foreign banks and foreign branches
of domestic banks (subject to the limitations applicable
to investments in foreign securities referred to above).
9
<PAGE>
Non-convertible debt securities rated Baa by Moody's or
BBB by S&P are considered to be investment grade, although
Moody's indicates that securities rated Baa may have speculative
elements. For a further description of the securities ratings
mentioned above, see Appendix A.
When business or financial conditions warrant, the Fund
may assume a temporary defensive position and invest without
limit in cash equivalents, including short-term obligations of
the U.S. Government, its agencies or instrumentalities,
commercial paper, bankers' acceptances and certificates of
deposit, all of which meet the quality criteria for fixed-income
securities set forth above.
Repurchase Agreements. The Fund may enter into
"repurchase agreements" pertaining to U.S. Government securities
with member banks of the Federal Reserve System or "primary
dealers" (as designated by the Federal Reserve Bank of New York)
in such securities. It is the Fund's current practice to enter
into repurchase agreements only with such primary dealers and the
Fund has adopted procedures for monitoring the creditworthiness
of such dealers. A repurchase agreement arises when a buyer such
as the Fund purchases a security and the seller agrees, at the
time of the sale, to repurchase the security at a mutually agreed
upon price and time, normally one day or a few days later,
thereby determining the yield to the buyer during the buyer's
holding period. This results in a fixed rate of return insulated
from market fluctuations during such period. Such agreements
permit the Fund to keep all of its assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-
term nature. In the event a seller defaulted on its repurchase
obligation, the Fund might suffer loss to the extent that the
proceeds from the sale of the collateral were less than the
repurchase price. If the seller were to become bankrupt, the
Fund might be delayed in, or prevented from, selling the
collateral.
The Fund requires continual maintenance by its Custodian
for its account in the Federal Reserve/Treasury Book Entry System
of collateral in an amount equal to, or in excess
of, the market value of the securities which are the subject of a
repurchase agreement.
Portfolio Turnover. Generally, the Fund's policy with
respect to portfolio turnover is to purchase securities with a
view to holding them for periods of time sufficient to assure
long-term capital gains treatment upon their sale and not for
trading purposes. However, it is also the Fund's policy to sell
any security whenever, in the judgment of the Adviser, its
appreciation possibilities have been substantially realized or
the business or market prospects for such security have
10
<PAGE>
deteriorated, irrespective of the length of time that such
security has been held. This policy may result in the Fund
realizing short-term capital gains or losses on the sale of
certain securities. See "Dividends, Distributions and Taxes". It
is anticipated that the Fund's rate of portfolio turnover will
not exceed 100% during its current fiscal year. A 100% annual
turnover rate would occur, for example, if all the stocks in the
Fund's portfolio were replaced within a period of one year. A
portfolio turnover rate approximating 100% involves
correspondingly greater brokerage commission expenses than would
a lower rate, which expenses must be borne by the Fund and its
shareholders.
The portfolio turnover rates of securities of the Fund
for the fiscal years ended September 30, 1994 and 1995 were 25%
and 30% respectively.
Fundamental Investment Restrictions
The following restrictions may not be changed without
shareholder approval, which means the affirmative vote of the
holders of (a) 67% or more of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented
or (b) more than 50% of the outstanding shares, whichever is
less. Whenever any investment restriction states a maximum
percentage of the Fund's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after and as a
result of the Fund's acquisition of such securities or other
assets. Accordingly, any later increase or decrease in percentage
beyond the specified limitation resulting from a change in values
or net assets will not be considered a violation.
These restrictions provide that the 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 value of the Fund's total assets
may be invested without regard to such 5% and
10% limitations;
(ii) invest 25% or more of its total
assets in a particular industry;
11
<PAGE>
(iii) borrow money except for temporary or
emergency purposes, including meeting
redemption requests which might require the
untimely disposition of securities; borrowing
in the aggregate may not exceed 15%, and
borrowing for purposes other than meeting
redemptions may not exceed 5%, of the value of
the Fund's total assets at the time the
borrowing is made;
(iv) invest more than 10% of its net
assets in the aggregate in restricted and not
readily marketable securities;
(v) invest more than 10% of 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);
(vi) invest more than 10% of the value of
its total assets in the aggregate in illiquid
securities or repurchase agreements not
terminable within seven days;
(vii) make short sales of securities or
maintain a short position or write or purchase
put options;
(viii) participate on a joint or joint and
several basis in any securities trading
account;
(ix) invest in companies for the purpose
of exercising control;
(x) issue any senior security within the
meaning of the 1940 Act;
(xi) purchase the securities of any other
investment company or investment trust, except
when such purchase is part of a merger,
consolidation or acquisition of assets;
(xii) purchase or sell real estate, real
estate mortgage loans, commodities or
commodity contracts (other than stock index
futures contracts), except that the Fund may
purchase readily marketable securities of
issuers which engage in real estate operations
and securities which are secured by real
12
<PAGE>
estate or interests therein, including real
estate investment trusts;
(xiii) purchase participations or other
direct interests in oil, gas or other mineral
leases, rights or royalty contracts or
exploration or development programs, except
that the Fund may invest in the securities of
companies which operate, invest in, or sponsor
such programs; or
(xiv) purchase or retain the securities of
any issuer if, to the knowledge of the Fund's
management, those officers and trustees of the
Fund and its Adviser each owning beneficially
more than one-half of 1% of the outstanding
securities of such issuer together own more
than 5% of the securities of such issuer.
In connection with the qualification or registration of
the Fund's shares for sale under the securities laws of certain
states, the Fund has agreed, in addition to the foregoing
investment restrictions that it will not invest in warrants if
such warrants valued at the lower of cost or market would exceed
5% of the value of the Fund's net assets. Included within such
amount, but not to exceed 2% of the Fund's net assets may be
warrants which are not listed on the New York Stock Exchange or
the American Stock Exchange. Warrants acquired by the Fund in
units, or attached to securities may be deemed to be without
value.
____________________________________________________________
MANAGEMENT OF THE FUND
____________________________________________________________
Adviser
Alliance Capital Management L.P., a New York Stock
Exchange listed company 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 the Fund under the supervision and control
of the Fund's Trustees.
The Adviser is a leading international investment
manager supervising client accounts with assets as of September
30, 1995 of more than $140 billion (of which more than $47
billion represented the assets of investment companies). The
13
<PAGE>
Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies,
foundations and endowment funds and included, as of September 30,
1995, 29 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,350
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 107 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.
Alliance Capital Management Corporation ("ACMC"),1 the
sole general partner of, and the owner of a 1% general
partnership interest in, the Adviser, is an indirect wholly-
owned subsidiary of The Equitable Life Assurance Society of the
United States ("Equitable"), one of the largest life insurance
companies in the United States and a wholly-owned subsidiary of
The Equitable Companies Incorporated ("ECI"), a holding company
[controlled by AXA, a French insurance holding company. As of
June 30, 1995, ACMC, Inc. and Equitable Capital Management
Corporation ("ECMC"), each a wholly-owned direct or indirect
subsidiary of Equitable, together with Equitable, owned in the
aggregate approximately 59% of the issued and outstanding units
representing assignments of beneficial ownership of limited
partnership interests in the Adviser ("Units"). As of June 30,
1995, approximately 33% and 8% of the Units were owned by the
public and employees of the Adviser and its subsidiaries,
respectively, including employees of the Adviser who serve as
Trustees of the Fund.
AXA owns approximately 60% of the outstanding voting
shares of common stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations are comprised of
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of
January 1, 1995, 42.3% of the issued shares (representing 54.7%
of the voting power) of AXA were owned by Midi Participations, a
French corporation that is a holding company. The voting shares
of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
1For purposes of this Statement of Additional Information, ACMC
refers to Alliance Capital Management Corporation, the sole
general partner of the Adviser, and to the predecessor general
partner of the Adviser of the same name.
14
<PAGE>
Assicurazioni Generali S.p.A., an Italian corporation (one of
which, Belgica Insurance Holding S.A., a Belgian corporation,
owned 34.1%). As of January 1, 1995, 62.1% of the issued shares
(representing 75.7% of the voting power) of Finaxa were owned by
five French mutual insurance companies (the "Mutuelles AXA") (one
of which, AXA Assurances I.A.R.D. Mutuelle, owned 31.8% of the
issued shares) (representing 39.0% of the voting power), and
26.5% of the issued shares (representing 16.6% of the voting
power) of Finaxa were owned by Banque Paribas, a French bank.
Including the shares owned by Midi Participations, as of January
1, 1995, the Mutuelles AXA directly or indirectly owned 51.3% of
the issued shares (representing 65.8% of the voting power) of
AXA. In addition, certain subsidiaries of AXA own 0.4% of the
shares of AXA which are not entitled to be voted. Acting as a
group, the Mutuelles AXA control AXA, Midi Participations and
Finaxa.
Under the Advisory Agreement, the Adviser furnishes
advice and recommendations with respect to the Fund's portfolio
of securities and investments and provides persons satisfactory
to the Trustees to act as officers and employees of the Fund.
Such officers and employees, as well as certain Trustees of the
Fund may be employees of the Adviser or its affiliates.
The Adviser is, under the Advisory Agreement,
responsible for certain expenses incurred by the Fund, including
for example, the costs of clerical and accounting assistance to
the Trustees, expenses of office rental and any expenses incurred
in promoting the sale of Fund shares (other than the portion of
the promotional expenses borne by the Fund in accordance with an
effective plan pursuant to Rule 12b-1 under the 1940 Act, and the
costs of printing Fund prospectuses and other reports to
shareholders and fees related to registration with the Securities
and Exchange Commission (the "Commission") and with state
regulatory authorities).
The Fund has, under the Advisory Agreement, assumed the
obligation for payment of all of its other expenses. As to the
obtaining of services other than those specifically provided to
the Fund by the Adviser, the Fund may employ its own personnel.
For such services, it also may utilize personnel employed by the
Adviser or by affiliates of the Adviser. In such event, the
services will be provided to the Fund at cost and the payments
specifically approved by the Fund's Trustees.
For the services rendered by the Adviser under the
Advisory Agreement, the Fund pays the Adviser at the annual rate
of .75 of 1% of the average daily value of the Fund's net assets.
The fee is accrued daily and paid monthly. The Advisory
Agreement provides that the Adviser will reimburse the Fund for
its net expenses (exclusive of interest, taxes, brokerage,
15
<PAGE>
expenditures pursuant to the Distribution Services Agreement
described below, and extraordinary expenses, all to the extent
permitted by applicable state securities laws and regulations)
which in any year exceed the limits prescribed by any state in
which the Fund's shares are qualified for sale. The Fund may not
qualify its shares for sale in every state. The Fund believes
that at present the most restrictive state expense ratio
limitation imposed by any state in which the Fund has qualified
its shares for sale is 2.5% of the first $30 million of the
mutual fund's average net assets, 2.0% of the next $70 million of
its average net assets and 1.5% of its average net assets in
excess of $100 million. Expense reimbursements, if any, are
accrued daily and paid monthly.
For the fiscal years ended September 30, 1993, 1994 and
1995, no reimbursements were required to be made pursuant to the
most restrictive expense limitation. The advisory fees for the
fiscal years ended September 30, 1993, 1994 and 1995, amounted to
$519,589, $398,069 and $304,705, respectively.
The Advisory Agreement became effective on July 22,
1992. The Advisory Agreement was approved by the unanimous vote,
cast in person, of the Fund's Trustees, including the Trustees
who are not parties to the Advisory Agreement or interested
persons as defined in the 1940 Act of any such party, at a
meeting called for that purpose and held on October 17, 1991. At
a meeting held on June 11, 1992, a majority of the outstanding
voting securities of the Fund approved the Advisory Agreement.
The Advisory Agreement continues in effect for
successive twelve-month periods (computed from each October 1),
provided that such continuance is specifically approved at least
annually by the Fund's Trustees or by a majority vote of the
holders of the outstanding voting securities of the Fund, and, in
either case, by a majority of the Trustees who are not parties to
the Advisory Agreement or interested persons as defined in the
1940 Act of any such party. Most recently, the continuance of
the Advisory Agreement until September 30, 1996 was approved by a
vote, cast in person, of the Trustees, including a majority of
the Trustees who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for
that purpose and held on July 21, 1995.
The Advisory Agreement is terminable without penalty on
60 days' written notice by a vote of a majority of the Fund's
outstanding voting securities or by a vote of a majority of the
Fund's Trustees, or by the Adviser on 60 days' written notice,
and will automatically terminate in the event of its assignment.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder,
16
<PAGE>
the Adviser shall not be liable for any action or failure to act
in accordance with its duties thereunder.
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The
Adviser may, from time to time, make recommendations which result
in the purchase or sale of a particular security by its other
clients simultaneously with the Fund. If transactions on behalf
of more than one client during the same period increase the
demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity.
It is the policy of the Adviser to allocate advisory
recommendations and the placing of orders in a manner which is
deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the clients of the
Adviser (including the Fund) are purchasing or selling the same
security on a given day from the same broker-dealer, such
transactions may be averaged as to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to ACM Institutional Reserves, Inc.,
AFD Exchange Reserves, Alliance All-Asia Investment Fund, Inc.,
The Alliance Fund, Inc., Alliance Balanced Shares, Inc., Alliance
Bond Fund, Inc., Alliance Capital Reserves, Alliance Developing
Markets Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance Growth
and Income Fund, Inc., Alliance Income Builder Fund, Inc.,
Alliance International Fund, Alliance Money Market Fund, Alliance
Mortgage Securities Income Fund, Inc., Alliance Mortgage Strategy
Trust, Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund II,
Alliance Municipal Trust, Alliance New Europe Fund, Inc.,
Alliance North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc., Alliance
Short-Term Multi- Market Trust, Inc., Alliance Technology Fund,
Inc., Alliance Utility Income Fund, Inc., Alliance Variable
Products Series Fund, Inc., Alliance World Income Trust, Inc.,
Alliance Worldwide Privatization Fund, Inc., The Alliance
Portfolios, Fiduciary Management Associates and The Hudson River
Trust, all registered open- end investment companies; and ACM
Government Income Fund, Inc., ACM Government Securities Fund,
Inc., ACM Government Spectrum Fund, Inc., ACM Government
Opportunity Fund, Inc., ACM Managed Income Fund, Inc., ACM
Managed Dollar Income Fund, Inc., ACM Municipal Securities Income
Fund, Inc., Alliance All-Market Advantage Fund, Inc., Alliance
Global Environment Fund, Inc., Alliance World Dollar Government
Fund, Inc., Alliance World Dollar Government Fund II, Inc., The
Austria Fund, Inc., The Korean Investment Fund, Inc., The
17
<PAGE>
Southern Africa Fund, Inc. and The Spain Fund, Inc., all
registered closed-end investment companies.
Trustees and Officers
The Trustees and principal officers of the Fund, their
ages and their primary occupations during the past five years are
set forth below. Each such Trustee and officer is also a
trustee, director or officer of other registered investment
companies sponsored by the Adviser. Unless otherwise specified,
the address of each of the following persons is 1345 Avenue of
the Americas, New York, New York 10105.
Trustees
JOHN D. CARIFA,2 50, - Chairman of the Board of
Trustees, is the President and Chief Operating Officer and a
Director of ACMC, with which he has been associated since prior
to 1991.
RUTH BLOCK, 65, - was formerly Executive Vice President
and Chief Insurance Officer of Equitable. She is a Director of
Ecolab Incorporated (specialty chemicals) and Amoco Corporation
(oil and gas). Her address is Box 4653, Stamford, Connecticut,
06903.
DAVID H. DIEVLER, 66, was formerly a Senior Vice
President of ACMC, with which he was associated since prior to
1991 through 1994. He is currently an independent consultant.
His address is P.O. Box 167, Spring Lake, New Jersey, 07762.
JOHN H. DOBKIN, 53, has been the President of Historic
Hudson Valley (historic preservation) since prior to 1991.
Previously, he was Director of the National Academy of Design.
From 1987 to 1992 he was a Director of ACMC. His address is 105
West 55th Street, New York, New York, 10019.
WILLIAM H. FOULK, JR., 63, is an investment Advisor and
Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, since
1986. His address is 2 Hekma Road, Greenwich, Connecticut,
06831.
DR. JAMES M. HESTER, 71, - is President of the Harry
Frank Guggenheim Foundation and a Director of Union Carbide
Corporation, with which he has been associated since prior to
1991. He was formerly President of New York University, the New
York Botanical Garden and Rector of the United Nations
University. His address is 45 East 89th Street, New York, New
York, 10128.
2An "interested person" of the Fund as defined in the 1940 Act.
18
<PAGE>
CLIFFORD L. MICHEL, 56, - is a partner in the law firm
of Cahill Gordon & Reindel, with which he has been associated
since prior to 1991. He is Chief Executive Officer of Wenonah
Development Company (investments) and Director of Placer Dome,
Inc., and Faber-Castell Corporation (writing products). His
address is 80 Pine Street, New York, New York, 10005.
DONALD J. ROBINSON, 61, was formerly a partner at
Orrick, Herrington & Sutcliffe since prior to 1991 and is
currently of counsel to that firm. His address is 599 Lexington
Avenue, 26th Floor, New York, New York 10022.
Officers
JOHN D. CARIFA, Chairman, see biography above.
PETER W. ADAMS, Executive Vice President, 56, is a
Senior Vice President of ACMC, with which he has been associated
since prior to 1991.
ALBERT S. DeGULIS, Vice President, 60, is a Vice
President of ACMC, with which he has been associated since prior
to 1991.
DAVID P. HANDKE, JR., Vice President, 45, is a Vice
President of ACMC, with which he has been associated since prior
to 1991.
THOMAS J. BARDONG, Vice President, 50, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1991.
EDMUND P. BERGAN, JR., Secretary, 44, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD"), with which he has been associated since prior to
1991.
MARK D. GERSTEN, Treasurer and Chief Financial Officer,
44, is a Senior Vice President of Alliance Fund Services, Inc.
("AFS"), with which he has been associated since prior to 1991.
PATRICK J. FARRELL, Controller, 35, is a Vice President
of AFS, with which he has been associated since prior to 1991.
DOMENICK PUGLIESE, Assistant Secretary, 34, is a Vice
President and Associate General Counsel of AFS, with which he has
been associated since May 1995. Previously, he was Vice
President and Counsel of Concord Holding Corporation since 1994,
Vice President and Associate General Counsel of Prudential
19
<PAGE>
Securities since 1991 and an associate with Battle Fowler since
prior to 1990.
The aggregate compensation paid by the Fund to each of
the Trustees during its fiscal year ended September 30, 1995, the
aggregate compensation paid to each of the Trustees during
calendar year 1995 by all of the funds to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex") and the total number of registered
investment companies in the Alliance Fund Complex with respect to
which each of the Trustees serves as a director or trustee, are
set forth below. Neither the Fund nor any other fund in the
Alliance Fund Complex provides compensation in the form of
pension or retirement benefits to any of its directors or
trustees. Each of the Trustees is a director or trustee of one or
more other registered investment companies in the Alliance Fund
Complex.
Total Number
of Funds in
the Alliance
Total Complex,
Compensation Including the
From the Fund, as to
Alliance Fund which the
Aggregate Complex, Trustee is a
Name of Director Compensation Including the Director or
of the Fund From the Fund Fund Trustee
- ---------------- ------------- ------------- --------------
John D. Carifa $-0- $-0- 49
Ruth Block $5,100 $159,000 36
David H. Dievler $5,100 $179,200 42
John H. Dobkin $5,158 $117,200 29
William H. Foulk, Jr. $5,158 $143,500 30
Dr. James J. Hester $5,100 $156,000 37
Clifford L. Michel $5,100 $131,500 36
Donald J. Robinson $-0- $24,000 9
As of January 12, 1996, the Trustees and officers of the
Fund as a group owned less than 1% of the shares of the Fund.
20
<PAGE>
______________________________________________________________
EXPENSES OF THE FUND
______________________________________________________________
Distribution Services Agreement
The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Fund directly or indirectly to pay
expenses associated with the distribution of its shares in
accordance with a plan of distribution which is included in the
Agreement has been duly adopted and approved in accordance with
Rule 12b-1 adopted by the Securities and Exchange Commission
under the 1940 Act (the "Rule 12b-1 Plan").
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge, and, in the case of Class C shares, without
the assessment of a contingent deferred sales charge, and at the
same time to permit the Principal Underwriter to compensate
broker-dealers in connection with the sale of such shares. In
this regard the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class
B shares, and the distribution services fee on the Class C
shares, are the same as those of the initial sales charge (or
contingent deferred sales charge, when applicable) and
distribution services fee with respect to the Class A shares in
that in each case the sales charge and/or distribution services
fee provide for the financing of the distribution of the Fund's
shares.
Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Trustees of the Fund
for their review on a quarterly basis. Also, the Agreement
provides that the selection and nomination of Trustees who are
not interested persons of the Fund (as defined in the 1940 Act)
are committed to the discretion of such disinterested Trustees
then in office.
The Agreement became effective on July 22, 1992 and was
amended as of April 30, 1993 to permit the distribution of two
additional classes of shares, Class B and Class C shares. The
amendment to the Agreement was approved by the unanimous vote,
cast in person, of the disinterested Trustees at a meeting called
for that purpose and held on February 23, 1993, and by the
21
<PAGE>
initial holder of each of the Class B shares and the Class C
shares of the Fund on April 30, 1993.
The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.
During the Fund's fiscal year ended September 30, 1995,
with respect to Class A shares, the Fund paid distribution
services fees for expenditures under the Agreement in the
aggregate amount of $116,813 which constituted approximately .30%
of the average daily net assets attributable to the Class A
shares during the period and the Adviser made payments from its
own resources, as described above, aggregating $72,902. Of the
$189,715 paid by the Fund and the Adviser under the Plan with
respect to the Class A shares, $22,214 was spent on advertising,
$5,669 on printing and mailing of prospectuses for persons other
than current shareholders, $79,292 for compensation to broker-
dealers and other financial intermediaries (including $48,640 to
the Fund's Principal Underwriter), $1,459 for compensation to
sales personnel and $81,081 was spent on printing of sales
literature, travel, entertainment, due diligence and other
promotional expenses.
During the fiscal year ended September 30, 1995, with
respect to Class B shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $11,989 which constituted approximately 1.00% of the average
daily net assets attributable to the Class B shares during the
period and the Adviser made payments from its own resources, as
described above, aggregating $255,055. Of the $267,044 paid by
the Fund and the Adviser under the Plan, $31,015 was spent on
advertising, $5,538 on printing and mailing of prospectuses for
persons other than current shareholders, $119,221 for
compensation to broker-dealers and other financial intermediaries
(including $72,953 to the Fund's Principal Underwriter), $1,153
for compensation to sales personnel and $110,117 was spent on
printing of sales literature, travel, entertainment, due
diligence and other promotional expenses.
During the fiscal year ended September 30, 1995, with
respect to Class C shares, the Fund paid distribution services
fees for expenditures under the Agreement in the aggregate amount
of $4,909 which constituted approximately 1.00% of the average
daily net assets attributable to the Class C shares during the
period and the Adviser made payments from its own resources, as
described above, aggregating $67,353. Of the $72,262 paid by the
Fund and the Adviser under the Plan, with respect to Class C
22
<PAGE>
shares $9,678 was spent on advertising, $2,087 on printing and
mailing of prospectuses for persons other than current
shareholders, $27,845 for compensation to broker-dealers and
other financial intermediaries (including $22,933 to the Fund's
Principal Underwriter), $414 for compensation to sales personnel
and $32,238 was spent on printing of sales literature, travel,
entertainment, due diligence and other promotional expenses.
The Agreement will continue in effect for successive
twelve-month periods (computed from each October 1), provided,
however, that such continuance is specifically approved at least
annually by the Trustees of the Fund or by vote of the holders of
a majority of the outstanding voting securities (as defined in
the 1940 Act) of that class, and, in either case, by a majority
of the Trustees of the Fund who are not parties to the Agreement
or interested persons, as defined in the 1940 Act, of any such
party (other than as trustees of the Fund) and who have no direct
or indirect financial interest in the operation of the Rule 12b-1
Plan or any agreement related thereto. Most recently the
continuance of the Agreement until September 30, 1996 was
approved by a vote, cast in person, of the Trustees, including a
majority of the Trustees who are not "interested persons", as
defined in the 1940 Act, at their meeting held on July 21, 1995.
In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class, and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.
All material amendments to the Agreement must be
approved by a vote of the Trustees or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
either case, by a majority of the disinterested Trustees, cast in
person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class, may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class
affected. The Agreement may be terminated (a) by the Fund
without penalty at any time by a majority vote of the holders of
the outstanding voting securities of the Fund, voting separately
by class or by a majority vote of the Trustees who are not
"interested persons" as defined in the 1940 Act or (b) by the
Principal Underwriter. To terminate the Agreement, any party
must give the other parties 60 days' written notice; to terminate
23
<PAGE>
the Rule 12b-1 Plan only, the Fund need give no notice to the
Principal Underwriter. The Agreement will terminate
automatically in the event of its assignment.
Transfer Agency Agreement
AFS, an indirect wholly-owned subsidiary of the Adviser,
receives a transfer agency fee per account holder of each of the
Class A shares, Class B shares and Class C shares of the Fund,
plus reimbursement for out-of-pocket expenses. The transfer
agency fee with respect to the Class B shares is higher than the
transfer agency fee with respect to the Class A shares or the
Class C shares reflecting the additional costs associated with
the Class B contingent deferred sales charge. For the fiscal
year ended September 30, 1995, the Fund paid AFS $34,260 for
transfer agency services.
________________________________________________________________
PURCHASE OF SHARES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares -- How To Buy Shares".
General
Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase (the "initial sales charge
alternative"), with a contingent deferred sales charge (the
"deferred sales charge alternative") or without any initial or
contingent deferred sales charge (the "asset-based sales charge
alternative"), as described below. Shares of the Fund are
offered on a continuous basis through (i) investment dealers that
are members of the National Association of Securities Dealers,
Inc. and have entered into selected dealer agreements with the
Principal Underwriter ("selected dealers") (ii) depository
institutions and other financial intermediaries or their
affiliates, that have entered into selected agent agreements with
the Principal Underwriter ("selected agents") or (iii) the
Principal Underwriter. The minimum for initial investments is
$250; subsequent investments (other than reinvestments of
dividends and capital gains distributions in shares) must be in
the minimum amount of $50. As described under "Shareholder
Services," the Fund offers an automatic investment program and a
403(b)(7) retirement plan which permit investments of $25 or
more. The subscriber may use the Subscription Application found
in the Prospectus for his or her initial investment. Sales
24
<PAGE>
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B or Class C shares.
Investors may purchase shares of the Fund in the United
States either through selected dealers or agents or directly
through the Principal Underwriter. Shares may also be sold in
foreign countries where permissible. The Fund may refuse any
order for the purchase of shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.
The public offering price of shares of the Fund is their
net asset value, plus, in the case of most purchases of Class A
shares, a sales charge which will vary depending on the purchase
alternative chosen by the investor and the amount of the
purchase, as shown in the table below under "Initial Sales Charge
Alternative - Class A Shares". On each Fund business day on
which a purchase or redemption order is received by the Fund and
trading in the types of securities in which the Fund invests
might materially affect the value of Fund shares, the per share
net asset value is computed in accordance with the Fund's
Agreement and Declaration of Trust and By-Laws as of the next
close of regular trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m. Eastern time) by dividing the
value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. The respective per
share net asset values of the Class A, Class B and Class C shares
are expected to be substantially the same. Under certain
circumstances, however, the per share net asset values of the
Class B and Class C shares may be lower than the per share net
asset value of the Class A shares as a result of the daily
expense accruals of the distribution and transfer agency fees
applicable with respect to the Class B and Class C shares. Even
under those circumstances, the per share net asset values of the
three classes eventually will tend to converge immediately after
the payment of dividends, which will differ by approximately the
amount of the expense accrual differential among the classes. A
Fund business day is any weekday, exclusive of national holidays
on which the Exchange is closed and Good Friday. For purposes of
this computation, the securities in the Fund's portfolio 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 Trustees believe would
accurately reflect fair market value.
The Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
25
<PAGE>
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers or agents, the applicable public offering price
will be the net asset value as so determined, but only if the
selected dealer or agent receives the order prior to the close of
regular trading on the Exchange and transmits it to the Principal
Underwriter prior to its close of business that same day
(normally 5:00 p.m. Eastern time). The selected dealer or agent
is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to
that day's closing price must be settled between the investor and
the selected dealer or agent. If the selected dealer or agent
receives the order after the close of regular trading on the
Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on
the next day it is open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "Literature" telephone number
shown on the cover of this Statement of Additional Information.
A telephone purchase order may not exceed $500,000. Payment for
shares purchased by telephone can be made only by Electronic
Funds Transfer from a bank account maintained by the shareholder
at a bank that is a member of the National Automated Clearing
House Association ("NACHA"). If a shareholder's telephone
purchase request is received before 3:00 p.m. Eastern time on a
Fund business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day. Full and
fractional shares are credited to a subscriber's account in the
amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to the Fund, share
certificates representing shares of the Fund are not issued
except upon written request to the Fund by the shareholder or his
or her authorized selected dealer or agent. This facilitates
later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen
certificates. No certificates are issued for fractional shares,
although such shares remain in the shareholder's account on the
books of the Fund.
In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash bonuses or other incentives to dealers or
agents, including Equico Securities, Inc., an affiliate of the
26
<PAGE>
Principal Underwriter, in connection with the sale of shares of
the Fund. Such additional amounts may be utilized, in whole or
in part, to provide additional compensation to registered
representatives who sell shares of the Fund. On some occasions,
such cash or other incentives may be conditioned upon the sale of
a specified minimum dollar amount of the shares of the Fund
and/or other Alliance Mutual Funds, as defined below, during a
specific period of time. On some occasions, such cash or other
incentives may take the form of payment for attendance at
seminars, meals, sporting events or theater performances, or
payment for travel expenses, including lodging incurred in
connection with trips taken by persons associated with a dealer
or agent and 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.
Alternative Purchase Arrangements
The Fund issues three classes of shares: Class A shares
are sold to investors choosing the initial sales charge
alternative, Class B shares are sold to investors choosing the
deferred sales charge alternative, and Class C shares are sold to
investors choosing the asset-based sales charge alternative. The
three classes of shares each represent an interest in the same
portfolio of investments of the Fund, have the same rights and
are identical in all respects, except that (i) Class A shares
bear the expense of the initial sales charge (or contingent
deferred sales charge, when applicable) and Class B shares bear
the expense of the contingent deferred sales charge, (ii) Class B
shares and Class C shares each bear the expense of a higher
distribution services fee and, in the case of Class B shares,
higher transfer agency costs, (iii) each class has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan
pursuant to which its distribution services fee is paid which
relates to a specific class and other matters for which separate
class voting is appropriate under applicable law, provided that,
if the Fund submits to a vote of both the Class A shareholders
and the Class B shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder
with respect to the Class A shares, the Class A shareholders and
the Class B shareholders will vote separately by Class and (iv)
only the Class B shares are subject to a conversion feature. Each
class has different exchange privileges and certain different
shareholder service options available.
The alternative purchase arrangements permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
27
<PAGE>
investment in the Fund, the accumulated distribution services fee
and contingent deferred sales charges on Class B shares prior to
conversion, or the accumulated distribution services fee on Class
C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on Class
A shares, as described below. In this regard, the Principal
Underwriter will reject any order (except orders from certain
retirement plans) for more than $250,000 for Class B shares.
Class C shares will normally not be suitable for the investor who
qualifies to purchase Class A shares at net asset value. In
addition, the Principal Underwriter will reject any order for
more than $1,000,000 for Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, most investors purchasing Class A shares would not
have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced
initial sales charges who expect to maintain their investment for
an extended period of time might consider purchasing Class A
shares because the accumulated continuing distribution charges on
Class B shares or Class C shares may exceed the initial sales
charge on Class A shares during the life of the investment.
Again, however, such investors must weigh this consideration
against the fact that, because of such initial sales charges, not
all their funds will be invested initially.
Other investors might determine, however, that it would
be more advantageous to purchase Class B shares or Class C shares
in order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
in the case of Class B shares, being subject to a contingent
deferred sales charge for a four-year period. For example, based
on current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee, to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.
28
<PAGE>
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
The Trustees of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B and Class C shares. On an ongoing basis, the Trustees of
the Fund, pursuant to their fiduciary duties under the 1940 Act
and state laws, will seek to ensure that no such conflict arises.
During the Fund's fiscal years ended September 30, 1995,
1994 and 1993, the aggregate amounts of underwriting commissions
payable with respect to shares of the Fund were $12,263, $33,066
and $89,991, respectively. Of that amount, the Principal
Underwriter, received the amounts of $1,343, $3,644 and $8,758,
respectively; representing that portion of the sales charges paid
on shares of the Fund sold during the year which was not
reallowed to selected dealers (and was, accordingly, retained by
the Principal Underwriter). During the Fund's fiscal year ended
September 30, 1995 the Principal Underwriter received $5,325 in
contingent deferred sales charges with respect to Class B shares.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A shares for
purchasers choosing the initial sales charge alternative is the
net asset value plus a sales charge, as set forth below.
29
<PAGE>
Initial Sales Charge
Discount Or
Commission
As % of To Dealers
As % of the Public Or Agents
Amount of Net Amount Offering As % of
Purchase Invested Price Offering Price
- ---------- ----------- ----------- ---------------
Less than
$100,000 4.44% 4.25% 4.00%
$100,000 but
less than
250,000 3.36 3.25 3.00
250,000 but
less than
500,000 2.30 2.25 2.00
500,000 but
less than
1,000,000* 1.78 1.75 1.50
____________________
* There is no sales charge on transactions of $1,000,000 or more.
With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, and such charge will be applied to
redemptions of shares by shareholders who hold both Class A and
Class B shares, as described below under "Deferred Sales Charge
Alternative--Class B Shares." Proceeds from the contingent
deferred sales charge on Class A shares are paid to the Principal
Underwriter and are used by the Principal Underwriter to defray
the expenses of the Principal Underwriter related to providing
distribution-related services to the Fund in connection with the
sales of Class A shares, such as the payment of compensation to
selected dealers and agents for selling Class A Shares. With
respect to purchases of $1,000,000 or more made through selected
dealers or agents, the Adviser may, pursuant to the Agreement
described above, pay such dealers or agents from its own
resources a fee of up to 1% of the amount invested to compensate
such dealers or agents for their distribution assistance in
connection with such purchases.
30
<PAGE>
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, or (ii) in exchange for
Class A shares of other "Alliance Mutual Funds" (as that term is
defined under "Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge. The Fund receives the entire net asset value of
its Class A shares sold to investors. The Principal
Underwriter's commission is the sales charge shown above less any
applicable discount or commission "reallowed" to selected dealers
and agents. The Principal Underwriter will reallow discounts to
selected dealers and agents in the amounts indicated in the table
above. In this regard, the Principal Underwriter may elect to
reallow the entire sales charge to selected dealers and agents
for all sales with respect to which orders are placed with the
Principal Underwriter. A selected dealer who receives
reallowance in excess of 90% of such a sales charge may be deemed
to be an "underwriter" under the Securities Act.
Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on September 30, 1995.
Net Asset Value per Class A Share at $18.91
September 30, 1995
Per Share Sales Charge - 4.25%
of offering price (4.44% of
net asset value per share) .84
Class A Per Share Offering Price to
the public $19.75
======
An investor choosing the initial sales charge
alternative may under certain circumstances be entitled to pay a
reduced initial sales charge or no initial sales charge but
subject in most cases to a contingent deferred sales charge. The
circumstances under which an investor may pay a reduced sales
charge or no initial sales charge are described below.
Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions indicated in the schedule
of such charges above by combining purchases of shares of the
Fund into a single "purchase", if the resulting "purchase" totals
31
<PAGE>
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in
the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company", as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund". Currently,
the Alliance Mutual Funds include:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio
-Massachusetts Portfolio
-Michigan Portfolio
32
<PAGE>
-Minnesota Portfolio
-New Jersey Portfolio
-Ohio Portfolio
-Pennsylvania Portfolio
-Virginia Portfolio
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Strategic Balanced Fund
-Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting AFS at the address or the
"Literature" telephone number shown on the front cover of this
Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on
the previous day) of (a) all Class A, Class B and
Class C shares of the Fund held by the investor
and (b) all shares of any other Alliance Mutual
Fund held by the investor; and
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with that
of the investor into a single "purchase" (see
above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the initial sales charge for the $100,000
purchase would be at the 2.25% rate applicable to a single
33
<PAGE>
$300,000 purchase of shares of the Fund, rather than the 3.25%
rate.
To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
Statement of Intention. Class A investors may also
obtain the reduced initial sales charges shown in the table above
by means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B and/or
Class C shares) of the Fund or any other Alliance Mutual Fund.
Each purchase of shares under a Statement of Intention will be
made at the public offering price or prices applicable at the
time of such purchase to a single transaction of the dollar
amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases
of shares of the Fund or any other Alliance Mutual Fund made not
more than 90 days prior to the date that the investor signs the
Statement of Intention; however, the 13-month period during which
the Statement of Intention is in effect will begin on the date of
the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will be necessary to invest
only a total of $60,000 during the following 13 months in shares
of the Fund or any other Alliance Mutual Fund, to qualify for the
3.25% initial sales charge on the total amount being invested
(the initial sales charge applicable to an investment of
$100,000).
The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher initial
sales charge applicable to the shares actually purchased if the
full amount indicated is not purchased, and such escrowed shares
will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed shares, whether paid
in cash or reinvested in additional Fund shares, are not subject
34
<PAGE>
to escrow. When the full amount indicated has been purchased, the
escrow will be released. To the extent that an investor
purchases more than the dollar amount indicated on the Statement
of Intention and qualifies for a further reduced sales charge,
the initial sales charge will be adjusted for the entire amount
purchased at the end of the 13-month period. The difference in
the initial sales charge will be used to purchase additional
shares of the Fund subject to the rate of the initial sales
charge applicable to the actual amount of the aggregate
purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting AFS at the address or
telephone numbers shown on the cover of this Statement of
Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced initial sales
charge on a monthly basis during the 13-month period following
such a plan's initial purchase. The initial sales charge
applicable to such initial purchase of shares of the Fund will be
that normally applicable, under the schedule of the initial sales
charges set forth in this Statement of Additional Information, to
an investment 13 times larger than such initial purchase. The
sales charge applicable to each succeeding monthly purchase will
be that normally applicable, under such schedule, to an
investment equal to the sum of (i) the current month's purchase
multiplied by the number of months (including the current month)
remaining in the 13-month period, and (ii) the total purchase
previously made during the 13-month period. Sales charges
previously paid during such period will not be retroactively
adjusted on the basis of later purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A shares of the Fund to be
redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that such
reinvestment is made within 120 calendar days after the
redemption or repurchase date. Shares are sold to a reinvesting
shareholder at the net asset value next determined as described
above. A reinstatement pursuant to this privilege will not
cancel the redemption or repurchase transaction; therefore, any
gain or loss so realized will be recognized for Federal tax
purposes except that no loss will be recognized to the extent
that the proceeds are reinvested in shares of the Fund. The
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reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased,
except that the privilege may be used without limit in connection
with transactions whose sole purpose is to transfer a
shareholder's interest in the Fund to his or her individual
retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written
request sent to the Fund at the address shown on the cover of
this Statement of Additional Information.
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without any initial sales
charge) and without any contingent deferred sales charge to
certain categories of investors including: (i) investment
advisory clients of the Adviser or its affiliates; (ii) officers
and present or former Directors of the Fund; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser, the Principal Underwriter, AFS and their affiliates;
officers and directors of ACMC, the Principal Underwriter, AFS
and their affiliates; officers, directors and present and full-
time employees of selected dealers or agents; or the spouse,
sibling, direct ancestor or direct descendant (collectively
"relatives") of any such person; or any trust, individual
retirement account or retirement plan account for the benefit of
any such person or relative; or the estate of any such person or
relative, if such shares are purchased for investment purposes
(such shares may not be resold except to the Fund); (iii) certain
employee benefit plans for employees of the Adviser, the
Principal Underwriter, AFS and their affiliates; (iv) persons who
were shareholders of the Fund before the commencement of sales of
shares of the Fund subject to a sales charge; (v) persons
participating in a fee-based program, sponsored and maintained by
a registered broker-dealer and approved by the Principal
Underwriter, pursuant to which such persons pay an asset-based
fee to such broker-dealer, or its affiliate or agent, for
services in the nature of investment advisory or administrative
services; (vi) persons who establish to the Principal
Underwriter's satisfaction that they are investing within such
time period as may be designated by the Principal Underwriter,
proceeds of redemption of shares of such other registered
investment companies as may be designated from time to time by
the Principal Underwriter; and (vii) employer-sponsored qualified
pensions or profit-sharing plans (including Section 401(k)
plans), custodial account maintained pursuant to Section
403(b)(7) retirement plans and individual retirement accounts
(including individual retirement accounts to which simplified
employee pension (SEP) contributions are made), if such plans or
accounts are established or administered under programs sponsored
by administrators or other persons that have been approved by the
Principal Underwriter.
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Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative
purchase Class B shares at the public offering price equal to the
net asset value per share of the Class B shares on the date of
purchase without the imposition of a sales charge at the time of
purchase. The Class B shares are sold without an initial sales
charge so that the Fund will receive the full amount of the
investor's purchase payment.
Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares which
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.
To illustrate, assume that on or after November 19, 1993
an investor purchased 100 Class B shares at $10 per share (at a
cost of $1,000) and in the second year after purchase, the net
asset value per share is $12 and, during such time, the investor
has acquired 10 additional Class B shares upon dividend
reinvestment. If at such time the investor makes his or her first
redemption of 50 Class B shares (proceeds of $600), 10 Class B
shares will not be subject to charge because of dividend
reinvestment. With respect to the remaining 40 Class B shares,
the charge is applied only to the original cost of $10 per share
and not to the increase in net asset value of $2 per share.
Therefore, $400 of the $600 redemption proceeds will be charged
at a rate of 3.0% (the applicable rate in the second year after
purchase, as set forth below).
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The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.
Contingent Deferred Sales Charge As A %
Of Dollar Amount Subject To Charge
Shares Purchased Shares Purchased
Before On Or After
Year Since Purchase November 19, 1993 November 19, 1993
First 5.50% 4.00%
Second 4.50% 3.00%
Third 3.50% 2.00%
Fourth 2.50% 1.00%
Fifth 1.50% None
Sixth 0.50% None
In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed, in the case of
Class B shares purchased on or after November 19, 1993, that the
redemption is first of any shares in the shareholder's Fund
account that are not subject to a contingent deferred sales
charge, second of Class B shares held for over three years and
third of Class A shares that are not subject to a contingent
deferred sales charge held shortest during the one-year period
during which such shares are subject to a sales charge. When
Class B shares acquired in an exchange are redeemed, the
applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied to Class B shares of
the Alliance Mutual Fund originally purchased by the shareholder
at the time of their purchase.
The contingent deferred sales charges on Class A and
Class B shares are waived on redemptions of shares (i) following
the death or disability, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), of a shareholder, (ii) to the
extent that the redemption represents a minimum required
distribution from an individual retirement account or other
retirement plan to a shareholder who has attained the age of 70-
1/2, (iii) that had been purchased by present or former Trustees
of the Fund, by the relative of any such person, by any trust,
individual retirement account or retirement plan account for the
benefit of any such person or relative, or by the estate of any
such person or relative, or (iv)pursuant to a systematic
withdrawal plan (see "Shareholder Services - Systematic
Withdrawal Plan" below).
Conversion Feature. At the end of the period ending
eight years after the end of the calendar month in which the
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shareholder's purchase order was accepted, Class B shares will
automatically convert to Class A shares and will no longer be
subject to a higher distribution services fee. Such conversion
will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other
charge. The purpose of the conversion feature is to reduce the
distribution services fee paid by holders of Class B shares that
have been outstanding long enough for the Principal Underwriter
to have been compensated for distribution expenses incurred in
the sale of such shares.
For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub- account) convert to Class A, an equal pro-rata
portion of the Class B shares in the sub-account will also
convert to Class A.
The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that (i) the assessment of the higher distribution
services fee and transfer agency costs with respect to Class B
shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Code, and (ii)
the conversion of Class B shares to Class A shares does not
constitute a taxable event under federal income tax law. The
conversion of Class B shares to Class A shares may be suspended
if such an opinion is no longer available at the time such
conversion is to occur. In that event, no further conversions of
Class B shares would occur, and shares might continue to be
subject to the higher distribution services fee for an indefinite
period which may extend beyond the period ending eight years
after the end of the calendar month in which the shareholder's
purchase order was accepted.
Asset-Based Sales Charge Alternative--Class C Shares
Investors choosing the asset-based sales charge
alternative purchase Class C shares at the public offering price
equal to the net asset value per share of the Class C shares on
the date of purchase without the imposition of a sales charge
either at the time of purchase or upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and without a contingent deferred sales charge so that the
investor will receive as proceeds upon redemption the entire net
asset value of his or her Class C shares. The Class C
distribution services fee enables the Fund to sell Class C shares
without either an initial or contingent deferred sales charge.
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Class C shares do not convert to any other class of shares of the
Fund and incur higher distribution services fees than Class A
shares, and will thus have a higher expense ratio and pay
correspondingly lower dividends than Class A shares.
________________________________________________________________
REDEMPTION AND REPURCHASE OF SHARES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Sell Shares."
Redemption
Subject only to the limitations described below, the
Fund's Agreement and Declaration of Trust requires that the Fund
redeem the shares tendered to it, as described below, at a
redemption price equal to their net asset value as next computed
following the receipt of shares tendered for redemption in proper
form. Except for any contingent deferred sales charge which may
be applicable to Class A shares or Class B shares, there is no
redemption charge. Payment of the redemption price will be made
within seven days after the Fund's receipt of such tender for
redemption.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A shares and Class B
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
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<PAGE>
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.
To redeem shares of the Fund for which no share
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an institution that is an "eligible guarantor" as
defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended.
Telephone Redemption By Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by electronic
funds transfer, once in any 30 day period, of shares for which no
stock certificates have been issued by telephone at
(800) 221-5672 by a shareholder who has completed the appropriate
portion of the Subscription Application or, in the case of an
existing shareholder, an "Autosell" application obtained from
AFS. A telephone redemption request may not exceed $100,000, and
must be made by 4:00 p.m. Eastern time on a Fund business day as
defined above. Proceeds of telephone redemptions will be sent by
Electronic Funds Transfer to a shareholder's designated bank
account at a bank selected by the shareholder that is a member of
the NACHA.
Telephone Redemption By Check. Except as noted below,
each Fund shareholder is eligible to request redemption by check,
once in any 30-day period, of Fund shares for which no stock
certificates have been issued by telephone at (800) 221-5672
before 4:00 p.m. Eastern time on a Fund business day in an amount
not exceeding $50,000. Proceeds of such redemptions are remitted
by check to the shareholder's address of record. Telephone
redemption by check is not available with respect to shares (i)
for which certificates have been issued, (ii) held in nominee or
"street name" accounts, (iii) held by a shareholder who has
changed his or her address of record within the preceding 30
calendar days or (iv) held in any retirement plan account. A
shareholder otherwise eligible for telephone redemption by check
may cancel the privilege by written instruction to AFS, or by
checking the appropriate box on the Subscription Application
found in the Prospectus.
General. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching AFS
by telephone (although no such difficulty was apparent at any
time in connection with the 1987 market break). If a shareholder
were to experience such difficulty, the shareholder should issue
written instructions to AFS at the address shown on the cover of
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<PAGE>
this Statement of Additional Information. The Fund reserves the
right to suspend or terminate its telephone redemption service at
any time without notice. Neither the Fund nor the Adviser, the
Principal Underwriter or AFS will be responsible for the
authenticity of telephone requests for redemptions that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for redemptions are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for redemptions.
To redeem shares of the Fund represented by share
certificates, the investor should forward the appropriate share
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
share certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the share certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.
Repurchase
The Fund may repurchase shares through the Principal
Underwriter or selected dealers or agents. The repurchase price
will be the net asset value next determined after the Principal
Underwriter receives the request (less the contingent deferred
sales charge, if any, with respect to the Class A shares and
Class B shares), except that requests placed through selected
dealers or agents before the close of regular trading on the
Exchange on any day will be executed at the net asset value
determined as of such close of regular trading on that day if
received by the Principal Underwriter prior to its close of
business on that day (normally 5:00 p.m. Eastern time). The
selected dealer or agent is responsible for transmitting the
request to the Principal Underwriter by 5:00 p.m. If the
selected dealer or agent fails to do so, the shareholder's right
to receive that day's closing price must be settled between the
shareholder and the dealer or agent. A shareholder may offer
shares of the Fund to the Principal Underwriter either directly
or through a selected dealer or agent. Neither the Fund nor the
Principal Underwriter charges a fee or commission in connection
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<PAGE>
with the repurchase of shares (except for the contingent deferred
sales charge, if any, with respect to Class A shares and Class B
shares). Normally, if shares of the Fund are offered through a
selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.
________________________________________________________________
SHAREHOLDER SERVICES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares- - Shareholder Services". The shareholder services set
forth below are applicable to all three classes of shares of the
Fund.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing "pre-authorized check"
drafts drawn on the investor's own bank account. Under such a
program, pre-authorized monthly drafts for a fixed amount (at
least $25) are used to purchase shares through the selected
dealer or selected agent designated by the investor at the public
offering price next determined after the Principal Underwriter
receives the proceeds from the investor's bank. Drafts may be
made in paper form or, if the investor's bank is a member of the
NACHA, in electronic form. If made in paper form, the draft is
normally made on the 20th day of each month, or the next business
day thereafter. If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
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<PAGE>
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus. Current shareholders should contact AFS at the
address or telephone numbers shown on the cover of this Statement
of Additional Information to establish an automatic investment
program.
Exchange Privilege
Class A shareholders of the Fund can exchange their
Class A shares for Class A shares of any other Alliance Mutual
Fund that offers Class A shares and for shares of Alliance World
Income Trust, Inc. without the payment of any sales or service
charges. For the purpose of applying any applicable contingent
deferred sales charge upon newly acquired Class A shares, the
period of time the Class A shares surrendered in the exchange
have been held is added to the period of time the newly acquired
shares have been held. Prospectuses for each Alliance Mutual
Fund may be obtained by contacting AFS at the address shown on
the cover of this Statement of Additional Information or by
telephone at (800) 227-4618 or, in Illinois, (800) 227-4170.
Class B shareholders of the Fund can exchange their
Class B shares ("original Class B shares") for Class B shares of
any other Alliance Mutual Fund that offers Class B shares ("new
Class B shares") without the payment of any contingent deferred
sales or service charges. For purposes of computing both the
time remaining before the new Class B shares convert to Class A
shares of that fund and the contingent deferred sales charge
payable upon disposition of the new Class B shares, the period of
time for which the original Class B shares have been held is
added to the period of time for which the new Class B shares have
been held. After an exchange, new Class B shares will
automatically convert into Class A shares in accordance with the
conversion schedule applicable to the Alliance Mutual Fund Class
B shares originally purchased for cash, and when redemption
occurs, the contingent deferred sales charge schedule applicable
to the Class B shares originally purchased is applied.
Class C shareholders of the Fund can exchange their
Class C shares for Class C shares of any other Alliance Mutual
Fund that offers Class C shares.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
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<PAGE>
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for Federal income tax purposes.
Each Fund shareholder, and the shareholder's selected
dealer or agent, are authorized to make telephone requests for
exchanges unless AFS, receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
share certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange
should telephone AFS with their account number and other details
of the exchange, at (800) 221-5672 before 4:00 p.m., Eastern
time, on a Fund business day as defined above. Telephone requests
for exchange received before 4:00 p.m. Eastern time on a Fund
business day will be processed as of the close of business on
that day. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching AFS
by telephone (although no such difficulty was apparent at any
time in connection with the 1987 market break). If a shareholder
were to experience such difficulty, the shareholder should issue
written instructions to AFS at the address shown on the cover of
this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the following
Fund business day.
Neither the Alliance Mutual Funds nor the Adviser, the
Principal Underwriter or AFS will be responsible for the
authenticity of telephone requests for exchanges that the Fund
reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
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<PAGE>
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for exchanges.
The exchange privilege is available only in states where
shares of the Alliance Mutual Funds being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.
Retirement Plans
The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact AFS at the "Literature"
telephone number on the cover of this Statement of Additional
Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals.
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If the aggregate net asset value of shares of the
Alliance Mutual Funds held by a qualified plan investing through
the Alliance Premier Retirement Program reaches $5 million on or
before December 15 in any year, all Class B shares and C shares
of the Fund held by such plan can be exchanged, without any sales
charge, for Class A shares of such Fund shortly before the end of
the calendar year in which the $5 million level is attained. The
Fund waives any contingent deferred sales charge applicable to
redemptions of Class B shares by qualified plans investing
through the Alliance Premier Retirement Program.
Simplified Employee Pension Plan ("SEP"). Sole
proprietors, partnerships and corporations may sponsor a SEP
under which they make annual tax-deductible contributions to an
IRA established by each eligible employee within prescribed
limits based on employee compensation.
403(b)(7) Retirement Plan. Certain tax-exempt
organizations and public educational institutions may sponsor
retirements plans under which an employee may agree that monies
deducted from his or her compensation (minimum $25 per pay
period) may be contributed by the employer to a custodial account
established for the employee under the plan.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to AFS as compensation for its services to the retirement plan
accounts maintained with the Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact AFS.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B or Class C Fund account, a Class A, Class
B or Class C account with one or more other Alliance Mutual Funds
may direct that income dividends and/or capital gains paid on his
or her Class A, Class B or Class C Fund shares be automatically
reinvested, in any amount, without the payment of any sales or
service charges, in shares of the same class of such other
Alliance Mutual Fund(s). Further information can be obtained by
contacting AFS at the address or the "Literature" telephone
number shown on the cover of this Statement of Additional
Information. Investors wishing to establish a dividend direction
plan in connection with their initial investment should complete
the appropriate section of the Subscription Application found in
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<PAGE>
the Prospectus. Current shareholders should contact AFS to
establish a dividend direction plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions and, except as discussed
below, any applicable contingent deferred sales charge. Shares
acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and
thereafter other shares will be liquidated to the extent
necessary, and depending upon the amount withdrawn, the
investor's principal may be depleted. A systematic withdrawal
plan may be terminated at any time by the shareholder or the
Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level. Therefore,
redemptions of shares under the plan may reduce or even liquidate
a shareholder's account and may subject the shareholder to the
Fund's involuntary redemption provisions. See "Redemption and
Repurchase of Shares -- General". Purchases of additional shares
concurrently with withdrawals are undesirable because of sales
charges when purchases are made. While an occasional lump-sum
investment may be made by a holder of Class A shares who is
maintaining a systematic withdrawal plan, such investment should
normally be an amount equivalent to three times the annual
withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting AFS at the address or the "Literature"
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<PAGE>
telephone number shown on the cover of this Statement of
Additional Information.
Class B CDSC Waiver for Shares Acquired After July 1,
1995. Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B shares in a shareholder's account acquired after
July 1, 1995 may be redeemed free of any contingent deferred
sales charge. Class B shares acquired after July 1, 1995 that
are not subject to a contingent deferred sales charge (such as
shares acquired with reinvested dividends or distributions) will
be redeemed first and will count toward these limitations.
Remaining Class B shares acquired after July 1, 1995 that are
held the longest will be redeemed next. Redemptions of Class B
shares acquired after July 1, 1995 in excess of the foregoing
limitations and redemptions of Class B shares acquired before
July 1, 1995 will be subject to any otherwise applicable
contingent deferred sales charge.
Statements and Reports
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, Ernst & Young LLP, as
well as a confirmation of each purchase and redemption. By
contacting his or her broker or AFS, a shareholder can arrange
for copies of his or her account statements to be sent to another
person.
________________________________________________________________
NET ASSET VALUE
________________________________________________________________
Shares of the Fund will be priced at the net asset value
per share next determined after receipt of a purchase or
redemption order. The net asset value per share is computed in
accordance with the Fund's Agreement and Declaration of Trust and
By-Laws as of the next close of regular trading on the Exchange
following receipt of a purchase order or tender of a redemption
order on each Fund business day on which such an order is
received and trading in the types of securities in which the Fund
invests might materially affect the value of the Fund's shares
and on such other days as the Trustees of the Fund deems
necessary in order to comply with Rule 22c-1 under the 1940 Act.
The net asset value per share is calculated by adding the market
value of all securities in the Fund's portfolio and other assets,
subtracting liabilities incurred or accrued and dividing by the
total number of the Fund's shares then outstanding.
49
<PAGE>
For purposes of this computation, readily marketable
portfolio securities listed on the Exchange are valued, except as
indicated below, at the last sale price reflected on the
consolidated tape at the close of the Exchange on the business
day as of which such value is being determined. If there has
been no sale on such day, the securities are valued at the mean
of the closing bid and asked prices on such day. If no bid or
asked prices are quoted on such day, then the security is valued
by such method as the Trustees of the Fund shall determine in
good faith to reflect its fair market value. Readily marketable
securities, including options, not listed on the Exchange but
listed on other national securities exchanges or admitted to
trading on the National Association of Securities Dealers
Automatic Quotations, Inc. ("NASDAQ") National List ("List") are
valued in like manner. Portfolio securities traded on more than
one national securities exchange are valued at the last sale
price on the business day as of which such value is being
determined as reflected on the tape at the close of the exchange
representing the principal market for such securities. Stock
index futures contracts will be valued in a like manner, except
that open futures contracts sales will be valued using the
closing settlement price or, in the absence of such a price, the
most recent quoted asked price.
Readily marketable securities including options, traded
only in the over-the-counter market, including listed securities
whose primary market is believed by the Adviser to be over-the-
counter but excluding those admitted to trading on the List, are
valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by
NASDAQ, the National Quotation Bureau or such other comparable
sources as the Trustees of the Fund deem appropriate to reflect
their fair market value. United States Government obligations
and other debt instruments having sixty days or less remaining
until maturity are stated at amortized cost which approximates
market value. All other assets of the Fund, including restricted
and not readily marketable securities, are valued in such manner
as the Trustees of the Fund in good faith deem appropriate to
reflect their fair market value.
The assets belonging to the Class A shares, the Class B
shares and the Class C shares will be invested together in a
single portfolio. The net asset value of each class will be
determined separately by subtracting the accrued expenses and
liabilities allocated to that class from the assets belonging to
that class pursuant to an order issued by the Commission.
50
<PAGE>
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
The Fund qualified for the fiscal year ended
September 30, 1995 and intends to qualify in the future for tax
treatment as a "regulated investment company" under the Code for
each taxable year. Such qualification does not, of course,
involve governmental supervision of management or investment
practices or policies. Investors should consult their own
counsel for a complete understanding of the requirements the Fund
must meet to qualify for such treatment. The information set
forth in the Prospectus and the following discussion relate
solely to Federal income taxes on dividends and distributions by
the Fund and assumes that the Fund qualifies as a regulated
investment company. Investors should consult their own counsel
for further details and for the application of state and local
tax laws to his or her particular situation.
Until the Trustees of the Fund otherwise determine, each
income dividend and capital gains distribution, if any, declared
by the Fund on its outstanding shares will, at the election of
each shareholder, be paid in cash or reinvested in additional
full or fractional shares of the Fund. Election to receive
dividends and distributions in cash or full or fractional shares
is made at the time the 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 the 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 Class C shares, and any incremental transfer agency
costs relating to Class B shares, will be borne exclusively by
the class to which they relate.
Dividends of net ordinary income and distributions of
net short-term capital gains are taxable to shareholders as
ordinary income. The dividends-received deduction for
corporations should also be applicable to the Fund's dividends of
net ordinary income and distributions of net realized short-term
capital gains. The amount of such dividends and distributions
eligible for the dividends-received deduction is limited to the
amount of dividends from domestic corporations received by the
Fund during the fiscal year. Under provisions of the tax law a
corporation's dividends-received deduction will be disallowed
51
<PAGE>
unless the corporation holds shares in the Fund at least 46 days.
Furthermore, provisions of the tax law disallow the dividends-
received deduction to the extent a corporation's investment in
shares of the Fund is financed with indebtedness.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders as capital gains distributions will not be
taxable to the Fund but will be taxable to the shareholders as
long-term capital gains, irrespective of the length of time a
shareholder may have held his Fund shares. Distributions of net
realized long-term capital gains are not eligible for the
dividends received deduction.
A dividend or capital gain distribution with respect to
shares of the Fund held by a tax-deferred or qualified retirement
plan, such as an IRA, 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.
Dividends and distributions are taxable in the manner
discussed regardless of whether they are paid to the shareholder
in cash or are reinvested in additional shares of the Fund.
In view of the Fund's investment policies, it is
expected that dividends from domestic corporations will be a
significant part of the Fund's gross income and, accordingly,
that a significant part of such dividends and distributions by
the Fund will be eligible for the dividends-received deduction;
however, this is largely dependent on the Fund's investment
activities, and accordingly cannot be predicted with certainty.
________________________________________________________________
PORTFOLIO TRANSACTIONS
________________________________________________________________
Subject to the general supervision and control of the
Trustees of the Fund, the Adviser makes the Fund's portfolio
decisions and determines the broker to be used in each specific
transaction with the objective of negotiating best price and
execution. When consistent with the objective of obtaining best
execution, brokerage may be directed to persons or firms
supplying investment information to the Adviser. There may be
occasions where the transaction cost charged by a broker may be
greater than that which another broker may charge if the Fund
determines in good faith that the amount of such transaction cost
is reasonable in relation to the value of the brokerage, research
52
<PAGE>
and statistical services provided by the executing broker.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking
best execution, the Fund may consider sales of shares of the Fund
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
Neither the Fund nor the Adviser has entered into
agreements or understandings with any brokers regarding the
placement of securities transactions because of research or
statistical services they provide. To the extent that such
persons or firms supply investment information to the Adviser for
use in rendering investment advice to the Fund, such information
may be supplied at no cost to the Adviser. While it is
impossible to place an actual dollar value on such investment
information, its receipt by the Adviser probably does not reduce
the overall expenses of the Adviser to any material extent.
The investment information provided to the Adviser is of
the type described in Section 28(e)(3) of the Securities Exchange
Act of 1934 and is designed to augment the Adviser's own internal
research and investment strategy capabilities. Research and
statistical services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its client accounts but not all such services may
be used by the Adviser in connection with the Fund.
The Fund may deal in some instances in securities which
are not listed on a national stock exchange but are traded in the
over-the-counter market. The Fund may also purchase listed
securities through the third market, i.e., from a dealer which is
not a member of the exchange on which a security is listed.
Where transactions are executed in the over-the-counter market or
third market, the Fund will seek to deal with the primary market
makers; but when necessary in order to obtain the best price and
execution, it will utilize the services of others. In all cases,
the Fund will attempt to negotiate best execution.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ, for which DLJ may receive a portion of the
brokerage commission. In such instances, the placement of orders
with such brokers would be consistent with the Fund's objective
of obtaining best execution and would not be dependent upon the
fact that DLJ is an affiliate of the Adviser. With respect to
orders placed with DLJ for execution on a national securities
exchange, commissions received must conform to Section
53
<PAGE>
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which
permit an affiliated person of a registered investment company
(such as the Fund), or any affiliated person of such person, to
receive a brokerage commission from such registered investment
company provided that such commission is reasonable and fair
compared to the commissions received by other brokers in
connection with comparable transactions involving similar
securities during a comparable period of time.
During the fiscal years ended September 30, 1993, 1994
and 1995, the Fund incurred brokerage commissions amounting in
the aggregate to $103,356, $80,344 and $57,130, respectively.
During the fiscal years ended September 30, 1993, 1994 and 1995,
brokerage commissions amounting in the aggregate to $-0-, $-0-
and $-0-, respectively, were paid to DLJ and brokerage
commissions amounting in the aggregate to $-0-, $-0- and $-0-,
respectively, were paid to brokers utilizing the Pershing
Division of DLJ. During the fiscal year ended September 30, 1995,
the brokerage commissions paid to DLJ constituted 0% of the
Fund's aggregate brokerage commissions and the brokerage
commissions paid to brokers utilizing the Pershing Division of
DLJ constituted 0% of the Fund's aggregate brokerage commissions.
During the fiscal year ended September 30, 1995, of the Fund's
aggregate dollar amount of brokerage transactions involving the
payment of commissions, 0% were effected through DLJ and
0% were effected through brokers utilizing the Pershing Division
of DLJ.
During the fiscal year ended September 30, 1995,
transactions in portfolio securities of the Fund aggregating
$35,751,143, with associated brokerage commissions of $57,130 was
allocated to persons or firms supplying research services to the
Fund or the Adviser.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
Capitalization
The Fund has an unlimited number of authorized Class A,
Class B and Class C shares of beneficial interest par value $.01
per share. All shares of the Fund, when issued, are fully paid
and non-assessable. The Trustees are authorized to reclassify
and issue any unissued shares to any number of additional series
without shareholder approval. Accordingly, the Trustees in the
future, for reasons such as the desire to establish one or more
additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
54
<PAGE>
of shares. Any issuance of shares of another class or series
would be governed by the 1940 Act and the law of the Commonwealth
of Massachusetts. If shares of another series were issued in
connection with the creation of a second portfolio, each share of
either portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series on matters, such as the election of Trustees, that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Advisory Agreement and changes in investment policy, shares
of each portfolio would vote as a separate series.
Procedures for calling a shareholders' meeting for the
removal of Trustees of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act will be available to shareholders
of the Fund. The rights of the holders of shares of a series may
not be modified except by the vote of a majority of the
outstanding shares of such series.
An order has been received from the Commission
permitting the issuance and sale of three classes of shares
representing interests in the Fund. The issuance and sale of any
additional classes will require an additional order from the
Commission. There is no assurance that such exemptive relief
would be granted.
At January 12, 1996 there were 2,607,643 shares of
beneficial interest of the Fund outstanding, including 2,381,120
Class A shares, 179,507 Class B shares and 47,016 Class C shares.
To the knowledge of the Fund, the following persons owned of
record, and no person owned beneficially, 5% or more of the
outstanding shares of the Fund as of January 12, 1996:
55
<PAGE>
No. of % of % of %of
Name and Address Shares Class A Class B Class C
State Street Bank 425,170 17.86
and Trust Co.
Skiff & Co., A/C OC7 #2108
1 Enterprise Dr. WSC
North Quincy, MA 02171
Atwell & Co. 291118 144,334 6.06
C/O United States Trust Co. NY
ATTN Securities Dept.
P.O. Box 2044 Peck Slip Stat
New York, NY 10038
Merrill Lynch 32,057 17.86
Mutual Fund Operations
4800 Deer Lake Dr East
Jacksonville, FL 32246
Merrill Lynch 15,658 33.30
Mutual Fund Operations
4800 Deer Lake Dr East
Jacksonville, FL 32246
Alliance Plans Div/FTC 3,052 6.49
C/F Janet Brettingen IRA
RR #5 Box 15
Mora, MN 55051
PaineWebber For the Benefit 2,743 5.88
of Unicare Homes, Inc.
Attn: Robert J. Abramowski
EIA Account
105 West Michigan Street
Milwaukee, WI 53203
Certain shareholders of the Fund are discretionary
managed accounts of the Adviser, which thereby exercised
investment discretion at January 12, 1996 with respect to an
aggregate of 75,115 shares, representing approximately 3% of all
outstanding shares as of that date.
Shareholder Liability
Under Massachusetts law, shareholders could, under
certain circumstances, be held personally liable for the
obligations of the Fund. However, the Agreement and Declaration
of Trust disclaims shareholder liability for acts or obligations
of the Fund and requires that the Trustees shall use their best
efforts to ensure that notice of such disclaimer be given in each
56
<PAGE>
note, bond, contract, instrument, certificate or undertaking made
or issued by the trustees or officers of the Fund. The Agreement
and Declaration of Trust provides for indemnification out of the
property of a Fund for all loss and expense of any shareholder of
the Fund held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in
which a Fund would be unable to meet its obligations.
Custodian
State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, acts as custodian for the
securities and cash of the Fund but plays no part in deciding the
purchase or sale of portfolio securities.
Principal Underwriter
Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter, and as such may solicit orders from the
public to purchase shares of the Fund. Alliance Fund
Distributors, Inc. is not obligated to sell any specific amount
of shares and will purchase shares for resale only against orders
for shares. Under the Agreement between the Fund and the
Principal Underwriter, the Fund has agreed to indemnify the
Principal Underwriter, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities,
including liabilities under the Securities Act.
Counsel
Legal matters in connection with the issuance of the
shares of beneficial interest offered hereby are passed upon by
Seward & Kissel, One Battery Park Plaza, New York, New York
10004. Seward & Kissel has relied upon the opinion of Sullivan &
Worcester, One Post Office Square, Boston, Massachusetts 02109,
for matters relating to Massachusetts law.
Independent Auditors
Ernst & Young LLP, 787 Seventh Avenue, New York, New
York 10019, have been appointed as independent auditors for the
Fund.
Total Return Quotations
From time to time the Fund advertises its "total
return". Computed separately for each class, the Fund's "total
return" is its average annual compounded total return for recent
57
<PAGE>
one, five, and ten-year periods (or the period since the Fund's
inception). The Fund's total return for such a period is computed
by finding, through the use of a formula prescribed by the
Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to
the value of such investment at the end of the period. For
purposes of computing total return, income dividends and capital
gains distributions paid on shares of the Fund are assumed to
have been reinvested when paid and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been
paid.
The Fund reclassified its shares outstanding prior to
May 3, 1993 as Class A shares. The Fund's average annual
compounded total return for Class A shares was 25.32% for the
year ended September 30, 1995, 15.25% for the five year period
ended September 30, 1995 and 14.06% for the ten year period ended
September 30, 1995. The Fund's average annual compounded total
return for Class B shares was 25.94% for the year ended September
30, 1995 and 13.52% for the period May 3, 1993 (commencement of
distribution) through September 30, 1995. The Fund's average
annual compounded total return for Class C shares was 29.99% for
the year ended September 30, 1995 and 14.25% for the period May
3, 1993 (commencement of distribution) through September 30,
1995.
The Fund's total return is not fixed and will fluctuate
in response to prevailing market conditions or as a function of
the type and quality of the securities in the Fund's portfolio
and its expenses. Total return information is useful in reviewing
the Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments
which pay a fixed yield for a stated period of time. An
investor's principal invested in the Fund is not fixed and will
fluctuate in response to prevailing market conditions.
Advertisements quoting performance ratings of the Fund
as measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. ("Lipper")
and advertisements presenting the historical record of payments
of income dividends by the Fund may also from time to time be
sent to investors or placed in newspapers or magazines such as
Barrons, Business Week, Changing Times, Forbes, Investor's Daily,
Money Magazine, The New York Times and The Wall Street Journal or
other media on behalf of the Fund.
Additional Information
Any shareholder inquiries may be directed to the
shareholder's broker or to AFS at the address or telephone
numbers shown on the front cover of this Statement of Additional
58
<PAGE>
Information. This Statement of Additional Information does not
contain all the information set forth in the Registration
Statement filed by the Fund with the Commission under the
Securities Act. Copies of the Registration Statement may be
obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in
Washington, D.C.
59
00250043.AF0
<PAGE>
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995 ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS-98.9%
CONSUMER PRODUCTS & SERVICES-57.4%
AUTO & RELATED-2.4%
Allen Group, Inc. 16,000 $ 580,000
General Motors Corp. Cl.E 10,000 455,000
1,035,000
BROADCASTING & CABLE-15.2%
Cellular Communications, Inc.* 26,500 1,424,375
Comcast Corp. Cl.A (SPL) 55,000 1,100,000
LIN Television Corp.* 12,000 372,000
News Corp., Ltd. 43,000 946,000
Tele-Communications, Inc.* 23,000 615,250
United International Holdings Co. Cl. A* 35,000 647,500
Viacom, Inc.* 32,000 1,592,000
6,697,125
COSMETICS-3.5%
Gillette Co. 32,000 1,524,000
DRUGS, HOSPITAL SUPPLIES & MEDICAL SERVICES-17.7%
Abbott Laboratories 37,000 1,577,125
Bristol-Myers Squibb Co. 12,000 874,500
Invacare Corp. 33,000 1,584,000
Merck & Co., Inc. 20,000 1,120,000
Stryker Corp. 35,000 1,631,875
United Healthcare Corp. 20,000 977,500
7,765,000
ENTERTAINMENT & LEISURE TIME-4.4%
Time Warner, Inc. 10,000 397,500
Walt Disney Co. 27,000 1,549,125
1,946,625
FOOD, BEVERAGES & TOBACCO-9.8%
PepsiCo, Inc. 26,000 $1,326,000
Philip Morris Cos., Inc. 14,000 1,169,000
UST, Inc. 20,000 572,500
Wrigley (Wm.) Jr. Co. 25,000 1,262,500
4,330,000
RESTAURANTS & LODGING-2.6%
McDonald's Corp. 30,000 1,147,500
RETAILING-1.8%
Home Depot, Inc. 20,000 797,500
25,242,750
FINANCIAL SERVICES-21.7%
BANKING & CREDIT-5.6%
MBNA Corp. 30,000 1,248,750
Northern Trust Corp. 27,000 1,242,000
2,490,750
BROKERAGE-3.7%
Morgan Stanley Group, Inc. 17,000 1,634,125
INSURANCE-7.7%
American International Group, Inc. 16,000 1,360,000
Progressive Corp. 45,000 2,013,750
3,373,750
MORTGAGE-4.7%
Charter One Financial, Inc. 35,000 1,032,500
Federal National Mortgage Assn. 10,000 1,035,000
2,067,500
9,566,125
TECHNOLOGY-13.5%
COMPUTER SOFTWARE & SERVICES-4.0%
Intuit, Inc.* 14,000 658,000
Microsoft Corp.* 12,000 1,086,000
1,744,000
6
COMPANY SHARES VALUE
- ----------------------------------------------------------------------
SEMI-CONDUCTORS & RELATED-9.5%
Intel Corp. 35,000 $2,104,375
Motorola, Inc. 27,000 2,062,125
4,166,500
5,910,500
BASIC INDUSTRIES-3.3%
ELECTRICAL EQUIPMENT-1.9%
General Electric Co. 13,000 828,750
OIL & GAS-1.4%
Royal Dutch Petroleum Co. 5,000 613,750
1,442,500
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ----------------------------------------------------------------------
UTILITIES-3.0%
TELEPHONE-3.0%
AirTouch Communications, Inc.* 19,000 $ 581,875
ALLTEL Corp. 25,000 746,875
1,328,750
Total Common Stocks
(cost $27,369,321) 43,490,625
COMMERCIAL PAPER-1.5%
American Express Co.
5.75%, 10/02/95
(amortized cost $634,899) $635 634,899
TOTAL INVESTMENTS-100.4%
(cost $28,004,220) 44,125,524
Other assets less liabilities-(0.4%) (155,119)
NET ASSETS-100% $43,970,405
* Non-income producing security.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995 ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $28,004,220) $44,125,524
Cash 12,575
Receivable for investment securities sold 199,643
Dividends receivable 70,648
Receivable for shares of beneficial interest sold 31,977
Total assets 44,440,367
LIABILITIES
Payable for investment securities purchased 279,375
Payable for shares of beneficial interest redeemed 44,654
Advisory fee payable 26,549
Distribution fee payable 12,211
Accrued expenses 107,173
Total liabilities 469,962
NET ASSETS $43,970,405
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $23,283
Additional paid-in capital 22,161,327
Accumulated net realized gain 5,664,491
Net unrealized appreciation of investments 16,121,304
$43,970,405
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share ($40,814,514/
2,157,860 shares of beneficial interest issued and outstanding) $18.91
Sales charge-4.25% of public offering price .84
Maximum offering price $19.75
CLASS B SHARES
Net asset value and offering price per share ($2,490,869/
134,563 shares of beneficial interest issued and outstanding) $18.51
CLASS C SHARES
Net asset value, redemption and offering price per share ($665,022/
35,892 shares of beneficial interest issued and outstanding) $18.53
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995 ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $5,787) $545,126
Interest 13,535 $ 558,661
EXPENSES
Advisory fee 304,705
Distribution fee - Class A 116,813
Distribution fee - Class B 11,989
Distribution fee - Class C 4,909
Administrative 142,812
Audit and legal 88,950
Custodian 66,952
Registration 59,315
Transfer agency 52,623
Trustees' fees 32,474
Printing 32,266
Miscellaneous 19,191
Total expenses 932,999
Net investment loss (374,338)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 5,764,023
Net change in unrealized appreciation of investments 5,516,315
Net gain on investments 11,280,338
NET INCREASE IN NET ASSETS FROM OPERATIONS $10,906,000
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
SEP. 30, SEP. 30,
1995 1994
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (374,338) $ (232,082)
Net realized gain on investments 5,764,023 6,398,156
Net change in unrealized appreciation
of investments 5,516,315 (9,126,084)
Net increase(decrease) in net assets
from operations 10,906,000 (2,960,010)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments
Class A (6,017,059) (8,811,714)
Class B (66,236) (34,271)
Class C (63,528) (47,987)
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net decrease (4,446,178) (12,206,038)
Total increase (decrease) 312,999 (24,060,020)
NET ASSETS
Beginning of year 43,657,406 67,717,426
End of year $43,970,405 $43,657,406
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Counterpoint Fund (the 'Fund') is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with a
front-end sales charge of up to 4.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 4% to zero depending on
the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Class C shares are sold without an initial or contingent deferred
sales charge. All three classes of shares have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last reported sales price, or, if no sale occurred, at the mean of the bid and
asked price at the regular close of the New York Stock Exchange.
Over-the-counter securities not traded on national securities exchanges are
valued at the mean of the closing bid and asked price. Securities which mature
in 60 days or less are valued at amortized cost which approximates market
value. Securities for which current market quotations are not readily available
(including investments which are subject to limitations as to their resale) are
valued at their fair value as determined in good faith by the Board of Trustees.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income, including
amortization for premium and discount, is accrued daily. Security transactions
are accounted for on the date the securities are purchased or sold. Security
gains and losses are determined on the identified cost basis.
4. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
5. RECLASSIFICATION OF NET ASSETS
As the Fund may not utilize net operating losses in future periods for tax
purposes, the Fund reclassified net operating losses of $374,338 to additional
paid-in capital at September 30, 1995. This reclassification had no effect on
net assets.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Fund pays Alliance
Capital Management L.P., (the 'Adviser') an advisory fee at an annual rate of
.75 of 1% of the average daily net assets of the Fund. Such fee is accrued
daily and paid monthly.
The Adviser has agreed, under the terms of the investment advisory agreement,
to reimburse the Fund to the extent that its aggregate expenses (exclusive of
interest, taxes, brokerage, distribution fees and extraordinary expenses)
exceed the limits prescribed by any state in which the Fund's shares are
qualified for sale. The Fund believes that the most restrictive expense ratio
limitation
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
imposed by any state is 2.5% of the first $30 million of its average daily net
assets, 2% of the next $70 million of its average daily net assets and 1.5% of
its average daily net assets in excess of $100 million. No reimbursement was
required for the year ended September 30, 1995. Pursuant to the advisory
agreement, the Fund paid $142,812 to the Adviser representing the cost of
certain legal and accounting services provided to the Fund by the Adviser for
the year ended September 30, 1995.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Service Agreement for providing personnel and facilities
to perform transfer agency services for the Fund. Such compensation amounted to
$34,260 for the year ended September 30, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received sales
charges of $1,343 from the sale of Class A shares and $5,325 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class B
shares for the year ended September 30, 1995.
Brokerage commissions paid on securities transactions for the year ended
September 30, 1995 amounted to $57,130 none of which was paid to affiliated
brokers.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Fund has adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the Fund's average daily net assets attributable to
Class A shares and 1% of the average daily net assets attributable to both
Class B and Class C shares. Such fee is accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their
entirety for distribution assistance and promotional activities. The
Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $369,497 and $193,244, for Class B and
C shares, respectively; such costs may be recovered from the Fund in future
periods so long as the Agreement is in effect. In accordance with the
Agreement, there is no provision for recovery of unreimbursed distribution
costs incurred by the Distributor beyond the current fiscal year for Class A
shares. The Agreement also provides that the Adviser may use its own resources
to finance the distribution of the Fund's shares.
NOTE D: INVESTMENT TRANSACTIONS
Total purchases and sales of investment securities (excluding short-term
investments) aggregated $12,273,345 and $23,477,798, respectively, for the year
ended September 30, 1995. At September 30, 1995, the cost of securities for
federal income tax purposes was $28,058,500. Accordingly, gross unrealized
appreciation of investments was $16,213,183 and gross unrealized depreciation
of investments was $146,159, resulting in net unrealized appreciation of
$16,067,024.
12
ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $.01 par value shares of beneficial interest
authorized, designated Class A, Class B and Class C shares. Transactions in
shares of beneficial interest were as follows:
SHARES AMOUNT
------------------------ ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEP. 30, SEP. 30, SEP., 30, SEP. 30,
1995 1994 1995 1994
---------- ------------ ------------- -------------
CLASS A
Shares sold 170,232 230,472 $ 2,678,638 $ 4,094,191
Shares issued in
reinvestment of
distributions 372,182 427,840 5,236,597 7,615,558
Shares redeemed (876,701) (1,390,350) (14,198,393) (24,619,455)
Net decrease (334,287) (732,038) $ (6,283,158) $(12,909,706)
CLASS B
Shares sold 222,071 36,284 $ 3,610,291 $ 656,549
Shares issued in
reinvestment of
distributions 3,246 1,211 44,952 21,430
Shares redeemed (121,879) (12,139) (1,993,362) (220,299)
Net increase 103,438 25,356 $ 1,661,881 $ 457,680
CLASS C
Shares sold 31,314 19,402 $ 514,912 $ 354,646
Shares issued in
reinvestment of
distributions 2,218 1,288 30,739 22,802
Shares redeemed (22,328) (7,610) (370,552) (131,460)
Net increase 11,204 13,080 $ 175,099 $ 245,988
13
FINANCIAL HIGHLIGHTS ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
YEAR
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------
1995 1994 1993 1992 1991
----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $17.14 $20.89 $19.45 $19.08 $15.18
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.15)(d) (.10) (.01) .13 .17
Net realized and unrealized gain (loss)
on investments 4.54 (.82) 2.60 1.76 4.92
Net increase (decrease) in net asset value
from operations 4.39 (.92) 2.59 1.89 5.09
LESS: DISTRIBUTIONS
Dividends from net investment income -0- -0- (.04) (.16) (.20)
Distributions from net realized gains (2.62) (2.83) (1.11) (1.36) (.99)
Total dividends and distributions (2.62) (2.83) (1.15) (1.52) (1.19)
Net asset value, end of year $18.91 $17.14 $20.89 $19.45 $19.08
TOTAL RETURN
Total investment return based on
net asset value (a) 30.87% (4.91)% 13.76% 10.76% 35.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $40,815 $42,712 $67,356 $70,876 $59,690
Ratio of expenses to average net assets 2.28% 1.94% 1.79% 1.62% 1.64%
Ratio of net investment income (loss)
to average net assets (.89)% (.43)% (.04)% .79% 1.02%
Portfolio turnover rate 30% 25% 48% 39% 38%
</TABLE>
See footnote summary on page 16.
14
ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS B
---------------------------------------
MAY 3, 1993(B)
TO
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------
1995 1994 1993
-------------- --------- -------------
Net asset value, beginning of period $16.94 $20.82 $18.51
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.27)(d) (.08) (.07)
Net realized and unrealized gain (loss)
on investments 4.46 (.97) 2.38
Net increase (decrease) in net asset
value from operations 4.19 (1.05) 2.31
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.62) (2.83) -0-
Net asset value, end of period $18.51 $16.94 $20.82
TOTAL RETURN
Total investment return based on
net asset value (a) 29.94% (5.63)% 12.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $2,491 $527 $120
Ratio of expenses to average net assets 3.05% 2.73% 3.35%(c)
Ratio of net investment loss to average
net assets (1.64)% (1.17)% (1.60)%(c)
Portfolio turnover rate 30% 25% 48%
See footnote summary on page 16.
15
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS C
---------------------------------------
MAY 3, 1993(B)
TO
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------
1995 1994 1993
-------------- --------- -------------
Net asset value, beginning of period $16.95 $20.83 $18.51
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.26)(d) (.14) (.05)
Net realized and unrealized gain (loss)
on investments 4.46 (.91) 2.37
Net increase (decrease) in net asset
value from operations 4.20 (1.05) 2.32
LESS: DISTRIBUTIONS
Distributions from net realized gains (2.62) (2.83) -0-
Net asset value, end of period $18.53 $16.95 $20.83
TOTAL RETURN
Total investment return based on
net asset value (a) 29.99% (5.62)% 12.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $665 $418 $242
Ratio of expenses to average net assets 2.99% 2.66% 3.22%(c)
Ratio of net investment loss to average
net assets (1.60)% (1.11)% (1.34)%(c)
Portfolio turnover rate 30% 25% 48%
(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 net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(b) Commencement of distribution.
(c) Annualized.
(d) Based on average shares outstanding.
16
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS ALLIANCE COUNTERPOINT FUND
_______________________________________________________________________________
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES ALLIANCE COUNTERPOINT FUND
We have audited the accompanying statement of assets and liabilities of
Alliance Counterpoint Fund (the 'Fund'), including the portfolio of
investments, as of September 30, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Counterpoint Fund at September 30, 1995, the results of its operations
for the year then ended the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the
indicated periods, in conformity with generally accepted accounting principles.
Ernst &Young LLP
New York, New York
November 3, 1995
<PAGE>
________________________________________________________________
APPENDIX A: BOND AND COMMERCIAL PAPER RATINGS
________________________________________________________________
Bond Ratings
Moody's Investors Service, Inc.: Aaa -- judged to be
the best quality, carry the smallest degree of investment risk;
Aa -- judged to be of high quality by all standards; A -- possess
many favorable investment attributes and are to be considered as
higher medium grade obligations; Baa -- considered as medium
grade obligations which are neither highly protected nor poorly
secured. Moody's Investors Service, Inc. also applies numerical
indicators, 1, 2 and 3, to rating categories Aa through Baa. The
modifier 1 indicates that the security is in the higher end of
its rating category; the modifier 2 indicates a mid-range
ranking; and 3 indicates a ranking toward the lower end of the
category.
Standard & Poor's Ratings Services: AAA -- highest
grade obligations, possess the ultimate degree of protection as
to principal and interest; AA -- also qualify as high grade
obligations, and in the majority of instances differ from AAA
issues only in small degree; A -- regarded as upper medium grade,
have considerable investment strength but are not entirely free
from adverse effects of changes in economic and trade conditions,
interest and principal are regarded as safe; BBB -- regarded as
having adequate capacity to pay interest and repay principal but
are more susceptible than higher rated obligations to the adverse
effects of changes in economic and trade conditions. Standard &
Poor's Corporation applies indicators "+", no character, and "-"
to the above rating categories AA through BBB. The indicators
show relative standing within the major rating categories.
Fitch Investors Services, Inc.: AAA -- Securities of
this rating are regarded as strictly high-grade, broadly
marketable, suitable for investment by trustees and fiduciary
institutions, and liable to but slight market fluctuation other
than through changes in the money rate; AA -- Securities in this
group are of safety virtually beyond question, and as a class are
readily salable while many are highly active; their merits are
not greatly unlike those of the AAA class, but a security so
rated may be of junior though strong lien -- in many cases
directly following an AAA security -- or the margin of safety is
less strikingly broad; A -- A securities are strong investments
and in many cases of highly active market, but are not so heavily
protected as the two upper classes or possibly are of similar
security but less quickly salable; as a class they are more
sensitive in standing and market to material changes in current
earnings of the company.
A-1
<PAGE>
Commercial Paper Ratings
Moody's Investors Service, Inc: Commercial paper rated
"Prime" carries the smallest degree of investment risk. The
modifiers 1, 2 and 3 are used to denote relative strength within
this highest classification.
Standard & Poor's Ratings Services: "A" is the highest
commercial paper rating category utilized by S&P which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
A-2
00250043.AF0
<PAGE>
________________________________________________________________
APPENDIX B: STOCK INDEX FUTURES
________________________________________________________________
Stock Index Futures Characteristics. Currently, stock
index futures contracts can be purchased or sold with respect to
the Standard & Poor's 500 Stock Index on the Chicago Mercantile
Exchange, the New York Stock Exchange Composite Index on the New
York Futures Exchange and the Value Line Stock Index on the
Kansas City Board of Trade. The Adviser does not believe that
differences in composition of the three indices will create any
differences in the price movements of the stock index futures
contracts in relation to the movements in such indices. However,
such differences in the indices may result in differences in
correlation of the futures contracts with movements in the value
of the securities being hedged.
Unlike the purchase or sale of a specific security by
the Fund, no price is paid or received by the Fund upon the
purchase or sale of a futures contract. Initially, the Fund will
be required to deposit with the broker through which such
transaction is effected or in a segregated account with the
Fund's Custodian an amount of cash or U.S. Treasury bills equal
to $3,000 per contract as of the date hereof. This amount is
known as initial margin. The nature of initial margin in futures
transactions is different from that of margin in security
transactions in that futures contract margin does not involve the
borrowing of funds to finance transactions. Rather, the initial
margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker will be made on a daily
basis as the price of the underlying stock index fluctuates, a
process known as marking to the market. For example, when the
Fund has purchased a stock index futures contract and the price
of the futures contract has risen in response to a rise in the
underlying stock index, that position will have increased in
value and the Fund will receive from the broker a variation
margin payment equal to that increase in value. Conversely,
where the Fund has purchased a stock index futures contract and
the price of the futures contract has declined in response to a
decrease in the underlying stock index, the position would be
less valuable and the Fund would be required to make a variation
margin payment to the broker. At any time prior to expiration of
the futures contract, the Adviser may elect to close the position
by taking an opposite position which will operate to terminate
the Fund's position in the futures contract. A final
determination of variation margin is then made, additional cash
B-1
<PAGE>
is required to be paid by or released to the Fund, and the Fund
realizes a loss or gain.
Risks of Transactions in Stock Index Futures. There are
several risks in connection with the use of stock index futures
by the Fund as a hedging device. One risk arises because of the
imperfect correlation between movements in the price of the stock
index futures and movements in the price of the securities which
are the subject of the hedge. The price of the stock index
futures may move more than or less than the price of the
securities being hedged. If the price of the stock index futures
moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the
price of the securities being hedged has moved in an unfavorable
direction, the Fund would be in a better position than if it had
not hedged at all. If the price of the securities being hedged
has moved in a favorable direction, this advantage will be
partially offset by the loss on the index future. If the price
of the future moves more than the price of the stock, the Fund
will experience either a loss or gain on the future which will
not be completely offset by movements in the price of the
securities which are the subject of the hedge. To compensate for
the imperfect correlation of movements in the price of securities
being hedged and movements in the price of the stock index
futures, the Fund may buy or sell stock index futures contracts
in a greater dollar amount than the dollar amount of securities
being hedged if the volatility over a particular time period of
the prices of such securities has been greater than the
volatility over such time period of the index, or if otherwise
deemed to be appropriate by the investment adviser. Conversely,
the Fund may buy or sell fewer stock index futures contracts if
the volatility over a particular time period of the prices of the
securities being hedged is less than the volatility over such
time period of the stock index, or if otherwise deemed to be
appropriate by the investment adviser. It is also possible that,
where the Fund has sold futures to hedge its portfolio against a
decline in the market, the market may advance and the value of
securities held in the Fund may decline. If this occurred, the
Fund would lose money on the future and also experience a decline
in value in its portfolio securities. However, over time the
value of a diversified portfolio should tend to move in the same
direction as the market indices upon which the futures are based,
although there may be deviations arising from differences between
the composition of the Fund and the stocks comprising the index.
Where futures are purchased to hedge against a possible
increase in the price of stock before the Fund is able to invest
its cash (or cash equivalents) in stocks (or options) in an
orderly fashion, it is possible that the market may decline
instead. If the Fund then concludes not to invest in stock or
options at that time because of concern as to possible further
B-2
<PAGE>
market decline or for other reasons, the Fund will realize a loss
on the futures contract that is not offset by a reduction in the
price of securities purchased.
In addition to the possibility that there may be an
imperfect correlation, or no correlation at all, between
movements in the stock index futures and the portion of the
portfolio being hedged, the price of stock index futures may not
correlate perfectly with movement in the stock index due to
certain market distortions. Rather than meeting additional
margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort
the normal relationship between the index and futures markets.
Secondly, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price
distortion in the futures market, and because of the imperfect
correlation between the movements in the stock index and
movements in the price of stock index futures, a correct forecast
of general market trends by the Adviser may still not result in a
successful hedging transaction over a short time frame.
Positions in stock index futures may be closed out only on an
exchange or board of trade which provides a secondary market for
such futures. Although the Fund intends to purchase or sell
futures only on exchanges or boards of trade where there appear
to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will
exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures investment
position, and in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not
be sold until the futures contract can be terminated. In such
circumstances, an increase in the price of the securities, if
any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that
the price of the securities will in fact correlate with the price
movements in the futures contract and thus provide an offset on a
futures contract.
The Fund's Adviser intends to purchase and sell futures
contracts on the stock index for which it can obtain the best
price with due consideration to liquidity.
Successful use of stock index futures by the Fund is
also subject to the Adviser's ability to predict correctly
movements in the direction of the market. For example, if the
Fund has hedged against the possibility of a decline in the
B-3
<PAGE>
market adversely affecting stocks held in its portfolio and stock
prices increase instead, the Fund will lose part or all of the
benefit of the increased value of its stock which it has hedged
because it will have offsetting losses in its futures positions.
In addition, in such situations, if the Fund has insufficient
cash, it may have to sell securities to meet daily variation
margin requirements. Such sales of securities may be, but will
not necessarily be, at increased prices which reflect the rising
market. The Fund may have to sell securities at a time when it
may be disadvantageous to do so.
B-4
00250043.AF0
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information:
Portfolio of Investments, September 30, 1995
Statement of Assets and Liabilities, September 30,
1995
Statement of Operations, year ended September 30,
1995
Statement of Changes in Net Assets, years ended
September 30, 1994 and September 30, 1995
Notes to Financial Statements, September 30, 1995
Financial Highlights - for each of the years ended
September 30, 1991 through September 30, 1995
Report of Independent Auditors - November 3, 1995
All other schedules are either omitted because they are
not required under the related instructions, they are
inapplicable or the required information is presented
in the financial statements or notes which are included
in the Statement of Additional Information of the
Registration Statement.
(b) Exhibits
(1) Amended and Restated Agreement and Declaration of
Trust of Registrant - Incorporated by reference to
Exhibit 1 to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File
Nos. 2-94093 and 811-4139), filed on February 8, 1985.
(2) By-Laws - Incorporated by reference to Exhibit 2 to
Registrant's Registration Statement on Form N-1A (File
No. 2-94093), filed on October 31, 1984.
(3) Not applicable.
(4) Specimen form of certificate for shares of the
Registrant - Incorporated by reference to Exhibit 4 to
Registrant's Registration Statement on Form N-1A (File
No. 2-94093), filed on October 31, 1984.
C-1
<PAGE>
(5) Advisory Agreement between the Registrant and
Alliance Capital Management L.P. - Incorporated by
reference to Exhibit 5 to Post-Effective Amendment No.
18 of Registrant's Registration Statement on Form N-1A,
filed January 27, 1995 (File No. 94093).
(6) (a) Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. -
Incorporated by reference to Exhibit 6 (a) to
Post-Effective Amendment No. 14 of Registrant's
Registration Statement on Form N-1A, filed January 30,
1994 (File No. 94093).
(b) Form of Selected Dealer Agreement between
Alliance Fund Distributors, Inc. and selected dealers
offering shares of Registrant - Incorporated by
reference to Exhibit 5 to Registrant's Registration
Statement on Form N-1A (File No. 2-94093), filed on
March 2, 1993.
(c) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected agents
making available shares of Registrant - Incorporated by
reference to Exhibit 5 to Registrant's Registration
Statement on Form N-1A (File No. 2-94093), filed on
March 2, 1993.
(7) Not applicable.
(8) Custodian Contract between the Registrant and State
Street Bank and Trust Company - Incorporated by
reference to Exhibit 8 to Post-Effective Amendment No.
7 to Registrant's Registration Statement on Form N-1A
(File Nos. 2-94093), filed on January 31, 1990.
(9) Transfer Agency Agreement between the Registrant
and Alliance Fund Services, Inc. - Incorporated by
reference to Exhibit 9 to Post-Effective Amendment No.
5 to Registrant's Registration Statement on Form N-1A
(File Nos. 2-94093), filed on January 30, 1989.
(10) Not applicable.
(11) Consent of Independent Auditors - filed herewith.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
C-2
<PAGE>
(15) Rule 12b-1 Plan - See Exhibit 6(a) hereto.
(16) Schedule for computation of total return
performance - Incorporated by reference to Exhibit 16
to Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (File Nos. 2-94093
and 811-4139), filed on January 31, 1991.
(18) Rule 18f-3 Plan - filed herewith.
(27) Financial Data Schedule - filed herewith.
ITEM 25. Persons Controlled by or under Common Control with
Registrant.
None.
ITEM 26. Number of Holders of Securities.
Number of Record Holders
Title of Class (as of January 12, 1996)
Shares of Beneficial Class A - 1,559
Interest par value $.01 Class B - 277
Class C - 91
Total 1,927
ITEM 27. Indemnification.
It is the Registrant's policy to indemnify its
trustees and officers, employees and other agents as
set forth in Article VIII and Article III of
Registrant's First Amended and Restated Agreement and
Declaration of Trust, filed as Exhibit 1, in response
to Item 24 and Section 10 of the Distribution Services
Agreement filed as Exhibit 6(a), in response to Item
24, all as set forth below. The liability of the
Registrant's trustees and officers is dealt with in
Article VIII of Registrant's First Amended and Restated
Agreement and Declaration of Trust, as set forth below.
The Adviser's liability for any loss suffered by the
Registrant or its shareholders is set forth in Section
4 of the Advisory Agreement filed as Exhibit 5 in
response to Item 24, as set forth below.
Article VIII of the Registrant's First Amended and
Restated Agreement and Declaration of Trust reads as follows:
SECTION 8.1
Trustees, Shareholders, etc. Not Personally Liable; Notice.
The Trustees and officers of the Trust, in incurring any debts,
liabilities or obligations, or in limiting or omitting any other
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actions for or in connection with the Trust, are or shall be
deemed to be acting as Trustees or officers of the Trust and not
in their own capacities. No Shareholder shall be subject to any
personal liability whatsoever in tort, contract or otherwise to
any other Person or Persons in connection with the assets or the
affairs of the Trust or of any Portfolio, and subject to Section
8.4 hereof, no Trustee, officer, employee or agent of the Trust
shall be subject to any personal liability whatsoever in tort,
contract, or otherwise, to any other Person or Persons in
connection with the assets or affairs of the Trust or of any
Fund, save only that arising from his own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or the discharge of his
functions. The Trust (or if the matter relates only to a
particular Fund, that Fund) shall be solely liable for any and
all debts, claims, demands, judgments, decrees, liabilities or
obligations of any and every kind, against or with respect to the
Trust or such Fund in tort, contract or otherwise in connection
with the assets or the affairs of the Trust or such Fund, and all
Persons dealing with the Trust or any Fund shall be deemed to
have agreed that resort shall be had solely to the Trust Property
of the Trust or the Fund Assets of such Fund, as the case may be,
for the payment or performance thereof.
The Trustees shall use their best efforts to ensure that every
note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall
give notice that this Declaration of Trust is on file with the
Secretary of The Commonwealth of Massachusetts and shall recite
to the effect that the same was executed or made by or on behalf
of the Trust or by them as Trustees or Trustee or as officers or
officer, and not individually, and that the obligations of such
instrument are not binding upon any of them or the Shareholders
individually but are binding only upon the assets and property of
the Trust, or the particular Fund in question, as the case may
be, but the omission thereof shall not operate to bind any
Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually, or to subject the Fund Assets of any
Fund to the obligations of any other Fund.
SECTION 8.2
Trustees' Good Faith Action; Expert Advice; No Bond or Surety.
The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to
Section 8.4 hereof, a Trustee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment
or mistakes of fact or law. Subject to the foregoing, (i) the
Trustees shall not be responsible or liable in any event for any
neglect or wrongdoing of any officer, agent, employee,
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consultant, Investment Advisor, Administrator, Distributor or
Principal Underwriter, Custodian or Transfer Agent, Dividend
Disbursing Agent, Shareholder Servicing Agent or Accounting Agent
of the Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee; (ii) the Trustees may take advice
of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as
Trustees, and shall be under no liability for any act or omission
in accordance with such advice or for failing to follow such
advice; and (iii) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of
account of the Trust and upon written reports made to the
Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the
contract involved) any officer, partner or responsible employee
of a Contracting Party appointed by the Trustees pursuant to
Section 5.2 hereof. The Trustees as such shall not be required
to give any bond or surety or any other security for the
performance of their duties.
SECTION 8.3 Indemnification of Shareholders. If any Shareholder
(or former Shareholder) of the Trust shall be charged or held to
be personally liable for any obligation or liability of the Trust
solely by reason of being or having been a Shareholder and not
because of such Shareholder's acts or omissions or for some other
reason, the Trust (upon proper and timely request by the
Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former
Shareholder (or the heirs, executors, administrators or other
legal representatives thereof, or in the case of a corporation or
other entity, its corporate or other general successor) shall be
entitled (but solely out of the assets of the Fund of which such
Shareholder or former Shareholder is or was the holder of Shares)
to be held harmless from and indemnified against all loss and
expense arising from such liability.
SECTION 8.4 Indemnification of Trustees, Officers, etc. Subject
to the limitations set forth hereinafter in this Section 8.4, the
Trust shall indemnify (from the assets of the Fund or Funds to
which the conduct in question relates) each of its Trustees and
officers (including Persons who serve at the Trust's request as
directors, officers or trustees of another organization in which
the Trust has any interest as a shareholder, creditor or
otherwise [hereinafter, together with such Person's heirs,
executors, administrators or personal representative, referred to
as a "Covered Person"]) against all liabilities, including but
not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal,
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before any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a party
or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or
trustee, except with respect to any matter as to which it has
been determined that such Covered Person (i) did not act in good
faith in the reasonable belief that such Covered Person's action
was in or not opposed to the best interests of the Trust or (ii)
had acted with willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of
such Covered Person's office (either and both of the conduct
described in (i) and (ii) being referred to hereafter as
"Disabling Conduct"). A determination that the Covered Person is
entitled to indemnification may be made by (i) a final decision
on the merits by a court or other body before whom the proceeding
was brought that the Covered Person to be indemnified was not
liable by reason of Disabling Conduct, (ii) dismissal of a court
action or an administrative proceeding against a Covered Person
for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that
the indemnitee was not liable by reason of Disabling Conduct by
(a) a vote of a majority of a quorum of Trustees who are neither
"interested persons" of the Trust as defined in Section 2(a)(19)
of the 1940 Act nor parties to the proceeding, or (b) an
independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid
from time to time by the Fund or Funds to which the conduct in
question related in advance of the final disposition of any such
action, suit or proceeding; provided, that the Covered Person
shall have undertaken to repay the amounts so paid to such Fund
or Funds if it is ultimately determined that indemnification of
such expenses is not authorized under this Article VIII and (i)
the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of
a quorum of the disinterested Trustees, or an independent legal
counsel in a written opinion, shall have determined, based on a
review of readily available facts (as opposed to a full trial-
type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.
SECTION 8.5 Compromise Payment. As to any matter disposed of by
a compromise payment by any such Covered Person referred to in
Section 8.4 hereof, pursuant to a consent decree or otherwise, no
such indemnification either for said payment or for any other
expenses shall be provided unless such indemnification shall be
approved (i) by a majority of a quorum of the disinterested
Trustees or (ii) by an independent legal counsel in a written
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opinion. Approval by the Trustees pursuant to clause (i) or by
independent legal counsel pursuant to clause (ii) shall not
prevent the recovery from any Covered Person of any amount paid
to such Covered Person in accordance with either of such clauses
as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office.
SECTION 8.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VIII shall not be
exclusive of or affect any other rights to which any such Covered
Person may be entitled. As used in this Article VIII, a
"disinterested" Person is one against whom none of the actions,
suits or other proceedings in question, and no other action, suit
or other proceeding on the same or similar grounds is then or has
been pending or threatened. Nothing contained in this Article
VIII shall affect any rights to indemnification to which
personnel of the Trust, other than Trustees and officers, and
other Persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such Person.
SECTION 8.7 Liability of Third Persons Dealing with Trustees.
No person dealing with the Trustees shall be bound to make any
inquiry concerning the validity of any transaction made or to be
made by the Trustees or to see to the application of any payments
made or property transferred to the Trust or upon its order."
Article III of Registrant's First Amended and Restated Agreement
and Declaration of Trust reads, in pertinent part, as follows:
"Without limiting the foregoing and to the extent not
inconsistent with the 1940 Act or other applicable law, the
Trustees shall have power and authority:
(s) Indemnification. In addition to the mandatory
indemnification provided for in Article VIII hereof and
to the extent permitted by law, to indemnification with
any Person with whom this Trust has dealings,
including, without limitation, any independent
contractor, to such extent as the Trustees shall
determine."
The Advisory Agreement between the Registrant and Alliance
Capital Management L.P. provides that Alliance Capital Management
L.P. will not be liable under such agreement for any mistake of
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judgment or in any event whatsoever except for lack of good faith
and that nothing therein shall be deemed to protect, or purport
to protect, Alliance Capital Management L.P. against any
liability to Registrant or its security holders to which it would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties thereunder,
or by reason of reckless disregard of its obligations and duties
thereunder.
The Distribution Services Agreement between the Registrant
and Alliance Fund Distributors, Inc. provides that the Registrant
will indemnify, defend and hold Alliance Fund Distributors, Inc.,
and any person who controls it within the meaning of Section 15
of the Investment Company Act of 1940, free and harmless from and
against any and all claims, demands, liabilities and expenses
which Alliance Fund Distributors, Inc. or any controlling person
may incur arising out of or based upon any alleged untrue
statement of a material fact contained in Registrant's
Registration Statement or Prospectus and Statement of Additional
Information or arising out of, or based upon any alleged omission
to state a material fact required to be stated in or necessary to
make the statements in either thereof any one of the foregoing
not misleading, provided that nothing therein shall be so
construed as to protect Alliance Fund Distributors, Inc. against
any liability to Registrant or its security holders to which it
would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties
thereunder, or by reason of reckless disregard of its obligations
and duties thereunder.
The foregoing summaries are qualified by the entire text of
Registrant's First Amended and Restated Agreement and Declaration
of Trust, the Advisory Agreement between Registrant and Alliance
Capital Management L.P. and the Distribution Services Agreement
between Registrant and Alliance Fund Distributors, Inc.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
trustees, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
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precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2, 1980),
the Registrant will indemnify its trustees, officers, investment
manager and principal underwriters only if (1) a final decision
on the merits was issued by the court or other body before whom
the proceeding was brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct") or
(2) a reasonable determination is made, based upon a review of
the facts, that the indemnitee was not liable by reason of
disabling conduct, by (a) the vote of a majority of a quorum of
the trustees who are neither "interested persons" of the
Registrant as defined in section 2(a)(19) of the Investment
Company Act of 1940 nor parties to the proceeding
("disinterested, non-party trustees"), or (b) an independent
legal counsel in a written opinion. The Registrant will advance
attorneys fees or other expenses incurred by its trustees,
officers, investment adviser or principal underwriters in
defending a proceeding, upon the undertaking by or on behalf of
the indemnitee to repay the advance unless it is ultimately
determined that he is entitled to indemnification and, as a
condition to the advance, (1) the indemnitee shall provide a
security for his undertaking, (2) the Registrant shall be insured
against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of disinterested, non-party trustees of the
Registrant, or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found entitled to
indemnification.
The Registrant participates in a joint trustees/directors and
officers liability insurance policy issued by the ICI Mutual
Insurance Company. Coverage under this policy has been extended
to directors, trustees and officers of the investment companies
managed by Alliance Capital Management L.P. Under this policy,
outside trustees and directors are covered up to the limits
specified for any claim against them for acts committed in their
capacities as trustee or director. A pro rata share of the
premium for this coverage is charged to each investment company
and to the Adviser.
ITEM 28. Business and Other Connections of Investment Adviser.
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the
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Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively,
of this Registration Statement are incorporated by
reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation,
the general partner of Alliance Capital Management
L.P., set forth in Alliance Capital Management L.P.'s
Form ADV filed with the Securities and Exchange
Commission on April 21, 1988 (File No. 801- 32361) and
amended through the date hereof, is incorporated by
reference.
ITEM 29. Principal Underwriters
(a) Alliance Fund Distributors, Inc., the
Registrant's Principal Underwriter in connection
with the sale of shares of the Registrant.
Alliance Fund Distributors, Inc. also acts as
Principal Underwriter or Distributor for the
following investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
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Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105.
Positions and Offices Position and Offices
Name With Underwriter With Registrant
____ ______________________ ______________________
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A. Baumgardner Senior Vice President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
& Secretary
Daniel J. Dart Senior Vice President
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumsiek Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G. Poleonadkis Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
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Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Positions and Offices Position and Offices
Name With Underwriter With Registrant
____ ______________________ ______________________
Benji A. Baer Vice President
Warren W. Babcock III Vice President
Kenneth F. Barkoff Vice President
William P. Beanblosson Vice President
Jack C. Bixler Vice President
Casimir F. Bolanowski Vice President
Kevin T. Cannon Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
Mark J. Dunbar Vice President
Sohaila S. Farsheed Vice President
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President
& Controller
Andrew L. Gangolf Vice President
Mark D. Gersten Vice President Treasurer and Chief
Financial Officer
Joseph W. Gibson Vice President
Troy L. Glawe Vice President
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Herbert H. Goldman Vice President
James E. Gunter Vice President
Alan Halfenger Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Robert H. Joseph, Jr. Vice President
& Treasurer
Richard D. Keppler Vice President
Sheila F. Lamb Vice President
Positions and Offices Position and Offices
Name With Underwriter With Registrant
____ ______________________ ______________________
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J. MacDonald Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Nicole Nolan-Koester Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President Assistant Secretary
Bruce W. Reitz Vice President
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Dennis A. Sanford Vice President
Raymond S. Scalfani Vice President
Richard J. Sidell Vice President
J. William Strott, Jr. Vice President
Richard E. Tambourine Vice President
Joseph T. Tocyloski Vice President
Neil S. Wood Vice President
Emilie D. Wrapp Vice President
Maria L. Carreras Assistant Vice President
Sarah A. Chodera Assistant Vice President
John W. Cronin Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
Vicky M. Hayes Assistant Vice President
Positions and Offices Position and Offices
Name With Underwriter With Registrant
____ ______________________ ______________________
Daniel M. Hazard Assistant Vice President
John C. Hershock Assistant Vice President
James J. Hill Assistant Vice President
Kalen H. Holliday Assistant Vice President
Thomas K. Intoccia Assistant Vice President
Edward W. Kelly Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
Michael F. Mahoney Assistant Vice President
Shawn P. McClain Assistant Vice President
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Thomas F. Monnerat Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Carol H. Rappa Assistant Vice President
Lisa Robinson-Cronin Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Mark R. Manley Assistant Secretary
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the Rules thereunder are maintained as
follows: journals, ledgers, securities records and other
original records are maintained principally at the offices of
Alliance Fund Services, Inc., 500 Plaza Drive, Secaucus, New
Jersey 07094 and at the offices of (i) State Street Bank and
Trust Company, the Registrant's Custodian with respect to the
Growth Portfolio and the South Africa-Free International
Portfolio, 225 Franklin Street, Boston, Massachusetts 02110 and
(ii) Brown Brothers Harriman & Co., the Registrant's Custodian
with respect to the Short-Term Global Income Portfolio, 40 Water
Street, Boston, Massachusetts 02109. All other records so
required to be maintained are maintained at the offices of
Alliance Capital Management L.P., 1345 Avenue of the Americas,
New York, New York, 10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
The Registrant undertakes to furnish each person to whom the
prospectus is delivered with a copy of the Registrant's latest
report to Shareholders, upon request and without charge.
The Registrant undertakes to provide assistance to shareholders
in communications concerning the removal of any Trustee of the
Fund in accordance with section 16 of the Investment Company Act
of 1940.
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SIGNATURE
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this
Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
and State of New York, on the 30th day of January, 1996.
ALLIANCE COUNTERPOINT FUND
by /s/ John D. Carifa
John D. Carifa
Chairman
Pursuant to the requirements of the Securities Act of l933,
this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated:
Signature Title Date
(1) Principal Executive
Officer
/s/ John D. Carifa Chairman January 30, 1996
John D. Carifa
(2) Principal Financial and
Accounting Officer
/s/ Mark D. Gersten Treasurer and January 30, 1996
Mark D. Gersten Chief Financial
Officer
(3) All of the Trustees
Ruth Block
John D. Carifa
David H. Dievler
John H. Dobkin
William H. Foulk, Jr.
Dr. James M. Hester
Clifford L. Michel
Donald J. Robinson
By /s/ Edmund P. Bergan, Jr. January 30, 1996
(Attorney-in-fact)
Edmund P. Bergan, Jr.
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Index to Exhibits
Page
(11) Consent of Independent Auditors.
(18) Rule 18f-3 Plan.
(27) Financial Data Schedule.
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00250043.AF0
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Financial Highlights", "Shareholder Services - Statements and
Reports" and "General Information - Independent Auditors" and to
the use of our report dated November 3, 1995, in this
Registration Statement (Form N-1A 2-94093) of Alliance
Counterpoint Fund.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
January 25, 1996
00250043.AF3
<PAGE>
ALLIANCE COUNTERPOINT FUND
Plan pursuant to Rule 18f-3 under the
Investment Company Act of 1940
______________________________________
Effective November 28, 1995
This Plan (the "Plan") is adopted by Alliance
Counterpoint Fund (the "Fund") pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the "Act") and sets forth the
general characteristics of, and the general conditions under
which the Fund may offer, multiple classes of shares of its now
existing and hereafter created portfolios.1 This Plan may be
revised or amended from time to time as provided below.
Class Designations
The Fund2 may from time to time issue one or more of the
following classes of shares: Class A shares, Class B shares,
Class C shares and Class Y shares. Each of the four classes of
shares will represent interests in the same portfolio of
investments of the Fund and, except as described herein, shall
have the same rights and obligations as each other class. Each
class shall be subject to such investment minimums and other
conditions of eligibility as are set forth in the Fund's
prospectus or statement of additional information as from time to
time in effect (the "Prospectus").
Class Characteristics
Class A shares are offered at a public offering price
that is equal to their net asset value ("NAV") plus an initial
sales charge, as set forth in the Prospectus. Class A shares may
also be subject to a Rule 12b-1 fee, which may include a service
fee and, under certain circumstances, a contingent deferred sales
charge ("CDSC"), as described in the Prospectus.
____________________
1. Prior to the effectiveness of this Plan, the Fund has been
offering multiple classes of shares pursuant to an exemptive
order of the Securities and Exchange Commission. This Plan
is intended to allow the Fund to offer multiple classes of
shares to the full extent and in the manner permitted by Rule
18f-3 under the Act (the "Rule"), subject to the requirements
and conditions imposed by the Rule.
2. For purposes of this Plan, if the Fund has existing more than
one portfolio pursuant to which multiple classes of shares
are issued, then references in this Plan to the "Fund" shall
be deemed to refer instead to each portfolio.
<PAGE>
Class B shares are offered at their NAV, without an
initial sales charge, but may be subject to a CDSC and a Rule
12b-1 fee, which may include a service fee, as described in the
Prospectus.
Class C shares are offered at their NAV, without an
initial sales charge, and may be subject to a Rule 12b-1 fee,
which may include a service fee, and a CDSC, as described in the
Prospectus.
Class Y Shares are offered at their NAV, without any
initial sales charge, CDSC or Rule 12b-1 fee.
The initial sales charge on Class A shares and CDSC on
Class A, B and C shares are each subject to reduction or waiver
as permitted by the Act, and as described in the Prospectus.
Allocations to Each Class
Expense Allocations
The following expenses shall be allocated, to the extent
practicable, on a class-by-class basis: (i) Rule 12b-1 fees
payable by the Fund to the distributor or principal underwriter
of the Fund's shares (the "Distributor"), and (ii) transfer
agency costs attributable to each class. Subject to the approval
of the Fund's Trustees, including a majority of the independent
Trustees, the following "Class Expenses" may be allocated on a
class-by-class basis: (a) printing and postage expenses related
to preparing and distributing materials such as shareholder
reports, prospectuses and proxy statements to current
shareholders of a specific class,3 (b) SEC registration fees
incurred with respect to a specific class, (c) blue sky and
foreign registration fees and expenses incurred with respect to a
specific class, (d) the expenses of administrative personnel and
services required to support shareholders of a specific class
(including, but not limited to, maintaining telephone lines and
personnel to answer shareholder inquiries about their accounts or
about the Fund), (e) litigation and other legal expenses relating
to a specific class of shares, (f) Trustees' fees or expenses
incurred as a result of issues relating to a specific class of
shares, (g) accounting and consulting expenses relating to a
specific class of shares, (h) any fees imposed pursuant to a non-
Rule 12b-1 shareholder services plan that relate to a specific
____________________
3. For Class Y shares, the expenses of preparation, printing and
distribution of prospectuses and shareholder reports, as well
as other distribution-related expenses, will be borne by the
investment adviser of the Fund (the "Adviser") or the
Distributor from their own resources.
2
<PAGE>
class of shares, and (i) any additional expenses, not including
advisory or custodial fees or other expenses related to the
management of the Fund's assets, if these expenses are actually
incurred in a different amount with respect to a class, or if
services are provided with respect to a class that are of a
different kind or to a different degree than with respect to one
or more other classes.
All expenses not now or hereafter designated as Class
Expenses ("Fund Expenses") will be allocated to each class on the
basis of the net asset value of that class in relation to the net
asset value of the Fund.
Waivers and Reimbursements
The Adviser or Distributor may choose to waive or
reimburse Rule 12b-1 fees, transfer agency fees or any Class
Expenses on a voluntary, temporary basis. Such waiver or
reimbursement may be applicable to some or all of the classes and
may be in different amounts for one or more classes.
Income, Gains and Losses
Income, and realized and unrealized capital gains and
losses shall be allocated to each class on the basis of the net
asset value of that class in relation to the net asset value of
the Fund.
Conversion and Exchange Features
Conversion Features
Class B shares of the Fund automatically convert to
Class A shares of the Fund after a certain number of months or
years after the end of the calendar month in which the
shareholder's purchase order was accepted as described in the
Prospectus. Class B shares purchased through reinvestment of
dividends and distributions will be treated as Class B shares for
all purposes except that such Class B shares will be considered
held in a separate sub-account. Each time any Class B shares in
the shareholder's account convert to Class A shares, an equal
pro-rata portion of the Class B shares in the sub-account will
also convert to Class A shares. The conversion of Class B shares
to Class A shares may be suspended if the opinion of counsel
obtained by the Fund that the conversion does not constitute a
taxable event under current federal income tax law is no longer
available. Class B shares will convert into Class A shares on
the basis of the relative net asset value of the two classes,
without the imposition of any sales load, fee or other charge.
3
<PAGE>
In the event of any material increase in payments
authorized under the Rule 12b-1 Plan (or, if presented to
shareholders, any material increase in payments authorized by a
non-Rule 12b-1 shareholder services plan) applicable to Class A
shares, existing Class B shares will stop converting into Class A
shares unless the Class B shareholders, voting separately as a
class, approve the increase in such payments. Pending approval
of such increase, or if such increase is not approved, the
Trustees shall take such action as is necessary to ensure that
existing Class B shares are exchanged or converted into a new
class of shares ("New Class A") identical in all material
respects to Class A shares as existed prior to the implementation
of the increase in payments, no later than such shares were
previously scheduled to convert to Class A shares. If deemed
advisable by the Trustees to implement the foregoing, such action
may include the exchange of all existing Class B shares for a new
class of shares ("New Class B"), identical to existing Class B
shares, except that New Class B shares shall convert to New
Class A shares. Exchanges or conversions described in this
paragraph shall be effected in a manner that the Trustees
reasonably believe will not be subject to federal taxation. Any
additional cost associated with the creation, exchange or
conversion of New Class A or New Class B shares shall be borne by
the Adviser and the Distributor. Class B shares sold after the
implementation of the fee increase may convert into Class A
shares subject to the higher maximum payment, provided that the
material features of the Class A plan and the relationship of
such plan to the Class B shares are disclosed in an effective
registration statement.
Exchange Features
Shares of each class generally will be permitted to be
exchanged only for shares of a class with similar characteristics
in another Alliance Mutual Fund and shares of certain Alliance
money market funds. Class Y shares may be exchanged for Class Y
shares of another Alliance Mutual Fund and shares of certain
Alliance money market funds. If the aggregate net asset value of
shares of all Alliance Mutual Funds held by an investor in the
Fund reaches the minimum amount at which an investor may purchase
Class A shares at net asset value without a front-end sales load
on or before December 15 in any year, then all Class B and
Class C shares of the Fund held by that investor may thereafter
be exchanged, at the investor's request, at net asset value and
without any front-end sales load or CDSC for Class A shares of
the Fund. All exchange features applicable to each class will be
described in the Prospectus.
4
<PAGE>
Dividends
Dividends paid by the Fund with respect to its Class A,
Class B, Class C and Class Y shares, to the extent any dividends
are paid, will be calculated in the same manner, at the same time
and will be in the same amount, except that any Rule 12b-1 fee
payments relating to a class of shares will be borne exclusively
by that class and any incremental transfer agency costs or, if
applicable, Class Expenses relating to a class shall be borne
exclusively by that class.
Voting Rights
Each share of a Fund entitles the shareholder of record
to one vote. Each class of shares of the Fund will vote
separately as a class with respect to the Rule 12b-1 plan
applicable to that class and on other matters for which class
voting is required under applicable law. Both Class A and
Class B shareholders will vote separately as a class to approve
any material increase in payments authorized under the Rule 12b-1
plan applicable to Class A shares.
Responsibilities of the Trustees
On an ongoing basis, the Trustees will monitor the Fund
for the existence of any material conflicts among the interests
of the four classes of shares. The Trustees shall further
monitor on an ongoing basis the use of waivers or reimbursement
by the Adviser and the Distributor of expenses to guard against
cross- subsidization between classes. The Trustees, including a
majority of the independent Trustees, shall take such action as
is reasonably necessary to eliminate any such conflict that may
develop. If a conflict arises, the Adviser and Distributor, at
their own cost, will remedy such conflict up to and including
establishing one or more new registered management investment
companies.
Reports to the Trustees
The Adviser and Distributor will be responsible for
reporting any potential or existing conflicts among the four
classes of shares to the Trustees. In addition, the Trustees
will receive quarterly and annual statements concerning
distributions and shareholder servicing expenditures complying
with paragraph (b)(3)(ii) of Rule 12b-1. In the statements, only
expenditures properly attributable to the sale or servicing of a
particular class of shares shall be used to justify any
distribution or service fee charged to that class. The
statements, including the allocations upon which they are based,
will be subject to the review of the independent Trustees in the
exercise of their fiduciary duties. At least annually, the
5
<PAGE>
Trustees shall receive a report from an expert, acceptable to the
Trustees, (the "Expert") with respect to the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The report of the Expert
shall also address whether the Fund has adequate facilities in
place to ensure the implementation of the methodology and
procedures for calculating the net asset value, dividends and
distributions for the classes, and the proper allocation of
income and expenses among the classes. The Fund and the Adviser
will take immediate corrective measures in the event of any
irregularities reported by the Expert.
Amendments
The Plan may be amended from time to time in accordance
with the provisions and requirements of Rule 18f-3 under the Act.
Adopted this 28th day of November, 1995
By: /s/ Edmund P. Bergan, Jr.
__________________________________
Edmund P. Bergan, Jr.
Secretary
6
00250043.AF2
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME>ALLIANCE COUNTERPOINT FUND
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<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-1-1994
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<INVESTMENTS-AT-COST> 28,004,220
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<DISTRIBUTIONS-OF-GAINS> 6,146,823
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<PAGE>
<GROSS-EXPENSE> 932,999
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00250043.AF5
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