<PAGE>
As Filed with the Securities and Exchange
Commission on August 30, 1995
Registration Nos. 33-12988
811-5088
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 17 X
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 19 X
__________________________________________
THE ALLIANCE PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10019
(Address of Principal Executive Offices)
800-221-5672
(Registrant's Telephone Number, including Area Code)
__________________________________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
____ immediately upon filing pursuant to paragraph (b)
_x__ on September 1, 1995, pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(i)
____ on (date) pursuant to paragraph (a)(i)
____ 75 days after filing pursuant to paragraph (a)(ii)
<PAGE>
____ on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment
Calculation of Registration Fee:
Title of
Securities Proposed Maximum Proposed Amount of
Being Amount Being Offering Price Maximum Aggregate Registration
Registered Registered Per Unit * Offering Price ** Fee
__________ ____________ ________________ _________________ ____________
Common Stock
$.00001 par
value for each
portfolio
Conservative
Investors 72,378 $11.31 $ 818,595
Short-Term
U.S. Govt.
Port. 247,686 $10.12 $2,506,580
___________
Total $100.00
* Estimated solely for the purpose of determining the amount
of the total registration fee based on the offering price per share of the
Short-Term U.S. Government Portfolio and the Conservative Investors
Portfolio of the Registrant's Common Stock on August 22, 1995.
** The calculation of the maximum aggregate offering price is
made pursuant to Rule 24e-2(a) under the Investment Company Act of 1940 and
is based on the following: the total amount of securities redeemed or
repurchased by Alliance Conservative Investors Fund during the fiscal year
ended April 30, 1995 was $16,730,717 of which $16,202,122 were previously
used for reduction pursuant to Rule 24f-2 or Rule 24e-(a) and $528,595 of
which is being so used for such reduction in this Amendment; and the total
amount of securities redeemed or repurchased by Alliance Short-Term U.S.
Government Fund during the period May 1, 1994 through August 31, 1994 was
$7,040,956 of which $4,824,376 were previously used for reduction pursuant
to Rule 24f-2 or Rule 24e-2(a) and $2,216,580 of which is being so used for
such reduction in this Agreement.
<PAGE>
Cross Reference Sheet for
Alliance Strategic Balanced Fund
Alliance Conservative Investors Fund
Alliance Growth Investors Fund
Alliance Short-Term U.S. Government Fund
Alliance Growth Fund
_________________________________________________
ITEM NUMBER OF FORM N-1A
PART A PROSPECTUS LOCATION OR CAPTION
___________________________ ______________________________
1. Cover Page Front Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights
Information
4. General Description General Information;
of Registrant Description of The Funds
5. Management of the Trust Management of The Funds;
Back Cover Page; General
Information
5A. Management's Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other General Information; Dividends,
Securities Distributions and Taxes
7. Purchase of Securities Purchase and Sale of Shares;
Being Offered Purchase and Sale of Shares;
Management of the Funds
8. Redemption or Repurchase Purchase and Sale of Shares
9. Legal Proceedings Not Applicable
<PAGE>
Cross Reference Sheet for
Alliance Strategic Balanced Fund
Alliance Conservative Investors Fund
Alliance Growth Investors Fund
Alliance Short-Term U.S. Government Fund
Alliance Growth Fund
______________________________________________________________
STATEMENT OF ADDITIONAL
ITEM NUMBER OF FORM N-1A INFORMATION LOCATION OR
PART B CAPTION
___________________________ ________________________
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Not Applicable
History
13. Investment Objectives and Investment Objectives and
Policies Policies; Investment
Techniques; Investment
14. Management of the Fund Management of the Trust
15. Control Persons and General Information
Principal Holders of
Securities
16. Investment Advisory and Management of the Trust;
Other Services Expenses of the Funds
17. Brokerage Allocation and Portfolio Transactions;
Other Services Expenses of the Funds
18. Capital Stock and Other General Information
Securities
19. Purchase, Redemption and Purchase and Redemption
Pricing of Securities Being of Shares; Net Asset
Offered Value
20. Tax Status Dividends, Distribution and
Taxes
21. Underwriters Expenses of the Funds; Purchase
and Redemption of Shares
<PAGE>
22. Calculation of General Information
Performance Data
23. Financial Statements Financial Statements
<PAGE>
The following documents are incorporated herein by reference:
1. The Trust's Prospectus relating to the Alliance Short-Term
U.S. Government Fund contained in Post-Effective Amendment
No. 14 to the Trust's Registration Statement (File Nos. 33-
12988, 811-5088) filed on October 31, 1994;
2. The Trust's Prospectus relating to the Alliance Growth Fund
and the Alliance Strategic Balanced Fund contained in Post-
Effective Amendment No. 15 to the Trust's Registration
Statement (File Nos. 33-12988, 811-5088) filed on January 27,
1995; and
3. The Trust's Statement of Additional Information (including
the reports of independent accountants and financial
statements contained therein), to the extent it relates to
the Alliance Short-Term U.S. Government Fund, contained in
Post-Effective Amendment No. 14 to the Trust's Registration
Statement (File Nos. 33-12988, 811-5088) filed on October 31,
1994.
4. The Trust's Statement of Additional Information (including
the reports of independent accountants and financial
statements contained therein), relating to the Alliance
Growth Fund and the Alliance Strategic Balanced Fund
contained in Post-Effective Amendment No. 16 to the Trust's
Registration Statement (File Nos. 33-12988, 811-5088) filed
on June 1, 1995.
<PAGE>
<PAGE>
Alliance
- --------------------------------------------------------------------------------
Asset
- --------------------------------------------------------------------------------
Allocation 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
September 1, 1995
Alliance Growth Investors Fund
Alliance Conservative Investors Fund
Table of Contents
Page
The Funds at a Glance ................................... 2
Expense Information ..................................... 3
Financial Highlights .................................... 5
Description of the Funds ................................ 7
Purchase and Sale of Shares ............................. 11
Management of the Funds ................................. 13
Dividends, Distributions and Taxes ...................... 14
General Information ..................................... 15
Appendix A .............................................. A-1
Investment Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
Alliance Growth Investors Fund ("Growth Investors Fund") and Alliance
Conservative Investors Fund ("Conservative Investors Fund") use asset
allocation strategies, and each Fund is designed with a view toward a
particular "investor profile." The Growth Investors Fund seeks the highest
total return consistent with Alliance's determination of reasonable risk by
investing in a diversified mix of publicly traded equity and fixed-income
securities. The Conservative Investors Fund seeks a high total return
without, in the view of Alliance, undue risk to principal by investing in a
diversified mix of publicly traded equity and fixed-income securities.
Each Fund is a series of The Alliance Portfolios (the "Trust"), and is a
diversified, open-end management investment company. This Prospectus offers
only shares of Alliance Growth Investors Fund and Alliance Conservative
Investors Fund. Shares of the Trust's other series, each of which has its own
investment objective and policies, are offered by separate Prospectuses. This
Prospectus sets forth concisely the information which a prospective investor
should know about the Funds before investing. A "Statement of Additional
Information" dated September 1, 1995, 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 address or
the "Literature" telephone number shown above.
The Funds offer 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" and "Management of the Funds--Distribution
Plans."
An investment in the Funds is not a deposit or obligation of, or guaranteed
or endorsed by, any bank and is not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency.
Investors are advised to read this Prospectus carefully and to retain it for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[LOGO OF ALLIANCE MUTUAL FUNDS APPEARS HERE]
(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 inside this Prospectus.
The Funds Seek to Provide . . .
Growth Investors Fund: Highest total return with reasonable risk through
investment in a mix of equity and fixed-income securities. Normally the Fund
will hold approximately 70% of its total assets in equity securities.
Conservative Investors Fund: High total return without undue risk to
principal through investment in a mix of equity and fixed-income securities.
Normally the Fund will hold approximately 70% of its total assets in
fixed-income securities.
The Funds Will Invest . . .
Principally in publicly traded equity and fixed-income securities.
The Trust's Investment Manager Is . . .
Alliance Capital Management L.P. ("Alliance"), a global investment adviser
providing diversified services to institutions
and individuals through a broad line of investments including 103 mutual
funds. Since 1971, Alliance has earned a reputation as a leader in the
investment world, with over $135.8 billion in assets under management.
Alliance provides investment management services to 29 of the FORTUNE 100
companies.
Getting Started . . .
Shares of the Funds are available through your financial represtative 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. In addition, alliance offers several time and
money savings services to investors. Be sure to ask you financial representative
about:
Automatic Reinvestment
Automatic Investment Program
Retirement Plans
Dividend Direction Plans
Auto Exchange
Systematic Withdrawals
A Choice of Purchase Plans
Telephone Transactions
24 Hour Information
[LOGO OF ALLIANCE MUTUAL FUNDS APPEARS HERE]
(R)/SM These are registered marks used under licenses from the owner,
Alliance Capital Management L.P.
2
<PAGE>
- --------------------------------------------------------------------------------
Expense Information
- --------------------------------------------------------------------------------
Shareholder Transaction Expenses are one of several factors to consider when
you invest in a Fund. The following tables summarize your maximum transaction
costs from investing in a Fund and estimated annual expenses for each class
of shares. The examples following the tables show the cumulative expenses
attributable to a hypothetical $1,000 investment in each class for the
periods specified.
<TABLE>
<CAPTION>
Conservative Investors Fund
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C> <C>
Shareholder Transaction Expenses
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 4.0% during None
the first year,
decreasing 1.0%
annually to 0%
after the fourth
year(b)
Exchange fee...................................................... None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees (after waiver)(c)................................. 0.32 0.32 0.32
Rule 12b-1 fees................................................... 0.30%(d) 1.00% 1.00%
Other expenses (e)................................................ 0.78% 0.78% 0.78%
----- ----- -----
Total Fund operating expenses (after waiver) (f)....................... 1.40% 2.10% 2.10%
===== ===== =====
</TABLE>
- --------------------------------------------------------------------------------
(a) Reduced for larger purchases. See "Purchase and Sale of Shares--How
to Buy Shares"--page 11.
(b) Class B shares automatically convert to Class A shares after eight
years. See "Purchase and Sale of Shares--How to Buy Shares--Class B
Shares--Deferred Sales Charge Alternative"--page 11.
(c) Reflects the agreement of Alliance to waive management fees to the
extent necessary to ensure that total Fund operating expenses do not exceed
the amounts shown in the table above. In the absence of such agreement,
management fees would have been .75%.
(d) Reflects the amount to which the Principal Underwriter has currently
undertaken to the Trustees to limit payments under the Fund's Class A
Distribution Plan.
(e) 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.
(f) Reflects the agreement of Alliance to limit total Fund operating
expenses. In the absence of such agreement, total Fund operating expenses
would have been 1.83%, 2.53% and 2.53%, respectively, for the Class A, Class
B and Class C shares.
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for the Period of:
--------------------------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------ ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment assuming (i) a 5% annual return throughout
the periods and (ii) redemption at the end of the period:
Class A.................................................. $56 $85 $116 $203
Class B.................................................. $61 $86 $113 $225(a)
Class C.................................................. $21 $66 $113 $243
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at
the end of the period:
Class A.................................................. $56 $85 $116 $203
Class B.................................................. $21 $66 $113 $225(a)
Class C.................................................. $21 $66 $113 $243
</TABLE>
(a) Assumes the Class B shares converted to Class A shares after eight years.
See note (b) above.
3
<PAGE>
GROWTH INVESTORS FUND
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C> <C>
Shareholder Transaction Expenses
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 4.0% during None
the first year,
decreasing 1.0%
annually to 0%
after the fourth
year(b)
Exchange fee...................................................... None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees (after waiver)(c)................................. 0.18 0.18 0.18
Rule 12b-1 fees................................................... 0.30%(d) 1.00% 1.00%
Other expenses (e)................................................ 0.92% 0.92% 0.92%
----- ----- -----
Total Fund operating expenses (after waiver and expense
reimbursement)(f)................................................. 1.40% 2.10% 2.10%
===== ===== =====
</TABLE>
- --------------------------------------------------------------------------------
(a) Reduced for larger purchases. See "Purchase and Sale of Shares--How
to Buy Shares"--page 11.
(b) As described herein, Class B shares will automatically convert to
Class A shares after eight years. See "Purchase and Sale of Shares--How to
Buy Shares--Class B Shares--Deferred Sales Charge Alternative"--page 11.
(c) Reflects the agreement of Alliance to waive management fees to the
extent necessary to ensure that total Fund operating expenses do not exceed
the amounts shown in the table above. In the absence of such agreement,
management fees would have been .75%.
(d) Reflects the amount to which the Principal Underwriter has currently
undertaken to the Trustees to limit payments under the Fund's Class A
Distribution Plan.
(e) 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.
(f) Reflects the agreement of Alliance to limit total Fund operating
expenses. In the absence of such agreement, total Fund operating expenses
would have been 1.97%, 2.67% and 2.67%, respectively, for the Class A, Class
B and Class C shares.
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for the Period of:
-------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming (i) a 5% annual return throughout
the periods and (ii) redemption at the end of the period:
Class A.............................................. $56 $85 $116 $203
Class B.............................................. $61 $86 $113 $225(a)
Class C.............................................. $21 $66 $113 $243
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at
the end of the period:
Class A.............................................. $56 $85 $116 $203
Class B.............................................. $21 $66 $113 $225(a)
Class C.............................................. $21 $66 $113 $243
</TABLE>
- --------------------------------------------------------------------------------
(a) Assumes the Class B shares converted to Class A shares after eight years.
See note (b) above.
The purpose of the foregoing tables 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 totalling 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 Plans." 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 (the "Commission")
regulations. The examples should not be considered a representation of future
expenses; actual expenses may be greater or less than those shown.
4
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected Data For a Share of Beneficial Interest Outstanding Throughout Each
Period
The information in the following tables, which pertains to the fiscal years
indicated, has been audited by Price Waterhouse LLP, the Trust's independent
accountants, whose report thereon appears in the Statement of Additional
Information. The following information should be read in conjunction with the
financial statements and related notes which are included in the Statement of
Additional Information. Further information about a Fund's performance is
contained in the Trust'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.
Prior to July 22, 1993, Equitable Capital Management Corporation ("Equitable
Capital") served as the investment adviser to the Trust. On July 22, 1993,
Alliance Capital Management L.P. acquired the business and substantially all
of the assets of Equitable Capital and became the investment adviser to the
Trust.
<TABLE>
<CAPTION>
Growth Investors Fund
Class A
-----------------------------------------
May 4,
Year Ended Year Ended 1992(a)
April 30, April 30, To April 30,
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period.................................. $ 11.61 $ 11.35 $10.00
------- ------- -------
Income from Investment Operations:
Net investment income................................................. .25* .12* .20*
Net realized and unrealized gain on investments....................... .38 .39 1.43
------- ------- -------
Net increase in net asset value from operations....................... .63 .51 1.63
------- ------- -------
Less: Distributions
Dividends from net investment income.................................. (.15) (.11) (.16)
Distributions from net realized gains................................. (.01) (.14) (.12)
------- ------- -------
Total dividends and distributions..................................... (.16) (.25) (.28)
------- ------- -------
Net asset value, end of period........................................ $ 12.08 $ 11.61 $11.35
======= ======= =======
Total Return
Total investment return based on net asset value(b)................... 5.57% 4.46% 16.32%
======= ======= =======
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)............................... $22,189 $16,759 $3,503
Ratios to average net assets of:
Expenses, net of waivers/reimbursements.......................... 1.40% 1.40% 1.40%(c)
Expenses, before waivers/reimbursements.......................... 1.97% 2.33% 4.27%(c)
Net investment income............................................ 2.32% 1.67% 1.91%(c)
Portfolio turnover rate............................................... 134% 96% 114%
</TABLE>
<TABLE>
<CAPTION>
Growth Investors Fund Growth Investors Fund
Class B Class C
---------------------------------------- ----------------------------
May 4, August 2,
Year Ended Year Ended 1992(a) Year Ended 1993(d)
April 30, April 30, To April 30, April 30, To April 30,
1995 1994 1993 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......................... $ 11.65 $ 11.41 $10.00 $11.65 $11.88
------- ------- ------ ------ ------
Income from Investment Operations:
Net investment income........................................ .17* .07* .07* .18* .08*
Net realized and unrealized gain (loss) on investments....... .38 .37 1.45 .38 (.11)
------- ------- ------ ------ ------
Net increase (decrease) in net asset value from operations... .55 .44 1.52 .56 (.03)
------- ------- ------ ------ ------
Less: Distributions
Dividends from net investment income......................... (.10) (.06) (.05) (.10) (.06)
Distributions from net realized gains........................ (.01) (.14) (.06) (.01) (.14)
------- ------- ------ ------ ------
Total dividends and distributions............................ (.11) (.20) (.11) (.11) (.20)
------- ------- ------ ------ ------
Net asset value, end of period............................... $ 12.09 $ 11.65 $11.41 $12.10 $11.65
======= ======= ====== ====== ======
Total Return
Total investment return based on net asset value(b).......... 4.83% 3.84% 15.23% 4.91% (.26)%
======= ======= ====== ====== ======
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)...................... $43,328 $30,871 $7,999 $4,247 $3,280
Ratios to average net assets of:
Expenses, net of waivers/reimbursements................. 2.10% 2.11% 2.15%(c) 2.10% 2.10%(c)
Expenses, before waivers/reimbursements................. 2.67% 3.00% 4.48%(c) 2.66% 3.02%(c)
Net investment income................................... 1.62% .95% 1.07%(c) 1.62% 1.04%(c)
Portfolio turnover rate...................................... 134% 96% 114% 134% 96%
</TABLE>
Please refer to the footnotes on page 6.
5
<PAGE>
<TABLE>
<CAPTION>
Conservative Investors Fund
Class A
--------------------------------------------
May 4,
Year Ended Year Ended 1992(a)
April 30, April 30, To April 30,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period................................. $ 10.37 $ 10.79 $10.00
------- ------- ------
Income from Investment Operations:
Net investment income................................................ .48* .31* .39*
Net realized and unrealized (loss) gain on investments............... (.02) (.26) .82
------- ------- ------
Net increase in net asset value from operations...................... .46 .05 1.21
------- ------- ------
Less: Distributions
Dividends from net investment income................................. (.45) (.29) (.36)
Distributions from net realized gains................................ -0- (.18) (.06)
------- ------- ------
Total dividends and distributions.................................... (.45) (.47) (.42)
------- ------- ------
Net asset value, end of period....................................... $ 10.38 $ 10.37 $10.79
======= ======= ======
Total Return
Total investment return based on net asset value(b).................. 4.65% .35% 12.25%
======= ======= ======
Ratios/Supplemental Data:
Net assets, end of year (000's omitted).............................. $16,105 $15,595 $5,339
Ratios to average net assets of:
Expenses, net of waivers/reimbursements......................... 1.40% 1.40% 1.40%(c)
Expenses, before waivers/reimbursements......................... 1.83% 2.03% 3.45%(c)
Net investment income........................................... 4.66% 3.43% 3.92%(c)
Portfolio turnover rate.............................................. 248% 133% 84%
</TABLE>
<TABLE>
<CAPTION>
Conservative Conservative
Investors Fund Investors Fund
Class B Class C
------------------------------------------ ---------------------------
May 4, August 2,
Year Ended Year Ended 1992(a) Year Ended 1993(d)
April 30, April 30, To April 30, April 30, To April 30,
1995 1994 1993 1995 1994
---------- --------- ------- ------ --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period...................... $ 10.47 $ 10.88 $10.00 $10.47 $11.12
------- ------- ------ ------ ------
Income from Investment Operations:
Net investment income..................................... .46* .24* .24* .46* .18*
Net realized and unrealized gain (loss) on investments.... (.02) (.26) .89 (.01) (.50)
------- ------- ------ ------ ------
Net increase (decrease) in net asset value from operations .44 (.02) 1.13 .45 (.32)
------- ------- ------ ------ ------
Less: Distributions
Dividends from net investment income...................... (.40) (.21) (.22) (.40) (.15)
Distributions from net realized gains..................... -0- (.18) (.03) -0- (.18)
------- ------- ------ ------ ------
Total dividends and distributions......................... (.40) (.39) (.25) (.40) (.33)
------- ------- ------ ------ ------
Net asset value, end of period............................ $ 10.51 $ 10.47 $10.88 $10.52 $10.47
======= ======= ====== ====== ======
Total Return
Total investment return based on net asset value(b)....... 3.91% (.31)% 11.39% 4.01% (2.98)%
======= ======= ====== ====== ======
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)................... $30,542 $29,697 $9,210 $4,419 $4,375
Ratios to average net assets of:
Expenses, net of waivers/reimbursements.............. 2.10% 2.11% 2.15%(c) 2.10% 2.10%(c)
Expenses, before waivers/reimbursements.............. 2.52% 2.73% 3.95%(c) 2.52% 2.69%(c)
Net investment income................................ 3.96% 2.72% 3.06%(c) 3.97% 2.94%(c)
Portfolio turnover rate................................... 248% 133% 84% 248% 133%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Net of fee waived and expenses reimbursed by Alliance.
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period of
less than one year is not annualized.
(c) Annualized.
(d) Commencement of distribution.
6
<PAGE>
- -------------------------------------------------------------------------------
Description Of The Funds
- -------------------------------------------------------------------------------
Except for certain investment restrictions designated as fundamental in this
Prospectus and the Statement of Additional Information, the investment
objectives and policies of the Funds are not fundamental policies and may be
changed by the Trustees without shareholder approval. However, the Trust will
give shareholders contemporaneous notice of any change in a Fund's investment
objective. There can be, of course, no assurance that the Funds will achieve
their investment objectives.
INVESTMENT OBJECTIVES AND POLICIES
General. The Conservative Investors and Growth Investors Funds invest in a
variety of fixed-income securities, money market instruments and equity
securities, each pursuant to a different asset allocation strategy, as
described below. The term "asset allocation" is used to describe the process
of shifting assets among discrete categories of investments in an effort to
adjust risk while producing desired return objectives. Portfolio management,
therefore, will consist not only of specific securities selection but also of
setting, monitoring and changing, when necessary, the asset mix. Each Fund has
been designed with a view toward a particular "investor profile." The
"conservative investor" has a relatively short-term investment bias, either
because of a limited tolerance for market volatility or a short investment
horizon. This investor is averse to taking risks that may result in principal
loss, even though such aversion may reduce the potential for higher long-term
gains and result in lower performance during periods of equity market strength.
Consequently, the asset mix for the Conservative Investors Fund attempts to
reduce volatility while providing modest upside potential. The "growth investor"
has a longer-term investment horizon and is therefore willing to take more risks
in an attempt to achieve long-term growth of principal. This investor wishes, in
effect, to be risk conscious without being risk averse. The asset mix for the
Growth Investors Fund should therefore provide for upside potential without
excessive volatility.
Alliance has established an asset allocation committee (the "Committee"), all
the members of which are employees of Alliance, which is responsible for
setting and continually reviewing the asset mix ranges of each Fund. The
Committee generally meets at least twice each month. Under normal market
conditions, the Committee is expected to change allocation ranges approximately
three to five times per year. However, the Committee has broad latitude to
establish the frequency, as well as the magnitude, of allocation changes within
the guidelines established for each Fund. During periods of severe market
disruption, allocation ranges may change frequently. It is also possible that in
periods of stable and consistent outlook no change will be made. The Committee's
decisions are based on and may be limited by a variety of factors, including
liquidity, portfolio size, tax consequences and general market conditions,
always within the context of the appropriate investor profile for each Fund.
Consequently, asset mix decisions for the Conservative Investors Fund
principally emphasize risk assessment of each asset class viewed over the
shorter term, while decisions for the Growth Investors Fund are principally
based on the longer term total return potential for each asset class.
The Funds are permitted to use a variety of hedging techniques to attempt to
reduce market, interest rate and currency risks.
INVESTMENT POLICIES OF THE CONSERVATIVE INVESTORS FUND
The investment objective of the Conservative Investors Fund is to achieve a
high total return without, in the view of Alliance, undue risk of principal.
The Conservative Investors Fund attempts to achieve its investment objective
by allocating varying portions of its assets among investment grade, publicly
traded fixed-income securities, money market instruments and publicly traded
common stocks and other equity securities of United States and non-United
States issuers.
All fixed-income securities owned by the Fund will be of investment grade.
This means that they will be in one of the top four rating categories
assigned by Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or will be unrated securities of comparable quality
as determined by Alliance. Securities in the fourth such rating category
(rated Baa by Moody's or BBB by S&P) have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead
to a weakened capacity to make principal and interest payments on such
obligations than in the case of higher-rated securities. In the event that
the rating of any security held by the Conservative Investors Fund falls
below investment grade (or, in the case of an unrated security, Alliance
determines that it is no longer of investment grade), the Fund will not be
obligated to dispose of such security and may continue to hold the obligation
if, in the opinion of Alliance, such investment is considered appropriate in
the circumstances. For a description of the ratings referred to above, see
Appendix A.
Equity securities invested in by the Conservative Investors Fund will consist
of common stocks and securities convertible into common stocks, such as
convertible bonds, convertible preferred stocks and warrants, issued by
companies with a favorable outlook for earnings and whose rate of growth is
expected to exceed that of the United States' economy over time.
The Conservative Investors Fund will at all times hold at least 40% of its
total assets in investment grade fixed-income securities, each having a
duration less than that of a 10-year Treasury bond (the "Fixed Income Core").
The duration of a fixed-income security is the weighted average maturity,
expressed in years, of the present value of all future cash flows, including
coupon payments and principal repayments.
7
<PAGE>
The Conservative Investors Fund is generally expected to hold approximately
70% of its total assets in fixed-income securities (including the Fixed
Income Core, cash and money market instruments) and 30% in equity securities.
Actual asset mixes will be adjusted in response to economic and credit market
cycles. The fixed-income asset class will always comprise at least 50%, but
never more than 90%, of the Fund's total assets. The equity class will always
comprise at least 10%, but never more than 50%, of the Fund's total assets.
For temporary defensive purposes, the Fund may invest in money market
instruments.
INVESTMENT POLICIES OF THE GROWTH INVESTORS FUND
The investment objective of the Growth Investors Fund is to achieve the
highest total return consistent with Alliance's determination of reasonable
risk. The Fund attempts to achieve its investment objective by allocating
varying portions of its assets among a number of asset classes. Equity
investments will include publicly traded common stocks and other equity
securities of the type in which the Conservative Investors Fund may invest,
but may also include equity securities issued by intermediate and small-sized
companies with favorable growth prospects, companies in cyclical industries,
companies whose securities are temporarily undervalued, companies in special
situations and less widely known companies. Fixed-income investments will
include investment grade fixed-income securities (including cash and money
market instruments) and may include securities that are rated in the lower
rating categories by recognized ratings agencies (i.e., Ba or lower by
Moody's or BB or lower by S&P) or that are unrated but determined by Alliance
to be of comparable quality. Lower rated fixed-income securities generally
provide greater current income than higher rated fixed-income securities, but
are subject to greater credit and market risk. The Fund will not invest more
than 25% of its total assets in securities rated below investment grade, that
is, securities rated Ba or lower by Moody's or BB or lower by S&P, or in
unrated securities deemed to be of comparable quality by Alliance. For a
description of the ratings referred to above, see Appendix A. For more
information about the risks associated with investment in lower rated
securities, see "High-Yield Securities" below.
The Growth Investors Fund will at all times hold at least 40% of its total
assets in publicly traded common stocks and other equity securities of the
type purchased by the Conservative Investors Fund (the "Equity Core"). The
Growth Investors Fund is generally expected to hold approximately 70% of its
total assets in equity securities (including the Equity Core) and 30% in
fixed-income securities (including cash and money market instruments). Actual
asset mixes will be adjusted in response to economic and credit market
cycles. The fixed-income asset class will always comprise at least 10%, but
never more than 60%, of the Fund's total assets. The equity class will always
comprise at least 40%, but never more than 90%, of the Fund's total assets. For
temporary defensive purposes, the Fund may invest in money market instruments.
ADDITIONAL INVESTMENT POLICIES AND TECHNIQUES APPLICABLE TO THE FUNDS
Foreign Securities. Each Fund may invest without limit in securities of
foreign issuers and securities which are not publicly traded in the United
States, although the Conservative Investors Fund generally will not invest
more than 15% of its total assets, and the Growth Investors Fund generally
will not invest more than 30% of its total assets, in such securities. Such
securities may involve certain special risks due to foreign economic,
political, diplomatic and legal developments, including favorable or
unfavorable changes in currency exchange rates, exchange control regulations
(including currency blockage and costs), expropriation of assets or
nationalization, confiscatory taxation, imposition of withholding taxes on
dividend or interest payments, and possible difficulty in obtaining and
enforcing judgments against foreign entities. Furthermore, issuers of foreign
securities are subject to different, often less comprehensive, accounting,
reporting and disclosure requirements than domestic issuers. The securities
of some foreign companies and foreign securities markets are less liquid and
at times more volatile than securities of comparable U.S. companies and U.S.
securities markets, and foreign securities markets may be subject to less
regulation than U.S. securities markets. The laws of some foreign countries
may limit the Funds' ability to invest in certain issuers located in those
countries. Foreign brokerage commissions and other fees are also generally
higher than in the United States. There are also special tax considerations
which apply to securities of foreign issuers and securities principally
traded overseas. Foreign settlement procedures and trade regulations may
involve certain risks (such as delay in payment or delivery of securities or
in the recovery of the Funds' assets held abroad) and expenses not present in
the settlement of domestic investments.
The Growth Investors Fund may invest a portion of its assets in developing
countries or in countries with new or developing capital markets. The risks
noted above are generally intensified for these investments. These countries
may have relatively unstable governments, economies based on only a few
industries or securities markets that trade a small number of securities.
Securities of issuers located in these countries tend to have volatile prices
and may offer significant potential for loss as well as gain.
The value of foreign investments measured in U.S. dollars will rise or fall
because of decreases or increases, respectively, in the value of the U.S. dollar
in comparison to the value of the currency in which the foreign investment is
denominated. The Funds may buy or sell foreign currencies, options on foreign
currencies, foreign currency futures contracts (and related options) and deal in
forward foreign currency exchange contracts in connection with the purchase and
sale of foreign investments. See the Statement of Additional Information.
Non-Publicly Traded Securities. Each Fund may invest in securities which are
not publicly traded, including securities sold pursuant to Rule 144A under
the Securities Act of 1933 ("Rule 144A Securities"). The sale of these
securities is
8
<PAGE>
usually restricted under Federal securities laws, and market quotations may not
be readily available. As a result, a Fund may not be able to sell these
securities (other than Rule 144A Securities) unless they are registered under
applicable Federal and state securities laws, or may have to sell them at less
than fair market value. Investment in these securities is restricted to 5% of a
Fund's total assets (not including for these purposes Rule 144A Securities, to
the extent permitted by applicable law) and is also subject to the Funds'
restriction against investing more than 15% of total assets in "illiquid"
securities. 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 the Trust's Board of
Trustees. For additional information see the Statement of Additional
Information.
Mortgage-Backed Securities. Each Fund may invest in mortgage-backed
securities, including collateralized mortgage obligations or "CMOs." Interest
and principal payments (including prepayments) on the mortgages underlying
mortgage-backed securities are passed through to the holders of the mortgage-
backed security. Prepayments occur when the mortgagor on an individual
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. 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.
Because the prepayment characteristics of the underlying mortgages vary, it
is not possible 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, such prepayments can
be expected to accelerate and the Funds would be required to reinvest the
proceeds at the lower interest rates then available. In addition, prepayments
of mortgages which underlie securities purchased at a premium could result in
capital losses.
The Funds may also invest in derivative instruments, including certificates
representing rights to receive payments of the interest only or principal only
of mortgage-backed securities ("IO/PO Strips"). These securities may be more
volatile than other types of securities. IO Strips involve the additional risk
of loss of the entire remaining value of the investment if the underlying
mortgages are prepaid.
Adjustable Rate Securities. Each Fund may invest in adjustable rate
securities. Adjustable rate securities are securities that 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 act as a buffer to reduce sharp changes in the value of adjustable rate
securities, these securities are still subject to changes in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
Because the interest rate is reset only periodically, 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 during a specified period or over the life of the
security.
Asset-Backed Securities. Each Fund may invest in asset backed securities
which represent fractional interests in pools of leases, retail installment
loans or revolving credit receivables, both secured and unsecured. These
assets are generally held by a trust. Payments of principal and interest or
interest only are passed through 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.
Underlying automobile sales contracts or credit card receivables are subject
to prepayment, which may reduce the overall return to certificate holders.
Nevertheless, principal repayment rates tend not to vary much with interest
rates and the short-term nature of the underlying car loans or other
receivables tends to dampen the impact of any change in the prepayment level.
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. If consistent with its investment objective and policies, the Funds
may invest in other asset-backed securities that may be developed in the
future.
High-Yield Securities. The Growth Investors Fund may invest in high-yield,
high-risk, fixed-income and convertible securities rated at the time of
purchase Ba or lower by Moody's or BB or lower by S&P, or, if unrated, judged
by Alliance to be of comparable quality ("High-Yield Securities"). The Growth
Investors Fund will generally invest in securities with a
minimum rating of Caa- by Moody's or CCC- by S&P or in unrated securities
judged by Alliance to be of comparable quality. However, from time to time,
the Fund may invest in securities rated in the lowest grades of Moody's (C)
or S&P (D) or in unrated securities judged by Alliance to be of comparable
quality, if Alliance determines that there are prospects for an upgrade or a
favorable conversion into equity securities (in the case of convertible
securities). Securities rated Ba or BB or lower (and comparable unrated
securities) are commonly referred to as "junk bonds." Securities rated D by
S&P are in default. For the fiscal year ended April 30, 1995, neither Fund
invested in High-Yield Securities.
As with other fixed-income securities, High-Yield Securities are subject to
credit risk and market risk and their yields may fluctuate. Market risk
relates to changes in a security's value as a result of changes in interest
rates. Credit risk relates to the ability of the issuer to make payments of
principal and interest. High-Yield Securities are subject to greater credit
risk (and potentially greater incidences of default) than comparable higher-
rated securities because issuers are more vulnerable to economic downturns,
higher interest rates or adverse
9
<PAGE>
issuer-specific developments. In addition, the prices of High-Yield Securities
are generally subject to greater market risk, and therefore react more sharply
to changes in interest rates. The value and liquidity of High-Yield Securities
may be diminished by adverse publicity and investor perceptions.
Because High-Yield Securities are frequently traded only in markets where the
number of potential purchasers and sellers, if any, is limited, the ability
of the Growth Investors Fund to sell High-Yield Securities at their fair
value either to meet redemption requests or to respond to changes in the
financial markets may be limited. Thinly traded High-Yield Securities may be
more difficult to value accurately for the purpose of determining the Fund's
net asset value. In addition, the values of such securities may be more
volatile.
Some High-Yield Securities in which the Growth Investors Fund may invest may
be subject to redemption or call provisions that may limit increases in
market value that might otherwise result from lower interest rates while
increasing the risk that the Fund may be required to reinvest redemption or
call proceeds during a period of relatively low interest rates.
The credit ratings issued by Moody's and S&P, a description of which is
included as Appendix A, are subject to various limitations. For example,
while such ratings evaluate credit risk, they ordinarily do not evaluate the
market risk of High-Yield Securities. In certain circumstances, the ratings
may not reflect in a timely fashion adverse developments affecting an issuer.
For these reasons, Alliance conducts its own independent credit analysis of
High-Yield Securities. When the Growth Investors Fund invests in securities
in the lower rating categories, the achievement of the Fund's goals is more
dependent on Alliance's ability than would be the case if the Fund were
investing in higher-rated securities.
In the event that the credit rating of a High-Yield Security held by the Growth
Investors Fund falls below its rating at the time of purchase (or, in the case
of unrated securities, Alliance determines that the quality of such security has
deteriorated since purchased by the Fund), the Fund will not be obligated to
dispose of such security and may continue to hold the obligation if, in the
opinion of Alliance, such investment is considered appropriate in the
circumstances.
Convertible Securities. Each Fund may invest in convertible securities. These
securities normally provide a higher yield than the underlying stock but
lower than a fixed-income security without the convertible feature. Also, the
price of the convertible security will normally vary to some degree with
changes in the price of the underlying stock although in some market
conditions the higher yield tends to make the convertible security less
volatile than the underlying common stock. In addition, the price of the
convertible security will also vary to some degree inversely with interest
rates. Convertible debt securities that are rated below BBB (S&P) or Baa
(Moody's) or comparable unrated securities as determined by Alliance may
share some or all of the risks of High-Yield Securities. For a description of
these risks, see "High-Yield Securities" above.
Zero-Coupon and Payment-in-Kind Bonds. The Funds may at times invest in so-
called "zero-coupon" bonds and "payment-in-kind" bonds. Zero-coupon bonds are
issued at a significant discount from their principal amount in lieu of
paying interest periodically. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. Because zero-coupon 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 which
pay interest currently in cash. 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 in cash. 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.
Futures and Related Options. Each Fund may buy and sell stock index futures
contracts ("index futures") and may buy options on index futures for hedging
purposes and may buy and sell options on stock indices for hedging purposes
or to earn additional income. The Funds may also, for hedging purposes,
purchase and sell futures contracts, options thereon and options with respect
to U.S. Treasury securities, including U.S. Treasury bills, notes and bonds.
The use of futures and options involves certain special risks. Futures and
options transactions involve costs and may result in losses. Certain risks
arise because of the possibility of imperfect correlations between movements
in the prices of futures and options and movements in the prices of the
underlying stock index or security or of the securities in a Fund's portfolio
that are the subject of a hedge. The successful use of the strategies
described above further depends on Alliance's ability to forecast market
movements correctly. Other risks arise from a Fund's potential inability to
close out its futures or options positions. In addition there can be no
assurance that a liquid secondary market will exist for any future or option
at any particular time. Certain provisions of the Internal Revenue Code and
certain regulatory requirements may limit the Funds' ability to engage in
futures and options transactions. A more detailed explanation of futures and
options transactions, including the risks associated with them, is included
in the Statement of Additional Information.
Options. A Fund may seek to increase current return by writing covered call
and put options on securities it owns or in which it may invest. The Fund
receives a premium from writing a call or put option, which increases the
Fund's return if the option expires unexercised or is closed out at a net
profit. When the Fund writes a call option, it gives up the opportunity to
profit from any increase in the price of a security above the exercise price
of the option; when it writes a put option, the Fund takes the risk that it
will be required to purchase a security from the
10
<PAGE>
option holder at a price above the current market price of the security. The
Fund may terminate an option that it has written prior to its expiration by
entering into a closing purchase transaction in which it purchases an option
having the same terms as the option written. A Fund may also buy and sell put
and call options for hedging purposes. A Fund may also from time to time buy and
sell combinations of put and call options on the same underlying security to
earn additional income. A Fund's use of these strategies may be limited by
applicable law.
Securities Loans, Repurchase Agreements and Forward Commitments. Each Fund
may lend portfolio securities amounting to not more than 25% of its total
assets and may enter into repurchase agreements on up to 25% of its total
assets. These transactions must be fully collateralized at all times, but
involve some risk to a Fund if the other party should default on its
obligation and the Fund is delayed or prevented from recovering the
collateral. Each Fund may also purchase securities for future delivery, which
may increase its overall investment exposure and involves a risk of loss if
the value of the securities declines prior to the settlement date.
Portfolio Management. Alliance manages each Fund's portfolio by buying and
selling securities to help attain its investment objective. The portfolio
turnover rate for each Fund is included under "Financial Highlights." A high
portfolio turnover rate will involve greater costs to a Fund (including
brokerage commissions and transaction costs) and may also result in the
realization of taxable capital gains, including short-term capital gains
taxable at ordinary income rates. See "Dividends, Distributions and Taxes"
below and "Portfolio Transactions" in the Statement of Additional Information.
Certain Fundamental Investment Policies. The Funds have adopted certain
fundamental investment policies which may not be changed without shareholder
approval, including policies which provide that each Fund may not: (i) invest
more than 5% of its total assets in the securities of any one issuer (other
than U.S. Government securities and repurchase agreements relating thereto),
although up to 25% of a 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.
- -------------------------------------------------------------------------------
Purchase And Sale
- -------------------------------------------------------------------------------
Of Shares
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
You can purchase shares through broker-dealers, banks or other financial
intermediaries, or directly through Alliance. The minimum initial investment
is $250. The minimum for subsequent investments is $50. Investments of $25 or
more are allowed under the automatic investment program and a 403(b)(7)
retirement plan. Share certificates are issued only upon request. See the
Statement of Additional Information and the Application for more information.
The Funds offer the following classes of shares:
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
- -------------------------------------------------------------------------------
$1,000,000 to less
than $3,000,000 1.27 1.25 1.00
- -------------------------------------------------------------------------------
$3,000,000 to less
than $5,000,000 0.76 0.75 0.50
- -------------------------------------------------------------------------------
</TABLE>
On purchases of $5,000,000 or more, you pay no initial sales charge; Alliance
may pay from its own resources to the dealer or agent a fee of up to .25 of
1%. Certain purchases of Class A shares may qualify for reduced or eliminated
sales charges in accordance with the Funds' 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 Application and the 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 contingent deferred sales charge ("CDSC") if
you redeem shares within four years after purchase. Shares obtained from
dividend or distribution reinvestment are not subject to the CDSC. 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 the Class B shares until the redemption of those shares, as
follows:
<TABLE>
<CAPTION>
CDSC
Shares Purchased
On or After
Year Since Purchase November 19, 1993
- -------------------------------------------------------------------------------
<S> <C>
First 4%
Second 3%
Third 2%
Fourth 1%
Thereafter None
</TABLE>
The CDSC is deducted from the amount of the redemption and paid to Alliance
Fund Distributors, Inc. ("AFD"). The CDSC will be waived on redemptions of
shares following the death or disability of a shareholder or to meet certain
qualified retirement plans. See the Statement of Additional Information.
11
<PAGE>
Shares purchased before November 19, 1993 are subject to a different CDSC
schedule.
Class B shares are subject to higher distribution fees than Class A shares
for a period of eight years (at which time they convert to Class A shares).
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 CDSC. The
Funds 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 Funds. 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.
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 ("Exchange") is open as of the close of regular trading
(currently 4:00 p.m. Eastern time). The portfolio securities of a Fund are
valued at their current market value determined on the basis of market
quotations or, if such quotations are not readily available, by such other
methods as the Trustees believe would accurately reflect fair market value.
General
The decision as to which Class is more beneficial to you depends on the
amount and intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might consider
Class A shares. If you are making a smaller investment, you might consider
Class B shares because 100% of your purchase is invested immediately. If you
are unsure of the length of your investment, you might consider Class C
shares because there is no initial or contingent deferred sales charge.
Consult your financial agent. There is no size limit on purchases of Class A
shares. The maximum purchase of Class B shares is $250,000. The maximum
purchase of Class C shares is $5,000,000. A Fund may refuse any order to
purchase shares.
In addition to the discount or commission paid to dealers, AFD will from time
to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Alliance Mutual Funds. Such incentives will take the form
of payment for attendance at seminars, lunches, dinners, sporting events or
theater performances, or payment for travel, lodging and entertainment
incurred in connection with travel by persons associated with a dealer and
their immediate family members to urban or resort locations within or outside
the United States. Such a dealer 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 to a Fund on any day the Exchange is
open, either directly or though your financial intermediary. The price you
will receive is the net asset value (less any applicable CDSC for Class B
shares) next calculated after a Fund receives your request in proper form.
Proceeds generally will be sent to you within seven days. However, for shares
recently purchased by check, a Fund will not send proceeds until it is
reasonably satisfied that the check has been collected (which may take up to
15 days).
Selling Shares Through Your Broker
A Fund must receive your broker's request before 4:00 p.m. Eastern time to
receive that day's net asset value (less any applicable CDSC for Class B
shares). Your broker is responsible for furnishing all necessary
documentation to the Fund and may charge you for this service.
Selling Shares Directly To A Fund
Send a signed letter of instruction or stock power form to Alliance Fund
Services, Inc. ("AFS") along with certificates, if any, that represent the
shares you want to sell. For your protection, signatures must be guaranteed
by a bank, a member firm of a national stock exchange or other eligible
guarantor institution. Stock power forms are available from your financial
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
General
The sale of shares is a taxable transaction for Federal tax purposes. Under
unusual circumstances, the Funds 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.
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's manual, call 800-227-4618.
During drastic economic or market developments, you might have difficulty in
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
12
<PAGE>
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.
HOW TO EXCHANGE SHARES
You may exchange your investment in any Fund for shares of the same class of
other Alliance Mutual Funds (which include AFD Exchange Reserves, a money
market fund managed by Alliance). Exchanges of shares are made at the net
asset values next determined, without sales or service charges. Exchanges may
be made by telephone or written request.
Class B shares will continue to age without regard to exchanges for purposes
of conversion to Class A shares and for determining the CDSC, if any, upon
redemption. 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 fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to
exchange by telephone shares not in certificate form. 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 investment advisory contract (the "Investment Advisory Contract") to
provide investment advice and, in general, to conduct the management and
investment programs of each Fund subject to the general supervision and
control of the Trustees of the Trust. The employee of Alliance principally
responsible for the Funds' investment program is Bruce W. Calvert, who has
had such responsibility since April 1995. Mr. Calvert is the Vice Chairman
and Chief Investment Officer of Alliance and has been associated with
Alliance since 1973.
Alliance is a leading international investment manager supervising client
accounts with assets as of June 30, 1995 totalling more than $135.8 billion
(of which more than $43 billion represents 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 103 separate investment portfolios currently have over
one million shareholders. As of June 30, 1995, Alliance was retained as an
investment manager of employee benefit fund assets for 29 of the Fortune 100
companies.
Alliance Capital Management Corporation, the sole general partner of, and the
owner of a 1% general partnership interest in, Alliance, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States, ("Equitable"), one of the largest life insurance companies in the
United States, which is a wholly-owned subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA, a French insurance holding
company. Certain information concerning the ownership and control of
Equitable by AXA is set forth in the Statement of Additional Information
under "Management of the Trust."
Alliance provides investment advisory, administrative and clerical services,
office space, and order placement facilities for each Fund and pays all
compensation of the Trustees and officers of the Trust who are affiliated
persons of Alliance. For its services, Alliance is entitled to receive a
monthly fee from each Fund at an annual rate of 0.75% of such Fund's average
daily net assets. However, Alliance has voluntarily agreed to waive its fees
and bear certain expenses so that total expenses of each Fund do not exceed
on an annual basis 1.40%, 2.10% and 2.10% of average net assets,
respectively, for the Class A, Class B and Class C shares.
DISTRIBUTION PLANS
Rule 12b-1 adopted by the Commission under the Investment Company Act of
1940, as amended (the "1940 Act"), permits an investment company to directly
or indirectly pay expenses associated with the distribution of its shares in
accordance with a duly adopted and approved plan. The Trust has adopted a
plan for each class of shares pursuant to Rule 12b-1 (each a "Plan" and
collectively the "Plans"). Pursuant to the Plans, each Fund pays AFD a Rule
12b-1 distribution services fee, which may not exceed an annual rate of .50%
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, to compensate AFD for distribution
services. The Trustees currently limit payments under the Class A Plan to
.30% of each Fund's aggregate average daily net assets attributable to Class
A shares. The Plans provide that a portion of the distribution services fee,
in an amount not to exceed .25%, constitutes a service fee that AFD will use
for personal service and/or the maintenance of shareholder accounts.
Each Plan provides that AFD will use the distribution services fee received
from a Fund for payments (i) to compensate broker-dealers or other persons
for providing distribution assistance, (ii) to otherwise promote the sale of
shares of that Fund and (iii) to compensate broker-dealers, depository
institutions and other financial intermediaries for providing administrative,
accounting and other services with respect to that Fund's shareholders. In
this regard, some payments under the Plans are used to compensate financial
intermediaries with
13
<PAGE>
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 are accrued daily and paid monthly, and
are charged as expenses of the Fund when accrued. The Plans also provide that
Alliance may use its own resources to finance the distribution of the Funds'
shares.
The Funds are not obligated under the Plans to pay any distribution services
fee in excess of the amounts set forth above. The purpose of the payments to
AFD under the Plans is to compensate AFD for its distribution services with
respect to the sale of the Funds' shares. Since AFD's compensation is not
directly tied to its expenses, the amount of compensation received by it
under the Plans during any year may be more or less than its actual expenses.
For this reason, the Plans are characterized by the staff of the Commission
as being of the "compensation" variety.
In the event that a Plan is terminated or not continued, (i) no
distribution services fees (other than current amounts accrued but not yet
paid) would be owed by the Funds to AFD with respect to the relevant class
and (ii) the Funds would not be obligated to pay AFD for any amounts expended
by AFD not previously recovered by AFD from distribution services fees in
respect of shares of such class or, in the case of Class B shares, recovered
through deferred sales charges. Unreimbursed distribution expenses incurred
as of April 30, 1995 with respect to the Class B shares of the Conservative
Investors Fund amounted to approximately $1,129,165, or approximately 3.70%
of the net assets represented by Class B shares on that date. Unreimbursed
distribution expenses incurred as of April 30, 1995 with respect to the Class
C shares of the Conservative Investors Fund amounted to approximately
$124,599, or approximately 2.62% of the net assets represented by Class C
shares on that date. Unreimbursed distribution expenses incurred as of April
30, 1995 with respect to the Class B shares of the Growth Investors Fund
amounted to approximately $1,276,362, or approximately 2.95% of the net
assets represented by Class B shares on that date. Unreimbursed distribution
expenses incurred as of April 30, 1995 with respect to the Class C shares of
the Growth Investors Fund amounted to approximately $196,425, or
approximately 4.63% of the net assets represented by Class C shares on that
date.
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 impose 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 initial, 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 Trust'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 above. In the event
that a change in these laws prevented a bank from providing such services, it
is expected that other service arrangements would be made and that
shareholders would not be adversely affected. The State of Texas requires
that shares of the Funds 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 from
a Fund, you may, within 30 days following the date of its payment, reinvest
the dividend or distribution in additional shares of the 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 the Fund.
It is the intention of the Conservative Investors Fund to distribute net
investment income quarterly and any net realized capital gains at least
annually. It is the intention of the Growth Investors Fund to distribute any
net investment income and any net realized capital gains at least annually.
Distributions from net investment income, if any, are expected to be small.
Distributions from net capital gains are made after applying any available
loss carryovers.
TAXES
Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Internal Revenue Code. So long as a Fund distributes at least 90%
of its income, qualification as a regulated investment company relieves that
Fund of Federal income and excise taxes on that part of its taxable income
including net capital gains which it pays out to its shareholders. Dividends
out of net ordinary income and distributions of net short-term capital gains
are taxable to the recipient shareholders as ordinary income. In the case of
corporate shareholders, such dividends may be eligible for the dividends-
received deduction, except that the amount eligible for the deduction is
limited to the amount of qualifying dividends received by the Fund. A
corporation's dividends-received deduction will be disallowed
14
<PAGE>
unless the corporation holds shares in the Fund at least 46 days.
Furthermore, the dividends-received deduction will be disallowed to the
extent that 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 Fund shares. Long-term capital gains distributions are not eligible for
the dividends-received deduction referred to above.
Under current federal tax law, the amount of an income dividend or capital
gains distribution declared by a Fund during October, November or December of
a year to shareholders of record as of a specified date in such a month that
is paid during January of the following year is includable in the prior
year's taxable income of shareholders that are calendar year taxpayers.
Any dividend or distribution received by a shareholder on shares of a Fund
will have the effect of reducing the net asset value of such shares by the
amount of such dividend or distribution. Furthermore, a dividend or
distribution made shortly after the purchase of such shares by a shareholder,
although in effect a return of capital to that particular shareholder, would
be taxable to him or her as described above. Any loss realized on the sale of
shares held six months or less will be a long-term capital loss to the extent
of distribution with respect to such shares of net capital gain.
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.
- -----------------------------------------------------------------------------
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,
the Trust may consider sales of shares of the Funds as a factor in the
selection of dealers to enter into portfolio transactions with the Funds.
ORGANIZATION
The Trust is a Massachusetts business trust organized on March 26, 1987.
Prior to August 2, 1993, the Trust was known as The Equitable Funds, and the
Growth Investors Fund and the Conservative Investors Fund were known as The
Equitable Growth Investors Fund and The Equitable Conservative Investors
Fund, respectively.
The Trust is an open-end management investment company with an unlimited
number of authorized shares of beneficial interest, which may, without
shareholder approval, be divided into an unlimited number of series of such
shares which, in turn, may be subdivided into an unlimited number of classes
of shares. The Trust currently consists of five series of shares, two of
which represent the Funds. Each Fund is divided into three classes of shares,
designated Class A shares, Class B shares and Class C shares. The Trustees
may, subject to any required approvals by the Commission, further divide each
series into additional classes of shares which may be sold under conditions
or with charges varying from those of the present classes of shares of each
series. In addition, upon approval by the Commission, fees and expenses other
than those described above may be allocated to any class of a series' shares.
Shareholders are entitled to one vote for each share held and to vote in the
election of Trustees and the termination of the Trust and on other matters
submitted to meetings of shareholders. Shareholders of a series or a class
thereof are entitled to vote only on matters which affect that series or that
class, and shareholders of the series or a particular class of shares of the
series which are affected generally vote together as a single class. The
Trust is not required and does not presently intend to hold annual meetings
of its shareholders for election of Trustees and ratification of the
selection of auditors. Shareholders may remove Trustees from office by votes
cast in person or by proxy at a meeting of shareholders or by written
consent. The shares of each Fund are freely transferable, are entitled to
distributions from the assets of the relevant Fund as declared by the
Trustees, and, if a Fund were liquidated, would receive the net assets of the
Fund attributable to the relevant class. The Trust may suspend the sale of
shares of any Fund or class thereof at any time and may refuse any order to
purchase shares.
Shareholders could, under certain circumstances, be held personally liable
for obligations of the Trust. However, the risk of a shareholder incurring
financial loss on account of such liability is considered remote since it may
arise only in very limited circumstances. See "Shareholder and Trustee
Liability" under "General Information" in the 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, is the Trust's registrar, transfer agent
and dividend-disbursing agent for a fee based upon the number of shareholder
accounts maintained for the Trust. 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
the shares of the Trust.
15
<PAGE>
PERFORMANCE INFORMATION
From time to time the Funds advertise their "yield" and "total return." Yield
and total return are computed separately for Class A, Class B and Class C
shares of each Fund. 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. The Funds 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 of each Fund. Advertisements of total return disclose the
average annual compounded total return for the recent one-year period and the
life of the class. 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 the Funds are assumed to have been
reinvested when paid and the maximum sales charges applicable to purchases
and redemptions of Fund shares are assumed to have been paid. Each Fund will
include performance data for each of its Class A, Class B and Class C shares
in any advertisement or information including performance data of the Funds.
These advertisements may quote performance rankings or ratings of the Funds
as measured by financial publications or by independent organizations such as
Lipper Analytical Services, Inc. and Morningstar, Inc. or compare the Funds'
performance to various indices.
ADDITIONAL INFORMATION
This Prospectus and the Statement of Additional Information, which has been
incorporated by reference herein, do not contain all the information set
forth in the Registration Statement filed by the Trust with the Commission
under the Securities Act of 1933. 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.
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
16
<PAGE>
- -------------------------------------------------------------------------------
Appendix A
- -------------------------------------------------------------------------------
RATINGS OF CORPORATE BONDS
Descriptions of the bond ratings of Standard & Poor's Corporation are:
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than for debt in higher rated categories.
BB, B, CCC, CC or C--Debt rated BB, B, CCC, CC or C is regarded, on balance,
as predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to
adverse debt conditions.
C1--The rating C1 is reserved for income bonds on which no interest is being
paid.
D--Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.
The ratings from AA to CC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
Descriptions of the bond ratings of Moody's Investors Service, Inc. are as
follows:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat greater than
the Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment some time in the
future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca--Bonds which are rated Ca represent obligations which are speculative to a
high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Moody's applies modifiers to each rating classification from Aa through B to
indicate relative ranking within its rating categories. The modifier "1"
indicates that a security ranks in the higher end of its rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates
that the issue ranks in the lower end of its rating category.
A-1
<PAGE>
- --------------------------------------------------------------------------------
Alliance Subscription Application
- --------------------------------------------------------------------------------
Alliance Asset Allocation Funds
Conservative Investors Fund Growth Investors Fund
- --------------------------------------------------------------------------------
Information And Instructions
- --------------------------------------------------------------------------------
To Open Your New Alliance Account
Please complete the application and mail it to:
Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520
Signatures - Please Be Sure To Sign the Application (Section 7)
If shares are registered in the name of:
* an individual, the individual should sign.
* joint tenants, both should sign.
* a custodian for a minor, the custodian should sign.
* a corporation or other organization, an authorized officer should sign
(please indicate corporate office or title).
* a trustee or other fiduciary, the fiduciary or fiduciaries should sign
(please indicate capacity).
Registration
To ensure proper tax reporting to the IRS:
* Individuals, Joint Tenants and Gift/Transfer to a Minor:
- Indicate your name exactly as it appears on your social security card.
* Trust/Other:
- Indicate the name of the entity exactly as it appeared on the notice
you received from the IRS when your Employer Identification number was
assigned.
Please Note:
* Certain legal documents will be required from corporations or other
organizations, executors and trustees, or if a redemption is requested by
anyone other than the shareholder of record. If you have any questions
concerning a redemption, contact the Fund at the number below.
* In the case of redemptions or repurchases of shares recently purchased by
check, redemption proceeds will not be made available until the Fund is
reasonably assured that the check has cleared, normally up to 15 calendar
days following the purchase date.
If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At:
1-(800) 221-5672.
<PAGE>
Subscription Application
- --------------------------------------------------------------------------------
Alliance Asset Allocation Funds:
Alliance Conservative Investors Fund
Alliance Growth Investors Fund
(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's (First Name) (MI) (Last Name)
/_/_/_/-/_/_/-/_/_/_/_/
Minor's Social Security Number (Required to open account)
Under the State of __________ (Minor's Residence) Uniform Gifts/Transfer to
Minor's Act
[_] Trust Account
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
Name of Trustee
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
Name of Trust
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
Name of Trust (cont'd)
/_/_/_/_/_/_/_/_/_/_/_/_/_/ /_/_/_/_/_/_/_/_/_/_/_/
Trust Dated Tax ID or Social Security Number
(Required to open account)
[_] Other
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
Name of Corporation, Partnership or other Entity
/_/_/_/_/_/_/_/_/_/
Tax ID Number
- --------------------------------------------------------------------------------
2. Address
- --------------------------------------------------------------------------------
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
Street
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
City State Zip Code
/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/_/
If Non-U.S., Specify Country
/_/_/_/-/_/_/_/-/_/_/_/_/ /_/_/_/-/_/_/_/-/_/_/_/_/
Daytime Phone Evening Phone
I am a [_] U.S. Citizen [_] Non-Resident Alien
[_] Resident Alien [_] Other _________________________
For Alliance Use Only
<PAGE>
- --------------------------------------------------------------------------------
3. Initial Investment
- --------------------------------------------------------------------------------
Minimum: $250; Maximum: Class B only - $250,000; Class C only - $5,000,000.
Make all checks payable to The Alliance Conservative Investors Fund or
Alliance Growth Investors Fund in which you are investing.
I hereby subscribe for shares of the following Alliance Portfolio(s):
<TABLE>
<CAPTION>
Class A Class B Class C
(Initial Sales (Contingent Deferred (Asset-based
Charge) Dollar Amount Sales Charge) Dollar Amount Sales Charge) Dollar Amount
-------------- ------------- -------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
[_] Conservative Investors Fund [_] (42) _____________ [_] (53) _____________ [_] (342) _____________
[_] Growth Investors Fund [_] (47) _____________ [_] (59) _____________ [_] (347) _____________
</TABLE>
---------------------------
DEALER USE ONLY
Wire Confirm No.:
---------------------------
to be purchased with the enclosed check or draft for $ _______________
+No checkwriting available on these funds.
- --------------------------------------------------------------------------------
4. Reduced Charges (Class A Only)
- --------------------------------------------------------------------------------
If you, your spouse or minor children own shares in other Alliance funds, you
may be eligible for a reduced sales charge. Please list below any existing
accounts to be considered and complete the Right of Accumulation section or the
Statement of Intent section.
__________________ ___________________ __________________ ___________________
Fund Account Number Fund Account Number
A. Right of Accumulation
[_] Please link the accounts listed above for Right of Accumulation privileges,
so that this and future purchases will receive any discount for which they
are eligible.
B. Statement of Intent
[_] I want to reduce my sales charge by agreeing to invest the following amount
over a 13-month period:
[_] $100,000 [_] $250,000 [_] $500,000
[_] $1,000,000 [_] $3,000,000 [_] $5,000,000
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
<TABLE>
<S> <C> <C> <C>
Income Dividends: (elect one) [_] Reinvest dividends [_] Pay dividends in cash [_] Use Dividend Direction Plan
Capital Gains Distribution: (elect one) [_] Reinvest capital gains [_] Pay capital gains in cash [_] Use Dividend Direction Plan
</TABLE>
If you elect to receive your income dividends or capital gains distributions
in cash, please enclose a preprinted voided check from the bank account you
wish to have your dividends deposited into.**
If you wish to utilize the Dividend Direction Plan, please designate the
Alliance account you wish to have your dividends reinvested in:
_____________________________________ _________________________________________
Fund Name Existing Account No.
Special Distribution Instructions:
[_] Please pay my distributions via check and send to the address indicated in
Section 2.
[_] Please mail my distributions to the person and/or address designated below:
_____________________________________ _________________________________________
Name Address
_____________________________________ __________________________ _____________
City State Zip
- --------------------------------------------------------------------------------
6. Shareholder Options
- --------------------------------------------------------------------------------
A. Automatic Investment Program (AIP) **
I hereby authorize Alliance Fund Services, Inc. to draw on my bank account,
on or about the ______ day of each month for a monthly investment in my Fund
account in the amount of $____________ (minimum $25 per month). Please attach
a preprinted voided check from the bank account you wish to use.
NOTE: If your bank is not a member of the NACHA, your Alliance account will
be credited on or about the 20th of each month.
The Fund requires signatures of bank account owners exactly as they appear on
bank records.
_______________________________ _________ ________________________ _________
Individual Account Date Joint Account Date
** Your bank must be a member of the National Automated Clearing House
Association (NACHA).
<PAGE>
B. Telephone Transactions
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.
Instructions: * Review the information in the Prospectus about telephone
transaction services.
* Check the box next to the telephone transaction
service(s) you desire.
* If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face of a
check from the bank account you wish to use and attach it
to this application.
Purchases and Redemptions via EFT**
[_] I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from my Broker/Agent, and to
withdraw money or credit money for such shares via EFT from the bank
account I have selected.
The fund requires signatures of bank account owners exactly as they appear on
bank records.
______________________________ ________ _______________________ _________
Individual Account Owner Date Joint Account Owner Date
Telephone Exchanges and Redemptions by Check
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an
authorized employee of a investment dealer or agent requesting a redemption
or exchange on my behalf. (NOTE: Telephone exchanges may only be processed
between accounts that have identical registrations.) Telephone redemption
checks will only be mailed to the name and address of record; and the address
must have no change within the last 30 days. The maximum telephone redemption
amount is $25,000. This service can be enacted once every 30 days.
[_] I do not elect the telephone exchange service.
[_] I do not elect the telephone redemption by check service.
C. Systematic Withdrawal Plan (SWP) **
In order to establish a SWP, an investor must own or purchase shares of the
Fund having a current net asset value of at least:
* $10,000 for monthly payments;
* $5,000 for bi-monthly payments;
* $4,000 for quarterly or less frequent payments
[_] I authorize this service to begin in ___________, 19__, for the amount
Month
of $_______________($50.00 minimum)
Frequency: (Please select one)
[_] Monthly [_] Bi-Monthly [_] Quarterly
[_] Annually [_] In the months circled: J F M A M J J A S O N D
Please send payments to: (please select one)
[_] My checking account. Select the date of the month on or about which you
wish the EFT payments to be made: _______________. Please enclose a
preprinted voided check to ensure accuracy.
[_] My address of record designated in Section 2.
[_] The payee and address specified below:
_______________________________________ ____________________________________
Name of Payee Address
_______________________________________ ______________________ ____________
City State Zip
D. Auto Exchange
[_] I authorize Alliance Fund Services, Inc. to initiate a monthly exchange
for $____________ ($25.00 minimum) on the _________ day of the month,
into the Alliance Fund noted below:
Fund Name: ___________________________________________________
[_] Existing account number:__________________________________
[_] New account
Shares exchanged will be redeemed at net asset value computed on the date
of the month selected. (If the date selected is not a fund business day
the transaction will be processed on the prior fund business day.)
Certificates must remain unissued.
- --------------------------------------------------------------------------------
7. Shareholder Authorization This section MUST be completed
- --------------------------------------------------------------------------------
I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and that
I have not been notified that this account is subject to backup withholding.
By selecting any of the above telephone privileges, I agree that neither the
Fund nor its Investment Adviser, Principal Underwriter, Transfer Agent 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). 50620GEN-AAApp
<PAGE>
The payment of funds is authorized by the signature(s) appearing on the
reverse side.
If this card is signed by more than one person, all checks will require all
signatures appearing on the reverse side unless a lesser number is indicated.
If no indication is given, all checks will require all signatures. Each
signatory guarantees the genuineness of the other signatures.
The Bank is hereby appointed agent by the person(s) signing this card (the
"Depositor[s]") and, as agent, is authorized and directed to present checks
drawn on this checking account to Alliance __________________________________
("the Fund") or its transfer agent as requests to redeem shares of "the Fund"
registered in the name of the Depositor(s) in the amounts of such checks and
to deposit the proceeds of such redemptions in this checking account. The
Bank shall be liable only for its own negligence.
The Depositor(s) agrees to be subject to the rules and regulations of the
Bank pertaining to this checking account as amended from time to time. The
Bank and "the Fund" reserve the right to change, modify or terminate this
checking account and authorization at any time.
Checks may not be for less than $500 or such other minimum amount as may from
time to time be established by "the Fund" upon prior written notice to its
shareholders. Shares purchases by check (including certified or cashier's
check) will not be redeemed within 15 calendar days of such purchase by
checkwriting or any other method of redemption.
No checkwriting available on Alliance World Income and Alliance Corporate
Bond.
ENCLOSE THIS CARD WITH THE APPLICATION FORM
SIGNATURE CARD NAME OF FUND:
Class A or Class C Account #
(if known)
- --------------------------------------------------------------------------------
Account Name(s) As Registered
- --------------------------------------------------------------------------------
Social Security Number
- --------------------------------------------------------------------------------
Authorized Signature(s) -- for joint accounts, all owners, or their legal
representatives, must sign this card.
1...........................................................................
2...........................................................................
3...........................................................................
- --------------------------------------------------------------------------------
Check One Box [_] All the above signatures are required on checks written
against this account.
[_] Any one signature is acceptable on checks written
against this account.
[_] A combination of signatures is required (specify number).
Subject to conditions printed on reverse side.
STATE STREET BANK AND TRUST COMPANY
7
00250184.AA3
<PAGE>
ALLIANCE CAPITAL [Need logo](R)
THE ALLIANCE PORTFOLIOS -
Alliance Conservative Investors Fund
Alliance Growth Investors Fund
_________________________________________________________________
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature Toll Free (800) 227-4618
_________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
September 1, 1995
_________________________________________________________________
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Funds' current Prospectus.
A copy of the Funds' Prospectus may be obtained by contacting
Alliance Fund Services, Inc. at the address or telephone numbers
shown above.
_________________________________________________________________
TABLE OF CONTENTS
INVESTMENT POLICIES AND RESTRICTIONS............................2
ADDITIONAL INVESTMENT TECHNIQUES OF THE FUNDS..................12
INVESTMENT RESTRICTIONS........................................37
MANAGEMENT OF THE FUNDS........................................41
PORTFOLIO TRANSACTIONS.........................................48
EXPENSES OF THE FUNDS..........................................50
PURCHASE OF SHARES.............................................56
REDEMPTION AND REPURCHASE OF SHARES............................72
SHAREHOLDER SERVICES...........................................76
NET ASSET VALUE................................................82
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................84
GENERAL INFORMATION............................................86
<PAGE>
APPENDIX
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The following investment policies and restrictions
supplement and should be read in conjunction with the information
set forth in the Prospectus of Alliance Conservative Investors
Fund (the "Conservative Investors Fund") and Alliance Growth
Investors Fund (the "Growth Investors Fund"), each a series of
The Alliance Portfolios (the "Trust"), under the heading
"Investment Objective and Policies." In addition to the
investment techniques described in this section for each of the
Funds, the Funds also may engage in the investment techniques
described below under the sub-heading "Additional Investment
Techniques of the Funds."
Investment Objectives and Policies of the Conservative Investors
and Growth Investors Fund
General. The Conservative Investors and Growth
Investors Funds invest in a variety of fixed-income securities,
money market instruments and equity securities, each pursuant to
a different asset allocation strategy, as described below. The
term "asset allocation" is used to describe the process of
shifting assets among discrete categories of investments in an
effort to adjust risk while producing desired return objectives.
Portfolio management, therefore, will consist not only of
specific securities selection but also of setting, monitoring and
changing, when necessary, the asset mix.
Each Fund has been designed with a view toward a
particular "investor profile." The "conservative investor" has a
relatively short-term investment bias, either because of a
limited tolerance for market volatility or a short investment
horizon. This investor is averse to taking risks that may result
in principal loss, even though such aversion may reduce the
potential for higher long-term gains and result in lower
performance during periods of equity market strength.
Consequently, the asset mix for the Conservative
Investors Fund attempts to reduce volatility while providing
modest upside potential. The "growth investor" has a longer-term
investment horizon and is therefore willing to take more risks in
an attempt to achieve long-term growth of principal. This
2
<PAGE>
investor wishes, in effect, to be risk conscious without being
risk averse. The asset mix for the Growth Investors Fund should
therefore provide for upside potential without excessive
volatility.
Alliance Capital Management L.P. (the "Adviser") has
established an asset allocation committee (the "Committee"), all
the members of which are employees of the Adviser, which is
responsible for setting and continually reviewing the asset mix
ranges of each Fund. The Committee generally meets at least
twice each month. Under normal market conditions, the Committee
is expected to change allocation ranges approximately three to
five times per year. However, the Committee has broad latitude to
establish the frequency, as well as the magnitude, of allocation
changes within the guidelines established for each Fund. During
periods of severe market disruption, allocation ranges may change
frequently. It is also possible that in periods of stable and
consistent outlook no change will be made. The Committee's
decisions are based on and may be limited by a variety of
factors, including liquidity, portfolio size, tax consequences
and general market conditions, always within the context of the
appropriate investor profile for each Fund. Consequently, asset
mix decisions for the Conservative Investors Fund particularly
emphasize risk assessment of each asset class viewed over the
shorter term, while decisions for the Growth Investors Fund are
principally based on the longer term total return potential for
each asset class.
The Funds are permitted to use a variety of hedging
techniques to attempt to reduce market interest rate and currency
risks.
Investment Policies of the Conservative Investors Fund
The investment objective of the Fund is to achieve a
high total return without, in the view of the Adviser, undue risk
of principal. The Fund attempts to achieve its investment
objective by allocating varying portions of its assets among
investment grade, publicly traded fixed-income securities, money
market instruments and publicly traded common stocks and other
equity securities of United States and non-United States issuers.
3
<PAGE>
All fixed-income securities owned by the Fund will be of
investment grade. This means that they will be in one of the top
four rating categories assigned by Standard & Poor's Corporation
or ("S&P") Moody's Investors Service, Inc. ("Moody's") or will be
unrated securities of comparable quality as determined by the
Adviser. Securities in the fourth such rating category (rated
Baa by Moody's or BBB by S&P) have speculative characteristics,
and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and
interest payments on such obligations than in the case of higher-
rated securities. In the event that the rating of any security
held by the Fund falls below investment grade (or, in the case of
an unrated security, the Adviser determines that it is no loner
of investment grade), the Fund will not be obligated to dispose
of such security and may continue to hold the obligation if, in
the opinion of the Adviser, such investment is considered
appropriate in the circumstances. For a description of the
ratings referred to above, see Appendix A to this Statement of
Additional Information.
Equity securities invested in by the Fund will consist
of common stocks and securities convertible into common stocks,
such as convertible bonds, convertible preferred stocks and
warrants, issued by companies with a favorable outlook for
earnings and whose rate of growth is expected to exceed that of
the United States' economy over time.
The Fund will at all times hold at least 40% of its
total assets in investment grade fixed- income securities, each
having a duration less than that of a 10-year Treasury bond (the
"Fixed Income Core"). The duration of a fixed-income security is
the weighted average maturity, expressed in years of the present
value of all future cash flows, including coupon payments and
principal repayments.
The Fund is generally expected to hold approximately 70%
of its total assets in fixed- income securities (including the
Fixed Income Core, cash and money market instruments) and 30% in
equity securities. Actual asset mixes will be adjusted in
response to economic and credit market cycles. The fixed-income
asset class will always comprise at least 50%, but never more
than 90%, of the Fund's total assets. The equity class will
always comprise at least 10%, but never more than 50%, of the
4
<PAGE>
Fund's total assets. For temporary defensive purposes, the Fund
may invest in money market instruments.
Investment Policies of the Growth Investors Fund
The investment objective of the Fund is to achieve the
highest total return consistent with the Adviser's determination
of reasonable risk. The Fund attempts to achieve its investment
objective by allocating varying portions of its assets among a
number of asset classes. Equity investments will include
publicly traded common stocks and other equity securities of the
type in which the Conservative Investors Fund may invest but may
also include equity securities issued by intermediate and small-
sized companies with favorable growth prospects, companies in
cyclical industries, companies whose securities are temporarily
undervalued, companies in special situations and less widely
known companies. Fixed-income investments will include
investment grade fixed-income securities (including cash and
money market instruments) and may include securities that are
rated in the lower rating categories by recognized ratings
agencies (i.e., Ba or lower by Moody's or BB or lower by S&P) or
that are unrated but determined by the Adviser to be of
comparable quality. Lower rated fixed-income securities
generally provide greater current income than higher rated fixed-
income securities, but are subject to greater credit and market
risk. The Fund will not invest more than 25% of its total assets
in securities rated below investment grade, that is, securities
rated Ba or lower by Moody's or BB or lower by S&P, or in unrated
securities deemed to be of comparable quality by the Adviser.
For a description of the ratings referred to above, see Appendix
A. For more information about the risks associated with
investment in lower rated securities, see "High-Yield Securities"
below.
The Fund will at all times hold at least 40% of its
total assets in publicly traded common stocks and other equity
securities of the type purchased by the Conservative Investors
Fund (the "Equity Core"). The Fund is generally expected to hold
approximately 70% of its total assets in equity securities
(including the Equity Core) and 30% in fixed-income securities
(including cash and money market instruments). Actual asset
mixes will be adjusted in response to economic and credit market
cycles. The fixed-income asset class will always comprise at
least 10%, but never more than 60%, of the Fund's total assets.
The equity class will always comprise at least 40%, but never
5
<PAGE>
more than 90%, of the Fund's total assets. For temporary
defensive purposes, the Fund may invest in money market
instruments.
High-Yield Securities. The Fund may invest in
high-yield, high-risk, fixed-income and convertible securities
rated at the time of purchase Ba or lower by Moody's or BB or
lower by S&P or, if unrated, judged by the Adviser to be of
comparable quality ("High-Yield Securities"). The Fund will
generally invest in securities with a minimum rating of Caa- by
Moody's or CCC-by S&P or in unrated securities judged by the
Adviser to be of comparable quality. However, from time to time,
the Fund may invest in securities rated in the lowest grades of C
by Moody's or D by S&P or in unrated securities judged by the
Adviser to be of comparable quality, if the Fund's management
determines that there are prospects for an upgrade or a favorable
conversion into equity securities (in the case of convertible
securities). Securities rated Ba or BB or lower (and comparable
unrated securities) are commonly referred to as "junk bonds."
Securities rated D by S&P are in default. During the fiscal year
ended April 30, 1995, the Fund did not invest in any High-Yield
Securities.
As with other fixed-income securities, High-Yield
Securities are subject to credit risk and market risk and their
yields may fluctuate. Market risk relates to changes in a
security's value as a result of changes in interest rates. Credit
risk relates to the ability of the issuer to make payments of
principal and interest. High-Yield Securities are subject to
greater credit risk (and potentially greater incidences of
default) than comparable higher-rated securities because issuers
are more vulnerable to economic downturns, higher interest rates
or adverse issuer-specific developments. In addition, the prices
of High-Yield Securities are generally subject to greater market
risk and therefore react more sharply to changes in interest
rates. The value and liquidity of High-Yield Securities may be
diminished by adverse publicity and investor perceptions.
Because High-Yield Securities are frequently traded only
in markets where the number of potential purchasers and sellers,
if any, is limited, the ability of the Fund to sell High-Yield
Securities at their fair value either to meet redemption requests
or to respond to changes in the financial markets may be limited.
Thinly traded High-Yield Securities may be more difficult to
value accurately for the purpose of determining the Fund's net
asset value. Also, because the market for certain High-Yield
Securities is relatively new, that market may be particularly
sensitive to an economic downturn or a general increase in
6
<PAGE>
interest rates. In addition, under such circumstances the values
of such securities may be more volatile.
Some High-Yield Securities in which the Fund may invest
may be subject to redemption or call provisions that may limit
increases in market value that might otherwise result from lower
interest rates while increasing the risk that the Fund may be
required to reinvest redemption or call proceeds during a period
of relatively low interest rates.
The credit ratings issued by Moody's and S&P, a
description of which is included as Appendix A to this Statement
of Additional Information, are subject to various limitations.
For example, while such ratings evaluate credit risk, they
ordinarily do not evaluate the market risk of High-Yield
Securities. In certain circumstances, the ratings may not reflect
in a timely fashion adverse developments affecting an issuer. For
these reasons, the Adviser conducts its own independent credit
analysis of High-Yield Securities. When the Fund invests in
securities in the lower rating categories, the achievement of the
Fund's goals is more dependent on the Adviser's ability than
would be the case if the Fund were investing in higher rated
securities.
In the event that the credit rating of a High-Yield
Security held by the Fund falls below its rating at the time of
purchase (or, in the case of unrated securities, the Adviser
determines that the quality of such security has deteriorated
since purchased by the Fund), the Fund will not be obligated to
dispose of such security and may continue to hold the obligation
if, in the opinion of the Adviser, such investment is considered
appropriate in the circumstances.
Securities rated Baa by Moody's or BBB by S&P or judged
by the Adviser to be of comparable quality share some of the
speculative characteristics of High-Yield Securities described
above.
Additional Investment Policies and Techniques Applicable to the
Conservative Investors and Growth Investors Funds
Mortgage-Backed Securities. Each Fund may invest in
mortgage-backed securities, including collateralized mortgage
obligations ("CMOs"). Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed
securities are passed through to the holders of the mortgage-
backed security. Prepayments occur when the mortgagor on an
individual mortgage prepays the remaining principal before the
7
<PAGE>
mortgage's scheduled maturity date. 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. Because the prepayment characteristics of the
underlying mortgages vary, it is not possible 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,
such prepayments can be expected to accelerate and the Fund would
be required to reinvest the proceeds at the lower interest rates
then available. In addition, prepayments of mortgages which
underlie securities purchased at a premium could result in
capital losses.
Stripped Mortgage-Related Securities. The Fund may
invest in stripped mortgage- related securities ("SMRS"). SMRS
are derivative multi-class mortgage-related securities. SMRS may
be issued by the United States Government, its agencies or
instrumentalities, or by private originators of, or investors in,
mortgage loans, including savings and loan associations, mortgage
banks, commercial banks, investment banks and special purpose
subsidiaries of the foregoing.
SMRS are usually structured with two classes that
receive different proportions of the interest and principal
distributions on a pool of GNMA, FNMA or FHLMC certificates,
whole loans or private pass-through mortgage-related securities
("Mortgage Assets"). A common type of SMRS will have one class
receiving some of the interest and most of the principal from the
Mortgage Assets, while the other class will receive most of the
interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the interest-
only or "IO" class), while the other class will receive all of
the principal (the principal-only or "PO" class). The yield to
maturity on an IO class is extremely sensitive to the rate of
principal payments (including prepayments) on the related
underlying Mortgage Assets, and a rapid rate of principal
prepayments may have a material adverse effect on the yield to
maturity of the IO class. The rate of principal prepayment will
change as the general level of interest rates fluctuates. If the
underlying Mortgage Assets experience greater than anticipated
principal prepayments, the Fund may fail to fully recoup its
initial investment in these securities. Due to their structure
and underlying cash flows, SMRS may be more volatile than
mortgage-related securities that are not stripped.
Although SMRS are purchased and sold by institutional
investors through several investment banking firms acting as
8
<PAGE>
brokers or dealers, these securities were only recently
developed. As a result, established trading markets have not yet
developed and, accordingly, these securities may be illiquid.
Adjustable Rate Securities. Each Fund may invest in
adjustable rate securities. Adjustable rate securities are
securities that 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 act as a buffer to reduce sharp changes in the value of
adjustable rate securities, these securities are still subject to
changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness. Because the interest
rate is reset only periodically, 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 during a specified
period or over the life of the security.
Convertible Securities. Each Fund may invest in
convertible securities. These securities normally provide a
higher yield than the underlying stock but lower than a
fixed-income security without the convertible feature. Also, the
price of the convertible security will normally vary to some
degree with changes in the price of the underlying stocks
although in some market conditions the higher yield tends to make
the convertible security less volatile than the underlying common
stock. In addition, the price of the convertible security will
also vary to some degree inversely with interest rates.
Convertible debt securities that are rated below BBB by S&P or
Baa by Moody's or comparable unrated securities as determined by
the Adviser may share some or all of the risks of High-Yield
Securities. For a description of these risks, see "High-Yield
Securities" above.
Zero-Coupon and Payment-in-Kind Bonds. Each Fund may at
times invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of
paying interest periodically. Payment-in-kind bonds allow the
issuer, at its option, to make current interest payments on the
bonds either in cash or in additional bonds. Because zero-coupon
bonds do not pay current interest, their value is generally
9
<PAGE>
subject to greater fluctuation in response to changes in market
interest rates than bonds which pay interest 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, the Fund is nonetheless required to
accrue interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Fund could
be required at times to liquidate other investments in order to
satisfy its dividend requirements.
Foreign Currency Exchange Transactions. Each Fund may
engage in foreign currency exchange transactions to protect
against uncertainty in the level of future currency exchange
rates. The Adviser expects to engage in foreign currency
exchange transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging") and to protect
against changes in the value of specific portfolio positions
("position hedging").
The Funds may engage in transaction hedging to protect
against a change in foreign currency exchange rates between the
date on which the Fund contracted to purchase or sell a security
and the settlement date, or to "lock in" the U.S. dollar
equivalent of a dividend or interest payment in a foreign
currency. The Funds may purchase or sell a foreign currency on a
spot (or cash) basis at the prevailing spot rate in connection
with the settlement of transactions in portfolio securities
denominated in that foreign currency.
If conditions warrant, the Funds may also enter into
contracts to purchase or sell foreign currencies at a future date
("forward contracts"), and may purchase and sell foreign currency
futures contracts, as a hedge against changes in foreign currency
exchange rates between the trade and settlement dates on
particular transactions and not for speculation. A foreign
currency forward contract is a negotiated agreement to exchange
currency at a future time at a rate or rates that may be higher
or lower than the spot rate. Foreign currency futures contracts
are standardized exchange-traded contracts and have margin
requirements.
10
<PAGE>
For transactions hedging purposes, the Funds may also
purchase and sell call and put options on foreign currency
futures contracts and on foreign currencies.
Each Fund may engage in position hedging to protect
against a decline in value relative to the U.S. dollar of the
currencies in which its portfolio securities are denominated or
quoted (or an increase in value of a currency in which securities
the Fund intends to buy are denominated, when the Fund holds cash
or short-term investments). For position hedging purposes, each
Fund may purchase or sell foreign currency futures contracts,
foreign currency forward contracts, and options on foreign
currency futures contracts and on foreign currencies. In
connection with position hedging, the Funds may also purchase or
sell foreign currency on a spot basis.
A Fund's currency hedging transactions may call for the
delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its
portfolio securities are then denominated. The Adviser will
engage in such "cross hedging"activities when it believes that
such transactions provide significant hedging opportunities for a
Fund.
Portfolio Management
The Adviser manages each Fund's portfolio by buying and
selling securities to help attain its investment objective. The
portfolio turnover rate for each Fund is included under
"Financial Highlights" in the Funds' Prospectus. A high
portfolio turnover rate will involve greater costs to a Fund
(including brokerage commissions and transaction costs) and may
also result in the realization of taxable capital gains,
including short-term capital gains taxable at ordinary income
rates. See "Dividends, Distributions and Taxes" and "Portfolio
Transactions" below.
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ADDITIONAL INVESTMENT TECHNIQUES OF THE FUNDS
Repurchase Agreements
The repurchase agreements referred to in the Funds'
Prospectus are agreements by which a Fund purchases a security
and obtains a simultaneous commitment from the seller to
repurchase the security at an agreed upon price and date. The
resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the
purchased security. The purchased security serves as collateral
for the obligation of the seller to repurchase the security and
the value of the purchased security is initially greater than or
equal to the amount of the repurchase obligation and the seller
is required to furnish additional collateral on a daily basis in
order to maintain with the purchaser securities with a value
greater than or equal to the amount of the repurchase obligation.
Such transactions afford the Funds the opportunity to earn a
return on temporarily available cash. While at times the
underlying security may be a bill, certificate of indebtedness,
note, or bond issued by an agency, authority or instrumentality
of the United States Government, the obligation of the seller is
not guaranteed by the U.S. Government and there is a risk that
the seller may fail to repurchase the underlying security,
whether because of the seller's bankruptcy or otherwise. In such
event, the Funds would attempt to exercise their rights with
respect to the underlying security, including possible
disposition in the market. However, the Funds may be subject to
various delays and risks of loss, including (a) possible declines
in the value of the underlying security during the period while
the Funds seek to enforce their rights thereto, (b) possible
reduced levels of income and lack of access to income during this
period and (c) inability to enforce rights and the expenses
involved in the attempted enforcement.
Non-Publicly Traded Securities
As described in the Prospectus, each of the Funds may
invest in securities which are not publicly traded, including
securities sold pursuant to Rule 144A under the Securities Act of
1933 ("Rule 144A Securities"). The sale of these securities is
usually restricted under Federal securities laws, and market
quotations may not be readily available. As a result, a Fund may
not be able to sell these securities (other than Rule 144A
Securities) unless they are registered under applicable Federal
and state securities laws, or may have to sell such securities at
less than fair market value. Investment in these securities is
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restricted to 5% of a Fund's total assets (excluding, to the
extent permitted by applicable law, Rule 144A Securities) and is
also subject to the restriction against investing more than 15%
of total assets in "illiquid" securities. 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 the liquidity guidelines
established by the Trust's Board of Trustees. Pursuant to these
guidelines, the Adviser will monitor the liquidity of a Fund's
investment in Rule 144A Securities.
Foreign Securities
Each Fund may invest without limit in securities of
foreign issuers which are not publicly traded in the United
States, although each Fund generally will not invest more than
15% of its total assets (30% in the case of the Growth Investors
Fund) in such securities. Investment in foreign issuers or
securities principally outside the United States may involve
certain special risks due to foreign economic, political,
diplomatic and legal developments, including favorable or
unfavorable changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of
assets or nationalization, confiscatory taxation, imposition of
withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against foreign
entities. Furthermore, issuers of foreign securities are subject
to different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The securities of
some foreign companies and foreign securities markets are less
liquid and at times more volatile than securities of comparable
U.S. companies and U.S. securities markets, and foreign
securities markets may be subject to less regulation than U.S.
securities markets. The laws of some foreign countries may limit
the Funds' abilities to invest in securities of certain issuers
located in these countries. Foreign brokerage commissions and
other fees are also generally higher than in the United States.
There are also special tax considerations which apply to
securities of foreign issuers and securities principally traded
overseas. Foreign settlement procedures and trade regulations
may involve certain risks (such as delay in payment or delivery
of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic
investments. The Fund may invest a portion of its assets in
developing countries or in countries with new or developing
capital markets. The risks noted above are generally intensified
for these investments. These countries may have relatively
unstable governments, economies based on only a few industries or
securities markets that trade a small number of securities.
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Securities of issuers located in these countries tend to have
volatile prices and may offer significant potential for loss as
well as gain.
The value of foreign investments measured in U.S.
dollars will rise or fall because of decreases or increases,
respectively, in the value of the U.S. dollar in comparison to
the value of the currency in which the foreign investment is
denominated. The Fund may buy or sell foreign currencies,
options on foreign currencies, foreign currency futures contracts
(and related options) and deal in forward foreign currency
exchange contracts in connection with the purchase and sale of
foreign investments. See "Additional Investment Policies and
Techniques Applicable to the Conservative Investors and Growth
Investors Funds - Foreign Currency Exchange Transactions" above.
Descriptions of Certain Money Market Securities in Which the
Funds May Invest
Certificates of Deposit, Bankers' Acceptances and Bank
Time Deposits. Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds. The issuer agrees to
pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate. The
certificate usually can be traded in the secondary market prior
to maturity.
Bankers' acceptances typically arise from short-term
credit arrangements designed to enable businesses to obtain funds
to finance commercial transactions. Generally, an acceptance is
a time draft drawn on a bank by an exporter or an importer to
obtain a stated amount of funds to pay for specific merchandise.
The draft is then "accepted" by another bank that, in effect,
unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held
by the accepting bank as an earning asset or it may be sold in
the secondary market at the going rate of discount for a specific
maturity. Although maturities for acceptances can be as long as
270 days, most maturities are six months or less.
Bank time deposits are funds kept on deposit with a bank
for a stated period of time in an interest bearing account. At
present, bank time deposits maturing in more than seven days are
not considered by the Adviser to be readily marketable.
Commercial Paper. Commercial paper consists of
short-term (usually from 1 to 270 days) unsecured promissory
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notes issued by entities in order to finance their current
operations.
Variable Notes. Variable amount master demand notes and
variable amount floating rate notes are obligations that permit
the investment of fluctuating amounts by a Fund at varying rates
of interest pursuant to direct arrangements between a Fund, as
lender, and the borrower. Master demand notes permit daily
fluctuations in the interest rate while the interest rate under
variable amount floating rate notes fluctuates on a weekly basis.
These notes permit daily changes in the amounts borrowed. The
Funds have the right to increase the amount under these notes at
any time up to the full amount provided by the note agreement, or
to decrease the amount, and the borrower may repay up to the full
amount of the note without penalty. Because these types of notes
are direct lending arrangements between the lender and the
borrower, it is not generally contemplated that such instruments
will be traded and there is no secondary market for these notes.
Master demand notes are redeemable (and, thus, immediately
repayable by the borrower) at face value, plus accrued interest,
at any time. Variable amount floating rate notes are subject to
next-day redemption 14 days after the initial investment therein.
With both types of notes, therefore, the Funds' right to redeem
depends on the ability of the borrower to pay principal and
interest on demand. In connection with both types of note
arrangements, the Funds consider earning power, cash flow and
other liquidity ratios of the issuer. These notes, as such, are
not typically rated by credit rating agencies. Unless they are
so rated, a Fund may invest in them only if at the time of an
investment the issuer has an outstanding issue of unsecured debt
rated Aa or better by Moody's or AA or better by S&P.
Asset-Backed Securities
Each Fund may invest in asset-backed securities
(unrelated to first mortgage loans) which represent fractional
interests in pools of retail installment loans, leases or
revolving credit receivables, both secured (such as Certificates
for Automobile Receivables or "CARS") and unsecured (such as
Credit Card Receivable Securities or "CARDS"). 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.
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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. Nevertheless, principal repayment rates
tend not to vary too much with interest rates, and the short-term
nature of the underlying car loans or receivables tends to dampen
the impact of any change in the prepayment level. Certificate
holders may also experience delays in payment if the full amounts
due on underlying sales contracts or receivables are not realized
by the trust holding the obligations 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. If
consistent with their investment objectives and policies, the
Funds may invest in other asset-backed securities that may be
developed in the future.
The staff of the Securities and Exchange Commission (the
"SEC") is of the view that certain asset-backed securities may
constitute investment companies under the Investment Company Act
of 1940 (the "1940 Act"). The Funds intend to conduct their
operations in a manner consistent with this view; therefore, the
Funds generally may not invest more than 10% of their total
assets in such securities without obtaining appropriate
regulatory relief.
Lending of Securities
Each Fund may seek to increase its income by lending
portfolio securities. Under present regulatory policies,
including those of the Board of Governors of the Federal Reserve
System and the SEC, such loans may be made only to member firms
of the New York Stock Exchange (the"Exchange") and would be
required to be secured continuously by collateral in cash, cash
equivalents, or U.S. Treasury Bills maintained on a current basis
at an amount at least equal to the market value of the securities
loaned. A Fund would have the right to call a loan and obtain
the securities loaned at any time on five days' notice. During
the existence of a loan, a Fund would continue to receive the
equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive compensation based on
investment of the collateral. A Fund would not, however, have
the right to vote any securities having voting rights during the
existence of the loan but would call the loan in anticipation of
an important vote to be taken among holders of the securities or
of the giving or withholding of their consent on a material
matter affecting the investment. As with other extensions of
credit there are risks of delay in recovery or even loss of
rights in the collateral should the borrower of the securities
fail financially. However, the loans would be made only to firms
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deemed by the Adviser to be of good standing, and when, in the
judgment of the Adviser, the consideration that can be earned
currently from securities loans of this type justifies the
attendant risk. If the Adviser determines that a Fund should
make securities loans, it is not intended that the value of the
securities loaned would exceed 25% of the value of such Fund's
total assets.
Forward Commitments and When-Issued and Delayed Delivery
Securities
Each Fund may enter into forward commitments for the
purchase of securities and may purchase securities on a
"when-issued" or "delayed delivery" basis. Agreements for such
purchases might be entered into, for example, when a Fund
anticipates a decline in interest rates and is able to obtain a
more advantageous yield by committing currently to purchase
securities to be issued later. When a Fund purchases securities
in this manner (i.e., on a forward commitment, when-issued or
delayed delivery basis), it does not pay for the securities until
they are received, and a Fund is required to create a segregated
account with the Trust's custodian and to maintain in that
account cash, U.S. Government securities or other liquid
high-grade debt obligations in an amount equal to or greater
than, on a daily basis, the amount of the Fund's forward
commitments and when-issued or delayed delivery commitments.
A Fund will enter into forward commitments and make
commitments to purchase securities on a when-issued or delayed
delivery basis only with the intention of actually acquiring the
securities. However, a Fund may sell these securities before the
settlement date if it is deemed advisable as a matter of
investment strategy.
Although neither of the Funds intends to make such
purchases for speculative purposes and each Fund intends to
adhere to the provisions of SEC policies, purchases of securities
on such bases may involve more risk than other types of
purchases. For example, by committing to purchase securities in
the future, a Fund subjects itself to a risk of loss on such
commitments as well as on its portfolio securities. Also, a Fund
may have to sell assets which have been set aside in order to
meet redemptions. In addition, if a Fund determines it is
advisable as a matter of investment strategy to sell the forward
commitment or "when-issued" or "delayed delivery" securities
before delivery, that Fund may incur a gain or loss because of
market fluctuations since the time the commitment to purchase
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such securities was made. Any such gain or loss would be treated
as a capital gain or loss and would be treated for tax purposes
as such. When the time comes to pay for the securities to be
purchased under a forward commitment or on a "when-issued" or
"delayed delivery" basis, a Fund will meet its obligations from
the then available cash flow or the sale of securities, or,
although it would not normally expect to do so, from the sale of
the forward commitment or "when-issued" or "delayed delivery"
securities themselves (which may have a value greater or less
than a Fund's payment obligation).
Options
Options on Securities. Each Fund intends to write only
covered options. In addition to the methods of "cover" described
in the Prospectus, each Fund may write call and put options and
may purchase call and put options on securities. This means that
so long as a Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the option or
securities convertible into such securities without additional
consideration (or for additional cash consideration held in a
segregated account by the custodian). In the case of call
options on U.S. Treasury Bills, a Fund might own U.S. Treasury
Bills of a different series from those underlying the call
option, but with a principal amount and value corresponding to
the option contract amount and a maturity date no later than that
of the securities deliverable under the call option. A Fund will
be considered "covered" with respect to a put option it writes,
if, so long as it is obligated as the writer of a put option, it
deposits and maintains with its custodian in a segregated account
cash, U.S. Government securities or other liquid high-grade debt
obligations having a value equal to or greater than the exercise
price of the option.
Effecting a closing transaction in the case of a written
call option will permit a Fund to write another call option on
the underlying security with either a different exercise price or
expiration date or both, or in the case of a written put option
will permit a Fund to write another put option to the extent that
the exercise price thereof is secured by deposited cash or
short-term securities. Such transactions permit a Fund to
generate additional premium income, which will partially offset
declines in the value of portfolio securities or increases in the
cost of securities to be acquired. Also, effecting a closing
transaction will permit the cash or proceeds from the concurrent
sale of any securities subject to the option to be used for other
investments by a Fund, provided that another option on such
security is not written. If a Fund desires to sell a particular
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security from its portfolio on which it has written a call
option, it will effect a closing transaction in connection with
the option prior to or concurrent with the sale of the security.
A Fund will realize a profit from a closing transaction
if the premium paid in connection with the closing of an option
written by the Fund is less than the premium received from
writing the option, or if the premium received in connection with
the closing of an option purchased by the Fund is more than the
premium paid for the original purchase. Conversely, a Fund will
suffer a loss if the premium paid or received in connection with
a closing transaction is more or less, respectively, than the
premium received or paid in establishing the option position.
Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option
previously written by a Fund is likely to be offset in whole or
in part by appreciation of the underlying security owned by the
Fund.
A Fund may purchase a security and then write a call
option against that security or may purchase a security and
concurrently write an option on it. The exercise price of the
call a Fund determines to write will depend upon the expected
price movement of the underlying security. The exercise price of
a call option may be below ("in-the-money"), equal to
("at-the-money") or above ("out-of-the-money") the current value
of the underlying security at the time the option is written.
In-the-money call options may be used when it is expected that
the price of the underlying security will decline moderately
during the option period. Out-of-the-money call options may be
written when it is expected that the premiums received from
writing the call option plus the appreciation in the market price
of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such
transactions, a Fund's maximum gain will be the premium received
by it for writing the option, adjusted upwards or downwards by
the difference between the Fund's purchase price of the security
and the exercise price. If the options are not exercised and the
price of the underlying security declines, the amount of such
decline will be offset in part, or entirely, by the premium
received.
The writing of covered put options is similar in terms
of risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and a Fund's gain will be limited to the premium received. If
the market price of the underlying security declines or otherwise
is below the exercise price, a Fund may elect to close the
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position or retain the option until it is exercised, at which
time the Fund will be required to take delivery of the security
at the exercise price; the Fund's return will be the premium
received from the put option minus the amount by which the market
price of the security is below the exercise price, which could
result in a loss. Out-of-the-money put options may be written
when it is expected that the price of the underlying security
will decline moderately during the option period. In-the-money
put options may be used when it is expected that the premiums
received from writing the put option plus the appreciation in the
market price of the underlying security up to the exercise price
will be greater than the appreciation in the price of the
underlying security alone.
Each of the Funds may also write combinations of put and
call options on the same security, known as "straddles," with the
same exercise and expiration date. By writing a straddle, a Fund
undertakes a simultaneous obligation to sell and purchase the
same security in the event that one of the options is exercised.
If the price of the security subsequently rises above the
exercise price, the call will likely be exercised and the Fund
will be required to sell the underlying security at a below
market price. This loss may be offset, however, in whole or
part, by the premiums received on the writing of the two options.
Conversely, if the price of the security declines by a sufficient
amount, the put will likely be exercised. The writing of
straddles will likely be effective, therefore, only where the
price of the security remains stable and neither the call nor the
put is exercised. In those instances where one of the options is
exercised, the loss on the purchase or sale of the underlying
security may exceed the amount of the premiums received.
By writing a call option, a Fund limits its opportunity
to profit from any increase in the market value of the underlying
security above the exercise price of the option. By writing a
put option, a Fund assumes the risk that it may be required to
purchase the underlying security for an exercise price above its
then current market value, resulting in a capital loss unless the
security subsequently appreciates in value. Where options are
written for hedging purposes, such transactions constitute only a
partial hedge against declines in the value of portfolio
securities or against increases in the value of securities to be
acquired, up to the amount of the premium.
Each of the Funds may purchase put options to hedge
against a decline in the value of portfolio securities. If such
decline occurs, the put options will permit the Fund to sell the
securities at the exercise price or to close out the options at a
profit. By using put options in this way, a Fund will reduce any
profit it might otherwise have realized in the underlying
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security by the amount of the premium paid for the put option and
by transaction costs.
A Fund may purchase call options to hedge against an
increase in the price of securities that the Fund anticipates
purchasing in the future. If such increase occurs, the call
option will permit the Fund to purchase the securities at the
exercise price, or to close out the options at a profit. The
premium paid for the call option plus any transaction costs will
reduce the benefit, if any, realized by a Fund upon exercise of
the option, and, unless the price of the underlying security
rises sufficiently, the option may expire worthless to the Fund
and the Fund will suffer a loss on the transaction to the extent
of the premium paid.
Options on Securities Indexes. Each Fund may write
(sell) covered call and put options on securities indexes and
purchase call and put options on securities indexes. A call
option on a securities index is considered covered if, so long as
a Fund is obligated as the writer of the call, the Fund holds in
its portfolio securities the price changes of which are, in the
option of the Adviser, expected to replicate substantially the
movement of the index or indexes upon which the options written
by the Fund are based. A put on a securities index written by a
Fund will be considered covered if, so long as it is obligated as
the writer of the put, the Fund segregates with its custodian
cash, U.S. Government securities or other liquid high-grade debt
obligations having a value equal to or greater than the exercise
price of the option.
A Fund may also purchase put options on securities
indexes to hedge its investments against a decline in value. By
purchasing a put option on a securities index, a Fund will seek
to offset a decline in the value of securities it owns through
appreciation of the put option. If the value of a Fund's
investments does not decline as anticipated, or if the value of
the option does not increase, the Fund's loss will be limited to
the premium paid for the option. The success of this strategy
will largely depend on the accuracy of the correlation between
the changes in value of the index and the changes in value of a
Fund's security holdings.
The purchase of call options on securities indexes may
be used by a Fund to attempt to reduce the risk of missing a
broad market advance, or an advance in an industry or market
segment, at a time when the Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing
call options for this purpose, a Fund will also bear the risk of
losing all or a portion of the premium paid if the value of the
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index does not rise. The purchase of call options on stock
indexes when a Fund is substantially fully invested is a form of
leverage, up to the amount of the premium and related transaction
costs, and involves risks of loss and of increased volatility
similar to those involved in purchasing calls on securities the
Fund owns.
Futures Contracts and Options on Futures Contracts
Futures Contracts. Each Fund may enter into interest
rate transactions with respect to futures contracts, index
futures contracts and foreign currency futures contracts.
(Unless otherwise specified, interest rate futures contracts,
index futures contracts and foreign currency futures contracts
are collectively referred to as "Futures Contracts.") Such
investment strategies will be used as a hedge and not for
speculation.
Purchases or sales of stock or bond index futures
contracts are used for hedging purposes to attempt to protect a
Fund's current or intended investments from broad fluctuations in
stock or bond prices. For example, a Fund may sell stock or bond
index futures contracts in anticipation of or during a market
decline to attempt to offset the decrease in market value of the
Fund's portfolio securities that might otherwise result. If such
decline occurs, the loss in value of portfolio securities may be
offset, in whole or part, by gains on the futures position. When
a Fund is not fully invested in the securities market and
anticipates a significant market advance, it may purchase stock
or bond index futures contracts in order to gain rapid market
exposure that may, in part or entirely, offset increases in the
cost of securities that the Fund intends to purchase. As such
purchases are made, the corresponding positions in stock or bond
index futures contracts will be closed out.
Interest rate futures contracts are purchased or sold
for hedging purposes to attempt to protect against the effects of
interest rate changes on a Fund's current or intended investments
in fixed income securities. For example, if a Fund owned
long-term bonds and interest rates were expected to increase,
that Fund might sell interest rate futures contracts. Such a
sale would have much the same effect as selling some of the
long-term bonds in that Fund's portfolio. However, since the
futures market is more liquid than the cash market, the use of
interest rate futures contracts as a hedging technique allows a
Fund to hedge its interest rate risk without having to sell its
portfolio securities. If interest rates did increase, the value
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of the debt securities in the portfolio would decline, but the
value of that Fund's interest rate futures contracts would be
expected to increase at approximately the same rate, thereby
keeping the net asset value of that Fund from declining as much
as it otherwise would have. On the other hand, if interest rates
were expected to decline, interest rate futures contracts could
be purchased to hedge in anticipation of subsequent purchases of
long-term bonds at higher prices. Because the fluctuations in
the value of the interest rate futures contracts should be
similar to those of long-term bonds, a Fund could protect itself
against the effects of the anticipated rise in the value of
long-term bonds without actually buying them until the necessary
cash became available or the market had stabilized. At that
time, the interest rate futures contracts could be liquidated and
that Fund's cash reserves could then be used to buy long-term
bonds on the cash market.
Each Fund may purchase and sell foreign currency futures
contracts for hedging purposes to attempt to protect its current
or intended investments from fluctuations in currency exchange
rates. Such fluctuations could reduce the dollar value of
portfolio securities denominated in foreign currencies, or
increase the cost of foreign-denominated securities to be
acquired, even if the value of such securities in the currencies
in which they are denominated remains constant. Each Fund may
sell futures contracts on a foreign currency, for example, when
it holds securities denominated in such currency and it
anticipates a decline in the value of such currency relative to
the dollar. In the event such decline occurs, the resulting
adverse effect on the value of foreign-denominated securities may
be offset, in whole or in part, by gains on the futures
contracts. However, if the value of the foreign currency
increases relative to the dollar, the Fund's loss on the foreign
currency futures contract may or may not be offset by an increase
in the value of the securities because a decline in the price of
the security stated in terms of the foreign currency may be
greater than the increase in value as a result of the change in
exchange rates.
Conversely, the Funds could protect against a rise in
the dollar cost of foreign-denominated securities to be acquired
by purchasing futures contracts on the relevant currency, which
could offset, in whole or in part, the increased cost of such
securities resulting from a rise in the dollar value of the
underlying currencies. When a Fund purchases futures contracts
under such circumstances, however, and the price of securities to
be acquired instead declines as a result of appreciation of the
dollar, the Fund will sustain losses on its futures position
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which could reduce or eliminate the benefits of the reduced cost
of portfolio securities to be acquired.
The Funds may also engage in currency "cross hedging"
when, in the opinion of the Adviser, the historical relationship
among foreign currencies suggests that a Fund may achieve
protection against fluctuations in currency exchange rates
similar to that described above at a reduced cost through the use
of a futures contract relating to a currency other than the U.S.
dollar or the currency in which the foreign security is
denominated. Such "cross hedging" is subject to the same risks
as those described above with respect to an unanticipated
increase or decline in the value of the subject currency relative
to the dollar.
Options on Futures Contracts. The writing of a call
option on a Futures Contract constitutes a partial hedge against
declining prices of the securities in the Fund's portfolio. If
the futures price at expiration of the option is below the
exercise price, a Fund will retain the full amount of the option
premium, which provides a partial hedge against any decline that
may have occurred in the Fund's portfolio holdings. The writing
of a put option on a Futures Contract constitutes a partial hedge
against increasing prices of the securities or other instruments
required to be delivered under the terms of the Futures Contract.
If the futures price at expiration of the put option is higher
than the exercise price, a Fund will retain the full amount of
the option premium, which provides a partial hedge against any
increase in the price of securities which the Fund intends to
purchase. If a put or call option a Fund has written is
exercised, the Fund will incur a loss which will be reduced by
the amount of the premium it receives. Depending on the degree
of correlation between changes in the value of its portfolio
securities and changes in the value of its options on futures
positions, a Fund's losses from exercised options on futures may
to some extent be reduced or increased by changes in the value of
portfolio securities.
The Funds may purchase options on Futures Contracts for
hedging purposes instead of purchasing or selling the underlying
Futures Contracts. For example, where a decrease in the value of
portfolio securities is anticipated as a result of a projected
market-wide decline or changes in interest or exchange rates, a
Fund could, in lieu of selling Futures Contracts, purchase put
options thereon. In the event that such decrease occurs, it may
be offset, in whole or part, by a profit on the option. If the
market decline does not occur, the Fund will suffer a loss equal
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to the price of the put. Where it is projected that the value of
securities to be acquired by a Fund will increase prior to
acquisition, due to a market advance or changes in interest or
exchange rates, a Fund could purchase call options on Futures
Contracts, rather than purchasing the underlying Futures
Contracts. If the market advances, the increased cost of
securities to be purchased may be offset by a profit on the call.
However, if the market declines, the Fund will suffer a loss
equal to the price of the call, but the securities which the Fund
intends to purchase may be less expensive.
Forward Foreign Currency Exchange Contracts
Each Fund may enter into forward foreign currency
exchange contracts ("Forward Contracts") to attempt to minimize
the risk to the Fund from adverse changes in the relationship
between the U.S. dollar and foreign currencies. The Funds intend
to enter into Forward Contracts for hedging purposes similar to
those described above in connection with their transactions in
foreign currency futures contracts. In particular, a Forward
Contract to sell a currency may be entered into in lieu of the
sale of a foreign currency futures contract where a Fund seeks to
protect against an anticipated increase in the exchange rate for
a specific currency which could reduce the dollar value of
portfolio securities denominated in such currency. Conversely, a
Fund may enter into a Forward Contract to purchase a given
currency to protect against a projected increase in the dollar
value of securities denominated in such currency which the Fund
intends to acquire. A Fund also may enter into a Forward
Contract in order to assure itself of a predetermined exchange
rate in connection with a security denominated in a foreign
currency. The Funds may engage in currency "cross hedging" when,
in the opinion of the Adviser, the historical relationship among
foreign currencies suggests that a Fund may achieve the same
protection for a foreign security at a reduced cost through the
use of a Forward Contract relating to a currency other than the
U.S. dollar or the foreign currency in which the security is
denominated.
If a hedging transaction in Forward Contracts is
successful, the decline in the value of portfolio securities or
the increase in the cost of securities to be acquired may be
offset, at least in part, by profits on the Forward Contract.
Nevertheless, by entering into such Forward Contracts, a Fund may
be required to forego all or a portion of the benefits which
otherwise could have been obtained from favorable movements in
exchange rates.
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Each Fund has established procedures consistent with SEC
policies concerning purchases of foreign currency through Forward
Contracts. Since those policies currently recommend that an
amount of a Fund's assets equal to the amount of the purchase be
held aside or segregated to be used to pay for the commitment, a
Fund will always have cash, U.S. Government securities or other
liquid, high-grade debt securities available sufficient to cover
any commitments under these contracts or to limit any potential
risk.
Options on Foreign Currencies
Each Fund may purchase and write options on foreign
currencies for hedging purposes. For example, a decline in the
dollar value of a foreign currency in which portfolio securities
are denominated will reduce the dollar value of such securities,
even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of
portfolio securities, the Funds may purchase put options on the
foreign currency. If the value of the currency does decline, the
Fund will have the right to sell such currency for a fixed amount
in dollars and will thereby offset, in whole or in part, the
adverse effect on its portfolio which otherwise would have
resulted.
Conversely, where a rise in the dollar value of a
currency in which securities to be acquired are denominated is
projected, thereby increasing the cost of such securities, the
Funds may purchase call options thereon. The purchase of such
options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other
types of options, however, the benefit to a Fund derived from
purchases of foreign currency options will be reduced by the
amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the
direction or to the extent anticipated, a Fund could sustain
losses on transactions in foreign currency options which would
require it to forego a portion or all of the benefits of
advantageous changes in such rates.
Each Fund may write options on foreign currencies for
the same types of hedging purposes or to increase return. For
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example, where the Fund anticipates a decline in the dollar value
of foreign-denominated securities due to adverse fluctuations in
exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected
decline occurs, the option will most likely not be exercised, and
the diminution in value of portfolio securities will be offset by
the amount of the premium received.
Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the dollar cost of securities
to be acquired, a Fund could write a put option on the relevant
currency, which, if rates move in the manner projected, will
expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. As in the case of other
types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of
the premium, and only if rates move in the expected direction.
If this does not occur, the option may be exercised and the Fund
will be required to purchase or sell the underlying currency at a
loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, a Fund also
may be required to forego all or a portion of the benefits which
might otherwise have been obtained from favorable movements in
exchange rates.
Risk Factors in Options, Futures and Forward Transactions
Risk of Imperfect Correlation of Hedging Instruments
With a Fund's Portfolio. The Funds' abilities effectively to
hedge all or a portion of their portfolios through transactions
in options, Futures Contracts, options on Futures Contracts,
Forward Contracts and options on foreign currencies depend on the
degree to which price movements in the underlying index or
instrument correlate with price movements in the securities that
are the subject of the hedge. In the case of futures and options
based on an index, the portfolio will not duplicate the
components of the index, and in the case of futures and options
on fixed income securities, the portfolio securities which are
being hedged may not be the same type of obligation underlying
such contract. As a result, the correlation, to the extent it
exists, probably will not be exact.
It should be noted that stock index futures contracts or
options based upon a narrower index of securities, such as those
of a particular industry group, may present greater risk than
options or futures based on a broad market index. This is due to
the fact that a narrower index is more susceptible to rapid and
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extreme fluctuations as a result of changes in the value of a
small number of securities.
The trading of futures and options entails the
additional risk of imperfect correlation between movements in the
futures or option price and the price of the underlying index or
instrument. The anticipated spread between the prices may be
distorted due to the differences in the nature of the markets,
such as differences in margin requirements, the liquidity of such
markets and the participation of speculators in the futures
market. In this regard, trading by speculators in futures and
options has in the past occasionally resulted in market
distortions, which may be difficult or impossible to predict,
particularly near the expiration of such contracts.
The trading of options on Futures Contracts also entails
the risk that changes in the value of the underlying Futures
Contract will not be fully reflected in the value of the option.
The risk of imperfect correlation, however, generally tends to
diminish as the maturity date of the Futures Contract or
expiration date of the option approaches.
Further, with respect to options on securities, options
on foreign currencies, options on stock indexes and options on
Futures Contracts, the Funds are subject to the risk of market
movements between the time that the option is exercised and the
time of performance thereunder. This could increase the extent of
any loss suffered by a Fund in connection with such transactions.
If a Fund purchases futures or options in order to hedge
against a possible increase in the price of securities before the
Fund is able to invest its cash in such securities, the Fund
faces the risk that the market may instead decline. If the Fund
does not then invest in such securities because of concern as to
possible further market declines or for other reasons, the Fund
may realize a loss on the futures or option contract that is not
offset by a reduction in the price of securities purchased.
In writing a call option on a security, foreign
currency, index or futures contract, a Fund also incurs the risk
that changes in the value of the assets used to cover the
position will not correlate closely with changes in the value of
the option or underlying index or instrument. For example, when
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<PAGE>
a Fund writes a call option on a stock index, the securities used
as "cover" may not match the composition of the index, and the
Fund may not be fully covered. As a result, the Fund could
suffer a loss on the call which is not entirely offset or offset
at all by an increase in the value of the Fund's portfolio
securities.
The writing of options on securities, options on stock
indexes or options on Futures Contracts constitutes only a
partial hedge against fluctuations in the value of a Fund's
portfolio. When a Fund writes an option, it will receive premium
income in return for the holder's purchase of the right to
acquire or dispose of the underlying security or future or, in
the case of index options, cash. In the event that the price of
such obligation does not rise sufficiently above the exercise
price of the option, in the case of a call, or fall below the
exercise price, in the case of a put, the option will not be
exercised and the Fund will retain the amount of the premium,
which will constitute a partial hedge against any decline that
may have occurred in the Fund's portfolio holdings, or against
the increase in the cost of the instruments to be acquired.
When the price of the underlying obligation moves
sufficiently in favor of the holder to warrant exercise of the
option, however, and the option is exercised, the Fund will incur
a loss which may only be partially offset by the amount of the
premium the Fund received. Moreover, by writing an option, a
Fund may be required to forego the benefits which might otherwise
have been obtained from an increase in the value of portfolio
securities or a decline in the value of securities to be
acquired.
In the event of the occurrence of any of the foregoing
adverse market events, a Fund's overall return may be lower than
if it had not engaged in the transactions described above.
With respect to the writing of straddles on securities,
a Fund incurs the risk that the price of the underlying security
will not remain stable, that one of the options written will be
exercised and that the resulting loss will not be offset by the
amount of the premiums received. Such transactions, therefore,
while creating an opportunity for increased return by providing a
Fund with two simultaneous premiums on the same security,
nonetheless involve additional risk, because the Fund may have an
option exercised against it regardless of whether the price of
the security increases or decreases.
Potential Lack of a Liquid Secondary Market. Prior to
exercise or expiration, a futures or option position can be
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<PAGE>
terminated only by entering into a closing purchase or sale
transaction. This requires a secondary market for such
instruments on the exchange on which the initial transaction was
entered into. While the Funds will enter into options or futures
positions only if there appears to be a liquid secondary market
therefor, there can be no assurance that such a market will exist
for any particular contracts at any specific time. In that
event, it may not be possible to close out a position held by a
Fund, and the Fund could be required to purchase or sell the
instrument underlying an option, make or receive a cash
settlement or meet ongoing variation margin requirements. Under
such circumstances, if the Fund has insufficient cash available
to meet margin requirements, it may be necessary to liquidate
portfolio securities at a time when it is disadvantageous to do
so. The inability to close out options and futures positions,
therefore, could have an adverse impact on the Funds' ability to
effectively hedge their portfolios, and could result in trading
losses.
The liquidity of a secondary market in a Futures
Contract or option thereon may be adversely affected by "daily
price fluctuation limits," established by exchanges, which limit
the amount of fluctuation in the price of a contract during a
single trading day. Once the daily limit has been reached in the
contract, no trades may be entered into at a price beyond the
limit, thus preventing the liquidation of open futures or option
positions and requiring traders to make additional margin
deposits. Prices have in the past moved to the daily limit on a
number of consecutive trading days.
The trading of Futures Contracts and options (including
options on Futures Contracts) is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment
failures, government intervention, insolvency of a brokerage firm
or clearing house or other disruptions of normal trading
activity, which could at times make it difficult or impossible to
liquidate existing positions or to recover excess variation
margin payments.
The staff of the SEC has taken the position that
over-the-counter options and the assets used as cover for
over-the-counter options are illiquid securities, unless certain
arrangements are made with the other party to the option
contract, permitting the prompt liquidation of the option
position. The Funds will enter into those special arrangements
only with primary U.S. Government securities dealers recognized
by the Federal Reserve Bank of New York ("primary dealers").
Under these special arrangements, the Trust will enter into
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<PAGE>
contracts with primary dealers which provide that each Fund has
the absolute right to repurchase an option it writes at any time
at a repurchase price which represents fair market value, as
determined in good faith through negotiation between the parties,
but which in no event will exceed a price determined pursuant to
a formula contained in the contract. Although the specific
details of the formula may vary between contracts with different
primary dealers, the formula will generally be based on a
multiple of the premium received by the Fund for writing the
option, plus the amount, if any, by which the option is
"in-the-money." The formula will also include a factor to
account for the difference between the price of the security and
the strike price of the option if the option is written
out-of-the-money. Under such circumstances the Fund only needs
to treat as illiquid that amount of the "cover" assets equal to
the amount by which (i) the formula price exceeds (ii) any amount
by which the market value of the security subject to the option
exceeds the exercise price of the option (the amount by which the
option is "in-the-money"). Although each agreement will provide
that the Fund's repurchase price shall be determined in good
faith (and that it shall not exceed the maximum determined
pursuant to the formula), the formula price will not necessarily
reflect the market value of the option written; therefore, the
Fund might pay more to repurchase the option contract than the
Fund would pay to close out a similar exchange-traded option.
Margin. Because of low initial margin deposits made
upon the opening of a futures position and the writing of an
option, such transactions involve substantial leverage. As a
result, relatively small movements in the price of the contract
can result in substantial unrealized gains or losses. However,
to the extent the Funds purchase or sell Futures Contracts and
options on Futures Contracts and purchase and write options on
securities and securities indexes for hedging purposes, any
losses incurred in connection therewith should, if the hedging
strategy is successful, be offset, in whole or in part, by
increases in the value of securities held by the Fund or
decreases in the prices of securities the Fund intends to
acquire. When a Fund writes options on securities or options on
stock indexes for other than hedging purposes, the margin
requirements associated with such transactions could expose the
Fund to greater risk.
Trading and Position Limits. The exchanges on which
futures and options are traded may impose limitations governing
the maximum number of positions on the same side of the market
and involving the same underlying instrument which may be held by
a single investor, whether acting alone or in concert with others
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(regardless of whether such contracts are held on the same or
different exchanges or held or written in one or more accounts or
through one or more brokers). In addition, the Commodity Futures
Trading Commission (the "CFTC") and the various contract markets
have established limits referred to as "speculative position
limits" on the maximum net long or net short position which any
person may hold or control in a particular futures or option
contract. An exchange may order the liquidation of positions
found to be in violation of these limits and may impose other
sanctions or restrictions. The Adviser does not believe that
these trading and position limits will have any adverse impact on
the strategies for hedging the portfolios of the Funds.
Risks of Options on Futures Contracts. The amount of
risk a Fund assumes when it purchases an option on a Futures
Contract is the premium paid for the option, plus related
transaction costs. In order to profit from an option purchased,
however, it may be necessary to exercise the option and to
liquidate the underlying Futures Contract, subject to the risks
of the availability of a liquid offset market described herein.
The writer of an option on a Futures Contract is subject to the
risks of commodity futures trading, including the requirement of
initial and variation margin payments, as well as the additional
risk that movements in the price of the option may not correlate
with movements in the price of the underlying security, index,
currency or Futures Contract.
Risks of Forward Contracts, Foreign Currency Futures
Contracts and Options Thereon, Options on Foreign Currencies and
Over-the-Counter Options on Securities. Transactions in Forward
Contracts, as well as futures and options on foreign currencies,
are subject to all of the correlation, liquidity and other risks
outlined above. In addition, however, such transactions are
subject to the risk of governmental actions affecting trading in
or the prices of currencies underlying such contracts, which
could restrict or eliminate trading and could have a substantial
adverse effect on the value of positions held by a Fund. In
addition, the value of such positions could be adversely affected
by a number of other complex political and economic factors
applicable to the countries issuing the underlying currencies.
Further, unlike trading in most other types of
instruments, there is no systematic reporting of last sale
information with respect to the foreign currencies underlying
contracts thereon. As a result, the available information on
which trading decisions will be based may not be as complete as
the comparable data on which a Fund makes investment and trading
decisions in connection with other transactions. Moreover,
because the foreign currency market is a global, twenty-four hour
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market, events could occur on that market which will not be
reflected in the forward, futures or options markets until the
following day, thereby preventing the Funds from responding to
such events in a timely manner.
Settlements of exercises of over-the-counter Forward
Contracts or foreign currency options generally must occur within
the country issuing the underlying currency, which in turn
requires traders to accept or make delivery of such currencies in
conformity with any United Sates or foreign restrictions and
regulations regarding the maintenance of foreign banking
relationships and fees, taxes or other charges.
Unlike transactions entered into by the Funds in Futures
Contracts and exchange-traded options, options on foreign
currencies, Forward Contracts and over-the-counter options on
securities and securities indexes are not traded on contract
markets regulated by the CFTC or (with the exception of certain
foreign currency options) the SEC. Such instruments are instead
traded through financial institutions acting as market-makers,
although foreign currency options are also traded on certain
national securities exchanges, such as the Philadelphia Stock
Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. In an over-the-counter trading environment, many of
the protections afforded to exchange participants will not be
available. For example, there are no daily price fluctuation
limits, and adverse market movements could therefore continue to
an unlimited extent over a period of time. Although the
purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could
be lost. Moreover, the option writer could lose amounts
substantially in excess of the initial investment, due to the
margin and collateral requirements associated with such
positions.
In addition, over-the-counter transactions can be
entered into only with a financial institution willing to take
the opposite side, as principal, of a Fund's position unless the
institution acts as broker and is able to find another
counterparty willing to enter into the transaction with the Fund.
Where no such counterparty is available, it will not be possible
to enter into a desired transaction. There also may be no liquid
secondary market in the trading of over-the-counter contracts,
and a Fund could be required to retain options purchased or
written, or Forward Contracts entered into, until exercise,
expiration or maturity. This in turn could limit the Fund's
ability to profit from open positions or to reduce losses
experienced, and could result in greater losses.
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Further, over-the-counter transactions are not subject
to the guarantee of an exchange clearing house, and a Fund will
therefore be subject to the risk of default by, or the bankruptcy
of, the financial institution serving as its counterparty. A
Fund will enter into an over-the-counter transaction only with
parties whose creditworthiness has been reviewed and found
satisfactory by the Adviser.
Transactions in over-the-counter options on foreign
currencies are subject to a number of conditions regarding the
commercial purpose of the purchaser of such option. The Funds
are not able to determine at this time whether or to what extent
additional restrictions on the trading of over-the-counter
options on foreign currencies may be imposed at some point in the
future, or the effect that any such restrictions may have on the
hedging strategies to be implemented by them.
As discussed below, CFTC regulations require that a Fund
not enter into transactions in commodity futures contracts or
commodity option contracts for other than "bona fide" hedging
purposes, unless the aggregate initial margin and premiums do not
exceed 5% of the fair market value of the Fund's assets.
Premiums paid to purchase over-the-counter options on foreign
currencies, and margins paid in connection with the writing of
such options, are required to be included in determining
compliance with this requirement, which could, depending upon the
existing positions in Futures Contracts and options on Futures
Contracts already entered into by a Fund, limit the Fund's
ability to purchase or write options on foreign currencies.
Conversely, the existence of open positions in options on foreign
currencies could limit the ability of the Fund to enter into
desired transactions in other options or futures contracts.
While Forward Contracts are not presently subject to
regulation by the CFTC, the CFTC may in the future assert or be
granted authority to regulate such instruments. In such event,
the Fund's ability to utilize Forward Contracts in the manner set
forth above could be restricted.
Options on foreign currencies traded on national
securities exchanges are within the jurisdiction of the SEC, as
are other securities traded on such exchanges. As a result, many
of the protections provided to traders on organized exchanges
will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on
a national securities exchange are cleared and guaranteed by the
Options Clearing Corporation ("OCC"), thereby reducing the risk
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<PAGE>
of counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market,
potentially permitting a Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.
The purchase and sale of exchange-traded foreign
currency options, however, is subject to the risks of the
availability of a liquid secondary market described above, as
well as the risks regarding adverse market movements, the
margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the
effects of other political and economic events. In addition,
exchange-traded options on foreign currencies involve certain
risks not presented by the over-the-counter market. For example,
exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in
applicable foreign countries for this purpose. As a result, if
it determines that foreign governmental restrictions or taxes
would prevent the orderly settlement of foreign currency option
exercises, or would result in undue burdens on the OCC or its
clearing member, the OCC may impose special procedures on
exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar
settlement prices or prohibitions on exercise.
Restrictions on the Use of Futures and Option Contracts
Under applicable regulations, when a Fund enters into
transactions in Futures Contracts and options on Futures
Contracts other than for bona fide hedging purposes, that Fund
maintains with its custodian in a segregated account cash,
short-term U.S. Government securities or high quality United
States dollar denominated money market instruments, which,
together with any initial margin deposits, are equal to the
aggregate market value of the Futures Contracts and options on
Futures Contracts that it purchases. In addition, a Fund may not
purchase or sell such instruments for other than bona fide
hedging purposes if, immediately thereafter, the sum of the
amount of initial margin deposits on such futures and options
positions and premiums paid for options purchased would exceed 5%
of the market value of the Fund's total assets.
Each Fund has adopted the additional restriction that it
will not enter into a Futures Contract if, immediately
thereafter, the value of securities and other obligations
underlying all such Futures Contracts would exceed 50% of the
value of such Fund's total assets. Moreover, a Fund will not
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<PAGE>
purchase put and call options if as a result more than 10% of its
total assets would be invested in such options.
Economic Effects and Limitations
Income earned by a Fund from its hedging activities will
be treated as capital gain and, if not offset by net realized
capital losses incurred by a Fund, will be distributed to
shareholders in taxable distributions. Although gain from such
transactions may hedge against a decline in the value of a Fund's
portfolio securities, that gain, to the extent not offset by
losses, will be distributed in light of certain tax
considerations and will constitute a distribution of that portion
of the value preserved against decline.
No Fund will "over-hedge," that is, a Fund will not
maintain open short positions in futures or options contracts if,
in the aggregate, the market value of its open positions exceeds
the current market value of its securities portfolio plus or
minus the unrealized gain or loss on such open positions,
adjusted for the historical volatility relationship between the
portfolio and futures and options contracts.
Each Fund's ability to employ the options and futures
strategies described above will depend on the availability of
liquid markets in such instruments. Markets in financial futures
and related options are still developing. It is impossible to
predict the amount of trading interest that may hereafter exist
in various types of options or futures. Therefore no assurance
can be given that a Fund will be able to use these instruments
effectively for the purposes set forth above.
The Funds' ability to use options, futures and forward
contracts may be limited by tax considerations. In particular,
tax rules might affect the length of time for which the Funds can
hold such contracts and the character of the income earned on
such contracts. In addition, differences between each Fund's
book income (upon the basis of which distributions are generally
made) and taxable income arising from its hedging activities may
result in return of capital distributions, and in some
circumstances, distributions in excess of the Fund's book income
may be required in order to meet tax requirements.
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Future Developments
The above discussion relates to each Fund's proposed use
of Futures Contracts, options and options on Futures Contracts
currently available. As noted above, the relevant markets and
related regulations are evolving. In the event of future
regulatory or market developments, each Fund may also use
additional types of futures contracts or options and other
investment techniques for the purposes set forth above.
INVESTMENT RESTRICTIONS
Except as described below and except as otherwise
specifically stated in the Prospectus or this Statement of
Additional Information, the investment policies of each Fund set
forth in the Prospectus and in this Statement of Additional
Information are not fundamental and may be changed without
shareholder approval.
The following is a description of restrictions on the
investments to be made by the Funds, which restrictions may not
be changed without the approval of a majority of the outstanding
voting securities of the relevant Fund.
Neither of the Funds will:
(1) Borrow money in excess of 10% of the value (taken
at the lower of cost or current value) of its total
assets (not including the amount borrowed) at the
time the borrowing is made, and then only from
banks as a temporary measure to facilitate the
meeting of redemption requests (not for leverage)
which might otherwise require the untimely
disposition of portfolio investments or pending
settlement of securities transactions or for
extraordinary or emergency purposes.
(2) Underwrite securities issued by other persons
except to the extent that, in connection with the
disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal
securities laws.
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(3) Purchase or retain real estate or interests in real
estate, although each Fund may purchase securities
which are secured by real estate and securities of
companies which invest in or deal in real estate.
(4) Make loans to other persons except by the purchase
of obligations in which such Fund may invest
consistent with its investment policies and by
entering into repurchase agreements, or by lending
its portfolio securities representing not more than
25% of its total assets.
(5) Issue any senior security (as that term is defined
in the 1940 Act), if such issuance is specifically
prohibited by the 1940 Act or the rules and
regulations promulgated thereunder. For the
purposes of this restriction, collateral
arrangements with respect to options, Futures
Contracts and Options on Futures Contracts and
collateral arrangements with respect to initial and
variation margins are not deemed to be the issuance
of a senior security. (There is no intention to
issue senior securities except as set forth in
paragraph 1 above.)
It is also a fundamental policy of each Fund that it may
purchase and sell futures contracts and related options.
In addition, the following is a description of operating
policies which the Trust has adopted on behalf of the Funds but
which are not fundamental and are subject to change without
shareholder approval.
Neither of the Funds will:
(a) Pledge, mortgage, hypothecate or otherwise encumber
an amount of its assets taken at current value in
excess of 15% of its total assets (taken at the
lower of cost or current value) and then only to
secure borrowings permitted by restriction (1)
above. For the purpose of this restriction, the
deposit of securities and other collateral
arrangements with respect to reverse repurchase
agreements, options, Futures Contracts, Forward
Contracts and options on foreign currencies, and
payments of initial and variation margin in
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connection therewith are not considered pledges or
other encumbrances.
(b) Purchase securities on margin, except that each
Fund may obtain such short-term credits as may be
necessary for the clearance of purchases and sales
of securities, and except that each Fund may make
margin payments in connection with Futures
Contracts, Options on Futures Contracts, options,
Forward Contracts or options on foreign currencies.
(c) Make short sales of securities or maintain a
shortposition for the account of such Fund unless
at all times when a short position is open it owns
an equal amount of such securities or unless by
virtue of its ownership of other securities it has
at all such times a right to obtain securities
(without payment of further consideration)
equivalent in kind and amount to the securities
sold, provided that if such right is conditional
the sale is made upon equivalent conditions and
further provided that no Fund will make such short
sales with respect to securities having a value in
excess of 5% of its total assets.
(d) Write, purchase or sell any put or call option or
any combination thereof, provided that this shall
not prevent a Fund from writing, purchasing and
selling puts, calls or combinations thereof with
respect to securities, indexes of securities or
foreign currencies, and with respect to Futures
Contracts.
(e) Purchase voting securities of any issuer if such
purchase, at the time thereof, would cause more
than 10% of the outstanding voting securities of
such issuer to be held by such Fund; or purchase
securities of any issuer if such purchase at the
time thereof would cause more than 10% of any class
of securities of such issuer to be held by such
Fund. For this purpose all indebtedness of an
issuer shall be deemed a single class and all
preferred stock of an issuer shall be deemed a
single class.
(f) Invest in securities of any issuer if, to the
knowledge of the Trust, officers and Trustees of
the Trust and officers and directors of the Adviser
who beneficially own more than 0.5% of the shares
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of securities of that issuer together own more than
5%.
(g) Purchase securities issued by any other registered
investment company or investment trust except (A)
by purchase in the open market where no commission
or profit to a sponsor or dealer results from such
purchase other than the customary broker's
commission, or (B) where no commission or profit to
a sponsor or dealer results from such purchase, or
(C) when such purchase, though not made in the open
market, is part of a plan of merger or
consolidation; provided, however, that a Fund will
not purchase such securities if such purchase at
the time thereof would cause more than 5% of its
total assets (taken at market value) to be invested
in the securities of such issuers; and, provided
further, that a Fund's purchases of securities
issued by an open-end investment company will be
consistent with the provisions of the 1940 Act.
(h) Make investments for the purpose of exercising
control or management.
(i) Participate on a joint or joint and several basis
in any trading account in securities.
(j) Invest in interests in oil, gas, or other mineral
exploration or development programs, although each
Fund may purchase securities which are secured by
such interests and may purchase securities of
issuers which invest in or deal in oil, gas or
other mineral exploration or development programs.
(k) Purchase warrants, if, as a result, a Fund would
have more than 5% of its total assets invested in
warrants or more than 2% of its total assets
invested in warrants which are not listed on the
New York Stock Exchange or the American Stock
Exchange.
(l) Purchase commodities or commodity contracts,
provided that this shall not prevent a Fund from
entering into interest rate futures contracts,
securities index futures contracts, foreign
currency futures contracts, forward foreign
currency exchange contracts and options (including
options on any of the foregoing) to the extent such
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<PAGE>
action is consistent with such Fund's investment
objective and policies.
(m) Purchase additional securities in excess of 5% of
the value of its total assets until all of a Fund's
outstanding borrowings (as permitted and described
in Restriction No. 1 above) have been repaid.
Whenever any investment restriction states a maximum
percentage of a 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 such Fund's acquisition of such securities or other
assets. Accordingly, any later increase or decrease beyond the
specified limitation resulting from a change in value or net
asset value will not be considered a violation of such percentage
limitation.
MANAGEMENT OF THE FUNDS
Adviser
Alliance Capital Management L.P. (the "Adviser"), a
Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been
retained under an investment advisory agreement (the "Investment
Advisory Contract") to provide investment advice and, in general,
to conduct the management and investment program of the Trust
under the supervision of the Trust's Board of Trustees.
The Adviser is a leading international investment
manager supervising client accounts with assets as of June 30,
1995 totaling more than $135.8 billion (of which more than $43
billion represents the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies,
foundations and endowment funds. The Adviser and its
subsidiaries employ more than 1,400 employees who operate out of
domestic offices and the overseas offices of subsidiaries in
Bombay, Istanbul, London, Sydney, Tokyo, Toronto, Bahrain,
Luxembourg and Singapore. The 51 registered investment companies
comprising 103 separate investment portfolios managed by the
Adviser currently have over one million shareholders. As of June
30, 1995 the Adviser was retained as an investment manager of
employee benefit fund assets for 29 of the "Fortune 100"
companies.
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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, each a wholly-owned direct or indirect subsidiary of
Equitable, owned in the aggregate approximately 59% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser
("Units"), and 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 Trust.
AXA owns approximately 60% of the outstanding voting
shares of common stock of ECI. AXA is a member of a group of
companies (the "AXA Group") that is the second largest insurance
group in France and one of the largest insurance groups in
Europe. Principally engaged in property and casualty insurance
and life insurance in Europe and elsewhere in the world, the AXA
Group is also involved in real estate operations and certain
other financial services, including mutual fund management, lease
financing services and brokerage services. Based on information
provided by AXA, as of January 1, 1995, 42.3% of the voting
shares (representing 54.7% of the voting power) of AXA were owned
by Midi Participations, a French corporation that is a holding
company. The voting shares of Midi Participations are in turn
owned 60% by Finaxa, a French corporation that is a holding
company, and 40% by subsidiaries of Assicurazioni Generali
S.p.A., an Italian corporation ("Generali"), one of which,
Belgica Insurance Holding S.A., a Belgian corporation, owned
34.1%. As of January 1, 1995, 62.1% of the voting 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
voting shares (representing 39.0% of the voting power)), and
26.5% of the voting shares (representing 16.6% of the voting
power) of Finaxa were owned by Compagnie Financiere de Paribas, a
_________________________
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.
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<PAGE>
French financial institution engaged in banking and related
activities. Including the shares owned by Midi Participations,
as of January 1, 1995, the Mutuelles AXA directly or indirectly
owned 51.3% of the voting shares (representing 65.8% of the
voting power) of AXA. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa. The Mutuelles AXA
have approximately 1.5 million policyholders.
Investment Advisory Contract and Expenses
The Adviser serves as investment manager and adviser of
each of the Funds and furnishes continuously an investment
program for each Fund and manages, supervises and conducts the
affairs of each Fund. The Investment Advisory Contract also
provides that the Adviser will furnish or pay the expenses of the
Trust for office space, facilities and equipment, services of
executive and other personnel of the Trust and certain
administrative services. The Adviser is compensated for its
services to the Funds at an annual rate of .75% of each Fund's
average daily net assets. The Adviser has voluntarily undertaken
until further notice to waive its fees in respect of each Fund
and has agreed to bear certain expenses of the Class A, Class B
and Class C shares of each Fund to the extent that expenses
exceed an annual rate of 1.40% for Class A shares and 2.10% for
Class B and Class C shares. The management fees for each Fund
are higher than those paid by most mutual funds.
The Investment Advisory Contract became effective on
July 23, 1993. The Investment Advisory Contract replaced an
earlier agreement (the "First Investment Advisory Contract")
between the Trust and Equitable Capital Management Corporation
("Equitable Capital") or Equitable, as the case may be, with
respect to the Funds. The First Investment Advisory Agreement
terminated because of its technical assignment in connection with
the transfer of substantially all of the assets comprising
Equitable Capital's business to the Adviser and certain of its
subsidiaries in exchange for newly issued limited partnership
interests in the Adviser and the assumption by the Adviser and
such subsidiaries of certain liabilities of Equitable Capital.
Equitable Capital was compensated for its services as investment
manager of the Funds at the same rates as are currently paid by
the Funds to the Adviser.
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<PAGE>
In anticipation of the assignment of the First
Investment Advisory Contract, the Investment Advisory Contract
was approved by the vote of the Trust's Trustees, including the
Trustees who are not parties to the Investment Advisory Contract
or interested persons of any such party, at meetings called for
the purpose and held on February 16, 1993 and March 31, 1993. At
a meeting held on April 8, 1993, a majority of the outstanding
voting securities of the Funds approved the Investment Advisory
Contract. Prior to July 23, 1993, Equitable Capital had served
as investment adviser to the Conservative Investors Fund and the
Growth Investors Fund since their inception.
During the period May 1, 1994 through April 30, 1995,
the Adviser earned $385,818 in management fees from the
Conservative Investors Fund (an additional $217,650 in fees were
waived) and $464,336 from the Growth Investors Fund (an
additional $350,235 in fees were waived). During the period July
23, 1993 through the fiscal year ended April 30, 1994, the
Adviser earned $202,051 in management fees from the Conservative
Investors Fund (an additional $164,848 in fees were waived) and
$173,868 from the Growth Investors Fund (an additional $215,813
in fees were waived). During the period May 1, 1993 to July 22,
1993, Equitable Capital earned $42,814 in management fees from
the Conservative Investors Fund (an additional $31,138 in fees
were waived) and $33,175 from the Growth Investors Fund (an
additional $25,249 in fees were waived). During the period May
4, 1992 through the fiscal year ended April 30, 1993, Equitable
Capital earned $739 in management fees from the Conservative
Investors Fund (an additional $51,602 in fees were waived) and $0
from the Growth Investors Fund ($39,694 in fees were waived).
The Investment Advisory Contract provides that it will
continue in effect for two years from its date of execution and
thereafter from year to year if its continuance is approved at
least annually (i) by the Board of Trustees or by vote of a
majority of the outstanding voting securities of the relevant
Fund, and (ii) by vote of a majority of the Trustees who are not
interested persons of the Adviser cast in person at a meeting
called for the purpose of voting on such approval. Any amendment
to the Investment Advisory Contract must be approved by vote of a
majority of the outstanding voting securities of the relevant
Fund and by vote of a majority of the Trustees who are not such
interested persons, cast in person at a meeting called for the
purpose of voting on such approval. The Investment Advisory
Contract may be terminated without penalty by the Adviser, by
vote of the Trustees or by vote of a majority of the outstanding
voting securities of the relevant Fund upon sixty days' written
notice, and it terminates automatically in the event of its
44
<PAGE>
assignment. The Adviser controls the word "Alliance" in the
names of the Trust and each Fund, and if Alliance should cease to
be the investment manager of any Fund, the Trust and such Fund
may be required to change their names and delete that word.
The Investment Advisory Contract provides that Alliance
shall not be subject to any liability in connection with the
performance of its services thereunder in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties.
Trustees and Officers
The Trustees and principal officers of the Trust, their
ages as of the date of this Statement of Additional Information
and their primary occupations during the past five years are set
forth below.
Trustees
*John D. Carifa, 50, Chairman of the Board and
President, is the President, Chief Operating Officer, and a
Director of Alliance Capital Management Corporation, the general
partner of the Adviser. His address is 1345 Avenue of the
Americas, New York, New York 10105.
Alberta B. Arthurs, 62, is the Director for Arts and
Humanities for The Rockefeller Foundation. Her address is 1133
Avenue of the Americas, New York, New York 10036.
Ruth Block, 64, was formerly an Executive Vice President
and the Chief Insurance Officer of The Equitable Life Assurance
Society of the United States. She is a Director of Ecolab
Incorporated (specialty chemicals) and Amoco Corporation (oil and
gas). Her address is Box 4653, Stamford, Connecticut 06903.
Richard W. Couper, 72, is President Emeritus and Trustee
of The Woodrow Wilson Fellowship Foundation and President
Emeritus of the New York Public Library. His address is Box 345,
Clinton, New York 13323-0345.
Brenton W. Harries, 67, is a Director of Enhance
Reinsurance Co. and was formerly the President and Chief
Executive of Global Electronic Markets Company. His address is
14 Point Road, Wilson Point, South Norwalk, Connecticut 06854.
Donald J. Robinson, 61, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently of counsel to
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<PAGE>
that firm. His address is 599 Lexington Avenue, 26th Floor, New
York, New York 10022.
The Trust pays no compensation to its officers or to
the Trustee listed above who is an interested person of the
Trust. The Trustees who are not interested persons of the Trust
receive an annual fee of $20,000 and a fee of $1,000 for each
meeting of the Board of Trustees attended and $500 for each
committee meeting of the Board of Trustees attended ($750 in the
case of the chairman of the committee). Trustees are also
reimbursed for any expenses incurred in attending meetings of the
Board of Trustees. The aggregate compensation paid to each of
the Trustees during the fiscal year ended April 30, 1995 and by
all of the registered investment companies to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex"), are set forth on the next page.
Pension Total
Retirement Compensation
Aggregate Aggregate Benefits Estimated from the
Compensation Compensation Accrued As Annual Alliance Fund
from the from the Part of Benefits Complex,
Conservative Growth Trust Upon Including
Name Investors Investors Expenses Retirement the Trust
___________ ____________ ____________ __________ __________ ____________
John D. Carifa $ 0 $ 0 $ 0 $ 0 $ 0
Alberta B. Arthurs $ 4,800 $ 4,800 $ 0 $ 0 $ 26,500
Ruth Block $ 5,000 $ 5,000 $ 0 $ 0 $ 157,000
Richard W. Couper $ 5,000 $ 5,000 $ 0 $ 0 $ 27,500
Brenton W. Harries $ 5,000 $ 5,000 $ 0 $ 0 $ 25,000
Donald J. Robinson $ 5,000 $ 5,000 $ 0 $ 0 $ 27,000
____________________
* The information in this column represents amounts actually paid during
calendar year 1994. There are 103 investment companies in the Alliance
Fund Complex.
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<PAGE>
Officers
*John D. Carifa, President, see biography above.
Edmund P. Bergan, Jr., 45, Clerk, is a Senior Vice
President and General Counsel of Alliance Fund Distributors, Inc.
His address is 1345 Avenue of the Americas, New York, New York
10105.
Mark D. Gersten, 44, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services,
Inc. His address is 500 Plaza Drive, Secaucus, New Jersey 07094.
Patrick J. Farrell, 35, Controller and Chief Accounting
Officer, is a Vice President of Alliance Fund Services, Inc. His
address is 500 Plaza Drive, Secaucus, New Jersey 07094.
Kathleen A. Corbet, 35, Vice President, is, since July
23, 1993, a Senior Vice President of Alliance Capital Management
Corporation, the general partner of Alliance Capital Management
L.P. She is also Vice President of The Hudson River Trust. She
was formerly Executive Vice President of Equitable Capital. Her
address is 1345 Avenue of the Americas, New York, New York 10105.
Franklin Kennedy III, 53, Vice President, is, since July
23, 1993, Senior Vice President of Alliance Capital Management
Corporation, the general partner of Alliance Capital Management
L.P. His address is 1345 Avenue of the Americas, New York, New
York 10150.
Barbara J. Krumsiek, 43, Vice President - Marketing, is,
since July 23, 1993, a Senior Vice President of Alliance Fund
Distributors, Inc. She was formerly an Investment Officer of
Equitable, Senior Vice President of Equitable Capital and Vice
President of Equitable Variable Life Insurance Company. Her
address is 1345 Avenue of the Americas, New York, New York 10105.
As of the date of this Statement of Additional
Information, the Trust believes that the officers and Trustees of
the Trust as a group owned beneficially less than 1.00% of the
outstanding shares of any Fund or of the Trust as a whole.
___________________
* An "interested person" of the Trust, as defined by the 1940
Act.
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The Trust undertakes to provide assistance to
shareholders in communications concerning the removal of any
Trustee of the Trust in accordance with Section 16 of the 1940
Act.
PORTFOLIO TRANSACTIONS
Under the general supervision of the Board of Trustees,
the Adviser makes the Funds' portfolio decisions and determines
the broker to be used in each specific transaction with the
objective of negotiating a combination of the most favorable
commission and the best price obtainable on each transaction
(generally defined as best execution). When consistent with the
objective of obtaining best execution, brokerage may be directed
to persons or firms supplying investment information to the
Adviser. Neither the Funds nor the Adviser have entered into
agreements or understandings with any brokers regarding the
placement of securities transactions because of research 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 Funds, such information may be supplied
at no cost to the Adviser and, therefore, may have the effect of
reducing the expenses of the Adviser in rendering advice to the
Funds. 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) of the Securities Exchange
Act of 1934, as amended, and is designed to augment the Adviser's
own internal research and investment strategy capabilities.
Research services furnished by brokers through which the Funds
effect securities transactions are used by the Adviser in
carrying out its investment management responsibilities with
respect to all its clients' accounts. There may be occasions
where the transaction cost charged by a broker may be greater
than that which another broker may charge if it is determined in
good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage and research services
provided by the executing broker.
The Funds may deal in some instances in securities which
are not listed on a national securities exchange but are traded
in the over-the-counter market. They may also purchase listed
securities through the third market. Where transactions are
executed in the over-the-counter market or third market, the
Funds will seek to deal with the primary market makers; but when
necessary in order to obtain best execution, they will utilize
the services of others.
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Aggregate securities transactions for the Funds during
the fiscal year ended April 30, 1995 were as follows: with
respect to the Conservative Investors Fund, $207,531,166 and, in
connection therewith, brokerage commissions of $3,758 (100%) were
allocated to persons or firms supplying research information; and
with respect to the Growth Investors Fund, $154,095,965 and, in
connection therewith, brokerage commission of $143,563 (100%)
were allocated to persons or firms supplying research
information. Aggregate securities transactions for the Funds
during the fiscal year ended April 30, 1994 were as follows:
with respect to the Conservative Investors Fund, $92,313,848 and,
in connection therewith, brokerage commissions of $10,178 (100%)
were allocated to persons or firms supplying research
information; and with respect to the Growth Investors Fund,
$60,632,954 and, in connection therewith, brokerage commissions
of $45,808 (100%) were allocated to persons or firms supplying
research information.
For the fiscal year ended April 30, 1995, the
Conservative Investors Fund paid an aggregate of $3,758 in
brokerage commissions; and the Growth Investors Fund paid an
aggregate of $143,563 in brokerage commissions. For the fiscal
year ended April 30, 1994, the Conservative Investors Fund paid
an aggregate of $10,178 in brokerage commissions; and the Growth
Investors Fund paid an aggregate of $45,808 in brokerage
commissions. For the fiscal year ended April 30, 1993, the
Conservative Investors Fund paid an aggregate of $2,650 in
brokerage commissions; and the Growth Investors Fund paid an
aggregate of $11,308 in brokerage commissions.
The Funds 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")
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 accordance
with the requirements of Section 11(a) of the Securities Exchange
Act of 1934, as amended. In such instances, the placement of
orders with such brokers would be consistent with the Funds'
objective of obtaining the best execution and would not be
dependent upon the fact that DLJ is an affiliate of the Adviser.
With respect to orders placed with DLJ for execution on a
national securities exchange, commissions received must conform
to Section 17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder,
which permit an affiliated person of a registered investment
company (such as the Trust), or any affiliated person of such
person, to receive a brokerage commission from such registered
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<PAGE>
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.
Pursuant to Section 11(a) of the Securities Exchange Act
of 1934, as amended, DLJ and its affiliates are restricted as to
the nature and extent of the brokerage services they may perform
for the Funds. Consistent with such restrictions, DLJ and its
affiliates may receive compensation relating to transactions in
portfolio securities of the Funds. The Adviser may effect
transactions in portfolio securities of the Funds through DLJ and
through unaffiliated brokers for which the Pershing Division of
DLJ provides clearance and settlement services and is compensated
for such services.
The brokerage transactions engaged in by the Funds with
DLJ and its affiliates during the fiscal years ended April 30,
1993, April 30, 1994 and April 30, 1995 are set forth below:
% of Fund's % of Fund's
Amount of Aggregate Aggregate
Fiscal Year Brokerage Brokerage Dollar Amount
Ended Fund Commission Commissions of Transactions
___________ ____ __________ ___________ _______________
1995 Growth Investors $33 0% 0%
1994 N.A. None None None
1993 N.A. None None None
The annual portfolio turnover rates of the securities of
the Conservative Investors Fund and the Growth Investors Fund for
the year ended April 30, 1995 were 248% and 134%, respectively.
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EXPENSES OF THE FUNDS
In addition to the payments to the Adviser under the
Investment Advisory Contract described above, the Trust pays
certain other costs including (a) brokerage and commission
expenses, (b) Federal, state and local taxes, including issue and
transfer taxes incurred by or levied on a Fund, (c) interest
charges on borrowing, (d) fees and expenses of registering the
shares of the Funds under the appropriate Federal securities laws
and of qualifying shares of the Funds under applicable state
securities laws including expenses attendant upon renewing and
increasing such registrations and qualifications, (e) expenses of
printing and distributing the Funds' prospectuses and other
reports to shareholders, (f) costs of proxy solicitations, (g)
transfer agency fees described below, (h) charges and expenses of
the Trust's custodian, (i) compensation of the Trust's officers,
Trustees and employees who do not devote any part of their time
to the affairs of the Adviser or its affiliates, (j) costs of
stationery and supplies, and (k) such promotional expenses as may
be contemplated by the Distribution Services Agreement described
below.
Distribution Arrangements
Rule 12b-1 adopted by the SEC under the 1940 Act permits
an investment company to directly or indirectly pay expenses
associated with the distribution of its shares in accordance with
a duly adopted and approved plan. The Trust has adopted a plan
for each class of shares of the Funds pursuant to Rule 12b-1
(each a "Plan" and collectively the "Plans"). Pursuant to the
Plans, each Fund pays Alliance Fund Distributors, Inc. (the
"Principal Underwriter") a Rule 12b-1 distribution services fee
which may not exceed an annual rate of .50% of a Fund's aggregate
average daily net assets attributable to the Class A shares,
1.00% of a Fund's aggregate average daily net assets attributable
to the Class B shares and 1.00% of a Fund's aggregate average
daily net assets attributable to the Class C shares to compensate
the Principal Underwriter for distribution expenses. The
Trustees currently limit payments under the Class A Plan to .30%
of a Fund's aggregate average daily net assets attributable to
the Class A shares. The Plans provide that a portion of the
distribution services fee in an amount not to exceed .25% of the
aggregate average daily net assets of a Fund attributable to each
of the Class A shares, Class B shares and Class C shares
constitutes a service fee that the Principal Underwriter will use
for personal service and/or the maintenance of shareholder
accounts. The Plans also provide that the Adviser may use its
own resources, which may include management fees received by the
Adviser from the Trust or other investment companies which it
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<PAGE>
manages and the Adviser's past profits, to finance the
distribution of the Funds' shares.
Each Plan may be terminated with respect to the class of
shares of any Fund to which the Plan relates by vote of a
majority of the Trustees who are not "interested persons" of the
Trust and who have no direct or indirect financial interest in
the operation of the Plans or in any agreement related to the
Plans (the "Qualified Trustees"), or by vote of a majority of the
outstanding voting securities of that class. Each Plan may be
amended by vote of the Trustees, including a majority of the
Qualified Trustees, cast in person at a meeting called for that
purpose. Any change in a Plan that would materially increase the
distribution costs to the class of shares of any Fund to which
the Plan relates requires approval by the affected class of
shareholders of that Fund. The Trustees review quarterly a
written report of such distribution costs and the purposes for
which such costs have been incurred with respect to each Fund's
Class A, Class B and Class C shares. For so long as the Plans
are in effect, selection and nomination of those Trustees who are
not interested persons of the Trust shall be committed to the
discretion of such disinterested persons.
The Plans may be terminated with respect to any Fund or
class of shares thereof at any time on 60 days' written notice
without payment of any penalty by the Principal Underwriter or by
vote of a majority of the outstanding voting securities of that
Fund or that class (as appropriate) or by vote of a majority of
the Qualified Trustees.
The Plans will continue in effect with respect to each
Fund and each class of shares thereof for successive one-year
periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the Qualified Trustees
and (ii) by the vote of a majority of the entire Board of
Trustees cast in person at a meeting called for that purpose.
For services rendered by the Principal Underwriter in
connection with the distribution of Class A shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $47,590 and $58,355 with respect to the Class A shares
of the Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1995. For
services rendered by the Principal Underwriter and Equico
Securities, Inc., the Trust's prior principal underwriter
("Equico"), in connection with the distribution of Class A shares
pursuant to the Plan applicable to such shares, Equico received
$3,700 and $2,574 with respect to the Class A shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1994; and
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the Principal Underwriter received $26,447 and $21,336 with
respect to the Class A shares of the Conservative Investors Fund
and the Growth Investors Fund, respectively, during the fiscal
year ended April 30, 1994.
For services rendered by the Principal Underwriter in
connection with the distribution of Class B shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $307,217 and $385,615 with respect to the Class B shares
of the Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1995. For
services rendered by the Principal Underwriter and Equico in
connection with the distribution of Class B shares pursuant to
the Plan applicable to such shares, Equico received $29,317 and
$24,700 with respect to the Class B shares of the Conservative
Investors Fund and the Growth Investors Fund, respectively,
during the fiscal year ended April 30, 1994; and the Principal
Underwriter received $165,904 and $149,494 with respect to the
Class B shares of the Conservative Investors Fund and the Growth
Investors Fund, respectively, during the fiscal year ended April
30, 1994.
For services rendered by the Principal Underwriter in
connection with the distribution of Class C shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $48,572 and $38,982 with respect to the Class C shares
of the Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1995. For
services rendered by the Principal Underwriter in connection with
the distribution of Class C shares pursuant to the Plan
applicable to such shares, the Principal Underwriter received
$15,339 and $11,203 with respect to the Class C shares of the
Conservative Investors Fund and the Growth Investors Fund,
respectively, during the fiscal year ended April 30, 1994.
The Principal Underwriter has informed the Trust that
expenses incurred by it and costs allocated to it in connection
with activities primarily intended to result in the sale of
Class A, Class B, and Class C shares, respectively, were as
follows for the periods indicated:
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CONSERVATIVE INVESTORS FUND
Amount of Expense and Allocated Cost
Class A Shares Class B Shares Class C Shares
(For the Fiscal (For the Fiscal (For the Fiscal
Category Year ended Year ended Year ended
of Expense April 30, 1995) April 30, 1995) April 30, 1995)
Advertising/Marketing $ 48,495 $ 86,624 $ 31,142
Printing and Mailing $ 4,659 $ 9,386 $ 4,680
of Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders
Compensation to $ 4,912 $ 12,603 $ 4,306
Underwriters
Compensation to Dealers
Compensation to Sales $ 83,269 $453,909 $ 73,404
Personnel
Interest, Carrying and $ 0 $ 0 $ 0
Other Financing Charges
Other (includes personnel $ 60,952 $ 68,437 $ 33,353
costs of those home office
employees involved in the
distribution effort and
the travel-related expenses
incurred by the marketing
personnel conducting
seminars)
$202,287 $630,959 $146,885
======== ======== ========
54
<PAGE>
GROWTH INVESTORS FUND
Amount of Expense and Allocated Cost
Class A Shares Class B Shares Class C Shares
(For the Fiscal (For the Fiscal (For the Fiscal
Category Year ended Year ended Year ended
of Expense April 30, 1995) April 30, 1995) April 30, 1995)
Advertising/Marketing $ 57,874 $ 102,377 $19,893
Printing and Mailing $ 6,564 $ 10,755 $ 4,612
of Prospectuses and
Semi-Annual and Annual
Reports to Other than
Current Shareholders
Compensation to $ 7,063 $ 22,176 $ 3,529
Underwriters
Compensation to Dealers
Compensation to Sales $ 91,892 $ 787,483 $52,170
Personnel
Interest, Carrying and $ 0 $ 0 $ 0
Other Financing Charges
Other (includes personnel $ 79,141 $ 78,534 $18,467
costs of those home office
employees involved in the
distribution effort and
the travel-related expenses
incurred by the marketing
personnel conducting
seminars)
$242,534 $1,001,325 $98,671
======== ========== =======
Custodial Arrangements
State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA, 02110 ("State Street Bank") is the Trust's
custodian.
55
<PAGE>
Transfer Agency Arrangements
Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of the Funds, plus reimbursement for out-of-
pocket expenses.
PURCHASE OF SHARES
The following information supplements that set forth in
the Prospectus under the heading "Purchase and Sale of Shares --
How To Buy Shares."
General
Shares of the Funds 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 Funds 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 Funds offer an automatic investment program and a
403(b)(7) retirement plan which permit investments of $25 or
more. The subscriber may use the Subscription Application found
in the Prospectus for his or her initial investment. Sales
personnel of selected dealers and agents distributing the Funds'
shares may receive differing compensation for selling Class A,
Class B or Class C shares.
Investors may purchase shares of the Funds 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 Funds may refuse any
order for the purchase of shares. The Funds reserve the right to
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<PAGE>
suspend the sale of their shares to the public in response to
conditions in the securities markets or for other reasons.
The public offering price of shares of the Funds 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
amount of the purchase, as shown in the table in the Prospectus.
On each Fund business day on which a purchase or redemption order
is received by a 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 Trust's Agreement and Declaration of Trust and By-Laws
as of the next close of regular trading on the New York Stock
Exchange (the "Exchange") (currently 4:00 p.m. New York time) by
dividing the value of the total assets attributable to a class,
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 a 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 Funds will accept unconditional orders for their
shares to be executed at the public offering price equal to their
net asset value next determined (plus applicable Class A sales
charges). Orders received by the Principal Underwriter prior to
the close of regular trading on the Exchange on each day the
Exchange is open for trading are priced at the net asset value
computed as of the close of regular trading on the Exchange on
that day (plus applicable Class A sales charges). In the case of
orders for purchase of shares placed through selected dealers or
agents, the applicable public offering price will be the net
asset value as so determined, but only if the selected dealer or
agent receives the order prior to the close of regular trading on
the Exchange and transmits it to the Principal Underwriter prior
to its close of business that same day (normally 5:00 p.m. New
57
<PAGE>
York time). The selected dealer or agent is responsible for
transmitting such orders by 5:00 p.m. If the selected dealer or
agent fails to do so, the investor's right to that day's closing
price must be settled between the investor and the selected
dealer or agent. If the selected dealer or agent receives the
order after the close of regular trading on the Exchange, the
price will be based on the net asset value determined as of the
close of regular trading on the Exchange on the next day it is
open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "Literature" telephone number
shown on the cover of this Statement of Additional Information.
Payment for shares purchased by telephone can be made only by
Electronic Funds Transfer from a bank account maintained by the
shareholder at a bank that is a member of the National Automated
Clearing House Association ("NACHA"). If a shareholder's
telephone purchase request is received before 3:00 p.m. New York
time on a Fund business day, the order to purchase shares is
automatically placed the following Fund business day, and the
applicable public offering price will be the public offering
price determined as of the close of business on such following
business day. Full and fractional shares are credited to a
subscriber's account in the amount of his or her subscription.
As a convenience to the subscriber, and to avoid unnecessary
expense to the Fund, 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, an affiliate of the
Principal Underwriter, in connection with the sale of shares of
the Funds. Such additional amounts may be utilized, in whole or
in part, 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, 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
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<PAGE>
seminars, meals, sporting events or theater performances, or
payment incurred in connection with travel, lodging and
entertainment 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.
Alternative Purchase Arrangements
Each 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 a 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 the Rule 12b-1 Plan pursuant to
which its distribution services fee is paid and other matters for
which separate class voting is appropriate under applicable law,
and (iv) only the Class B shares are subject to a conversion
feature. Each class has different exchange privileges and
certain different shareholder service options available.
The alternative purchase arrangements permit an investor
to choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
investment in a 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.
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<PAGE>
Class C shares will normally not be suitable for the investor who
qualifies to purchase Class A shares at net asset value. For
this reason, the Principal Underwriter will reject any order for
more than $5,000,000 for Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, 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 example, based on current fees and
expenses, an investor subject to the 4.25% initial sales charge
would have to hold his or her investment approximately seven
years for the Class C distribution services fee to exceed the
initial sales charge plus the accumulated distribution services
fee of Class A shares. In this example, an investor intending to
maintain his or her investment for a longer period might consider
purchasing Class A shares. This example does not take into
account the time value of money, which further reduces the impact
of the Class C distribution services fees on the investment,
fluctuations in net asset value or the effect of different
performance assumptions.
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
period during which Class B shares are subject to a contingent
deferred sales charge may find it more advantageous to purchase
Class C shares.
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<PAGE>
On an ongoing basis, the Trustees of the Trust, pursuant
to their fiduciary duties under the 1940 Act and state laws will
seek to ensure that no such conflict arises.
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 in the
Prospectus.
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 Funds in connection with
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 $5,000,000 or more made through selected
dealers or agents, the Adviser may, pursuant to the Rule 12b-1
Plans 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.
Shares issued pursuant to the automatic reinvestment of
income dividends or capital gains distributions are not subject
to any sales charges. The Funds receive the entire net asset
value of their Class A shares sold to investors. The Principal
Underwriter's commission is the sales charge shown in the
Prospectus 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
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<PAGE>
indicated in the table in the Prospectus. The Principal
Underwriter may, however, 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 a reallowance in excess of 90% of
such a sales charge may be deemed to be an "underwriter" under
the Securities Act of 1933, as amended.
Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Conservative Investors Fund and
of the Growth Investors Fund aggregating less than $100,000
subject to the schedule of sales charges set forth in the
Prospectus at a price based upon the net asset value of Class A
shares of the Fund on April 30, 1995.
Conservative Investors Fund
Net Asset Value per Class A Share
at April 30, 1995 $ 10.38
Per Share Sales Charge - 4.25%
of offering price (4.44% of net
asset value per share) $ 0.46
Class A Per Share Offering
Price to the Public $ 10.84
= =====
Growth Investors Fund
Net Asset Value per Class A Share
at April 30, 1995 $ 12.08
Per Share Sales Charge - 4.25%
of offering price (4.44% of net
asset value per share) $ 0.54
Class A Per Share Offering
Price to the Public $ 12.62
= =====
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<PAGE>
Any 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 may
nevertheless be subject in most cases to a contingent deferred
sales charge). The circumstances under which such an investor
may pay a reduced initial 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 shown in the Prospectus by combining purchases of
shares of a Fund into a single "purchase," if the resulting
"purchase" totals at least $100,000. The term "purchase" refers
to: (i) a single purchase by an individual, or to concurrent
purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their
children under the age of 21 years purchasing shares of a 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 that 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 a
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:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves, Inc.
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
- Corporate Bond Portfolio
- U.S. Government Portfolio
Alliance Capital Reserves
- Alliance Capital Reserves Portfolio
- Alliance Money Reserves
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
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<PAGE>
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Government Reserves
- Alliance Government Reserves Portfolio
- Alliance Treasury Reserves Portfolio
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.
- California Portfolio
- Insured California Portfolio
- Insured National Portfolio
- National Portfolio
- New York Portfolio
Alliance Municipal Income Fund II
- Arizona Portfolio
- Florida Portfolio
- Massachusetts Portfolio
- Michigan Portfolio
- Minnesota Portfolio
- New Jersey Portfolio
- Ohio Portfolio
- Pennsylvania Portfolio
- Virginia Portfolio
Alliance Municipal Trust
- Connecticut
- California
- General
- New Jersey
- New York
- Virginia
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.
- Global Bond Portfolio
- Premier Growth Portfolio
- Growth Portfolio
- Growth & Income Portfolio
- International Portfolio
- Money Market Portfolio
- Short-Term Multi-Market
- Total Return Portfolio
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<PAGE>
- U.S. Government/High Grade Securities Portfolio
- North American Government Income Portfolio
- Global Dollar Government Portfolio
- Utility Income Portfolio
- Conservative Investors Portfolio
- Growth Investors Portfolio
- Worldwide Privatization Portfolio
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
- Growth Portfolio
The Hudson River Trust
- Aggressive Stock Portfolio
- Balanced Portfolio
- Common Stock Portfolio
- Conservative Investors Portfolio
- Global Portfolio
- Growth & Income Portfolio
- Growth Investors Portfolio
- High Yield Portfolio
- Intermediate Government Securities
- Money Market Portfolio
- Quality Bond Portfolio
- Equity Index Portfolio
The Alliance Fund, Inc.
The Alliance Portfolios
- The Alliance Growth Fund
- The Alliance Conservative Investors Fund
- The Alliance Growth Investors Fund
- The Alliance Strategic Balanced Fund
- The Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "Literature" telephone number shown on
the front cover of this Statement of Additional Information.
Cumulative Quantity Discount (Right of Accumulation).
An investor's purchase of additional Class A shares of a 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
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<PAGE>
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with that
of the investor into a single "purchase" (see
above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the sales charge for the $100,000 purchase
would be at the rate applicable to a single $300,000 purchase of
shares of the Fund.
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 Prospectus
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 a 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 a 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 a 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 initial
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<PAGE>
sales charge on the total amount being invested, i.e., 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
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 a Fund subject to the rate of sales charge applicable
to the actual amount of the aggregate purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
a Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of a 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 a Fund will be that normally
applicable, under the schedule of the initial sales charges set
forth in the Prospectus, 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
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<PAGE>
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 a Fund to be redeemed
or repurchased may reinvest all or any portion of the redemption
or repurchase proceeds in Class A shares of the Fund at net asset
value without any sales charge, provided that such reinvestment
is made within 30 calendar days after the redemption or
repurchase date. Shares are sold to a reinvesting shareholder at
the net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund. The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in a 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 a Fund at
the address shown on the cover of this Statement of Additional
Information.
Sales at Net Asset Value. The Funds may sell their
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 Trustees of the Trust; present or former
directors and trustees of other investment companies managed by
the Adviser; present or retired full-time employees of the
Adviser; officers, directors and present or retired full-time
employees of ACMC, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; officers, directors and
present 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 relevant
Fund); (iii) certain employee benefit plans for employees of the
Adviser, the Principal Underwriter, Alliance Fund Services, Inc.
and their affiliates; and (iv) persons participating in a fee-
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<PAGE>
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 service in the nature of
investment advisory or administrative services.
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 Funds 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 Funds 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 Funds to sell 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 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
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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).
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
________________________________________________________
Shares Purchased
On or After
Years since Shares Purchased August 2, 1993 Shares Purchased
Purchase Before but Before On or After
Subject to Change August 2, 1993 November 19, 1993 November 19, 1993
_________________ ________________ _________________ _________________
First 5.00% 3.00% 4.00%
Second 4.00% 2.00% 3.00%
Third 3.00% 1.00% 2.00%
Fourth 1.00% 1.00% 1.00%
Fifth None None None
Sixth None None None
In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed that the
redemption is first of any Class A shares in the shareholder's
Fund account that are not subject to a contingent deferred sales
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charge, second of Class B shares held for over four years and
third of Class A shares that are subject to a contingent deferred
sales charge held shortest during the one-year period during
which such shares are subject to the sales charge, as the case
may be. 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 shares
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
and (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.
Conversion Feature. Class B shares will automatically
convert to Class A shares on the tenth Fund business day in the
month following the month in which the eighth anniversary date of
the acceptance of the purchase order for the Class B shares
occurs and such shares will no longer be subject to a higher
distribution services fee. Such conversions 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. See "Shareholder Services -- Exchange Privilege."
For purposes of conversion to Class A shares, 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
shares, an equal pro-rata portion of the Class B shares in the
sub-account will also convert to Class A.
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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 a 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.
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 a 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 a Fund to sell Class C shares
without either an initial or contingent deferred sales charge.
Class C shares do not convert to any other class of shares 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 Funds' Prospectus under the heading "Purchase and Sale of
Share--How to Sell Shares."
Redemption
Subject only to the limitations described below, the
Funds will redeem the shares tendered to them, as described
below, at a redemption price equal to their net asset value as
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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 a 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 SEC determines that
trading thereon is restricted, or for any period during which an
emergency (as determined by the SEC) exists as a result of which
disposal by a Fund of securities owned by it is not reasonably
practicable or as a result of which it is not reasonably
practicable for a Fund fairly to determine the value of its net
assets, or for such other periods as the Securities and Exchange
Commission may by order permit for the protection of security
holders of a Fund.
Payment of the redemption price may be made either in
cash or in portfolio securities (taken at their value used in
determining the redemption price), or partly in cash and partly
in portfolio securities. However, payments will be made wholly
in cash unless economic conditions exist which would make such a
practice detrimental to the best interests of the Funds. The
Trust has filed a formal election with the SEC pursuant to which
the Trust will only effect a redemption in portfolio securities
where the particular shareholder of record is redeeming more than
$250,000 or 1% of a Fund's total net assets, whichever is less,
during any 90-day period. In the opinion of the Trust's
management, however, the amount of a redemption request would
have to be significantly greater than $250,000 or 1% of total net
assets before a redemption wholly or partly in portfolio
securities would be made. If payment for shares redeemed is made
wholly or partly in portfolio securities, brokerage costs may be
incurred by the investor in converting the securities to cash.
The value of a shareholder's shares on redemption or
repurchase may be more or less than the cost of such shares to
the shareholder, depending upon the market value of a 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 (either in cash or in portfolio
securities) received by a shareholder upon redemption or
repurchase of his shares, assuming the shares constitute capital
assets in his hands, will result in long-term or short-term
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capital gains (or loss) depending upon the shareholder's holding
period and basis in respect of the shares redeemed.
To redeem shares of a 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.
Requests for redemption of shares for which no share certificates
have been issued can also be made by telephone at (800) 221-5672
by a shareholder who has completed the appropriate portion of the
Subscription Application or, in the case of an existing
shareholder, an "Autosell" application obtained from Alliance
Fund Services, Inc. A telephone redemption request must be for
at least $500 and may not exceed $100,000, and must be made
between 9:00 a.m. and 4:00 p.m. New York time on a Fund business
day as defined above. Proceeds of telephone redemptions will be
sent by Electronic Funds Transfer to a shareholder's designated
bank account at a bank selected by the shareholder that is a
member of the NACHA.
Telephone Redemption By Check. Except as noted below,
each Fund shareholder is eligible to request redemption, once in
any 30-day period, of Fund shares by telephone at (800) 221-5672
before 4:00 p.m. New York time on a Fund business day in an
amount not exceeding $25,000. Proceeds of such redemptions are
remitted by check to the shareholder's address of record.
Telephone redemption by check is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) purchased within 15
calendar days prior to the redemption request, (iv) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (v) held in any retirement plan
account. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application found in the
Prospectus.
General. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
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Alliance Fund Services, Inc. at the address shown on the cover of
this Statement of Additional Information. The Funds reserve the
right to suspend or terminate their telephone redemption service
at any time without notice. Neither the Funds nor the Adviser,
the Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
redemptions that a Fund reasonably believes to be genuine.
Alliance Fund Services, Inc. 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 Alliance Fund
Services, Inc. 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 Funds 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 relevant 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 relevant Fund.
The signature or signatures on the assignment form must be
guaranteed in the manner described above.
Repurchase
The Funds 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. New York time). The
selected dealer or agent is responsible for transmitting the
request to the Principal Underwriter by 5:00 p.m. If the
selected dealer or agent fails to do so, the shareholder's right
to receive that day's closing price must be settled between the
shareholder and the dealer or agent. A shareholder may offer
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shares of a Fund to the Principal Underwriter either directly or
through a selected dealer or agent. Neither the Funds nor the
Principal Underwriter charges a fee or commission in connection
with the repurchase of shares (except for the contingent deferred
sales charge, if any, with respect to Class A shares and Class B
shares). Normally, if shares of the Funds 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 Funds as described
above is a voluntary service of the Funds and the Funds may
suspend or terminate this practice at any time.
General
The Funds reserve the right to close out an account that
through redemption has remained below $200 for at least 60 days
after at least 30 days' written notice to the shareholder
subsequent to such period. No contingent deferred sales charge
will be deducted from the proceeds of this redemption. In the
case of a redemption or repurchase of shares of the Funds
recently purchased by check, redemption proceeds will not be made
available until the relevant 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 Funds' 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
Funds.
Automatic Investment Program
Investors may purchase shares of the Funds 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
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day thereafter. If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus. Current shareholders should contact Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.
Exchange Privilege
Class A shareholders can exchange their Class A shares
for Class A shares of any other Alliance Mutual Fund that offers
Class A shares without the payment of any sales or service
charges. Class A shareholders may also exchange their Class A
shares for shares of any of the ten Alliance Cash Management
Funds: Alliance Capital Reserves, Alliance Money Reserves,
Alliance Government Reserves, Alliance Treasury Reserves and the
General, California, Connecticut, New Jersey and New York
Portfolios of Alliance Municipal Trust, all of which are money
market funds, and Alliance World Income Trust, Inc., a short-term
global income fund. For purposes of applying any applicable
contingent deferred sales charge upon the newly acquired Class A
shares, the period of time that 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 and Alliance Cash Management Fund (each an
"Alliance Fund") may be obtained by contacting Alliance Fund
Services, Inc. at the address shown on the cover of this
Statement of Additional Information or by telephone at (800) 227-
4618 or, in Illinois, (800) 227-4170.
Class B shareholders of the Funds 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.
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Class C shareholders of the Funds 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 Fund whose shares are being acquired.
An exchange is effected through the redemption of the shares
tendered for exchange and the purchase of shares being acquired
at their respective net asset values as next determined following
receipt by the Alliance Fund whose shares are being exchanged of
(i) proper instructions and all necessary supporting documents as
described in such fund's prospectus, or (ii) a telephone request
for such exchange in accordance with the procedures set forth in
the following paragraph. Exchanges involving the redemption of
shares recently purchased by check will be permitted only after
the Alliance Fund whose shares have been tendered for exchange is
reasonably assured that the check has cleared, normally up to 15
calendar days following the purchase date. Exchanges of shares
of Alliance Funds will generally result in the realization of a
capital gain or loss for Federal income tax purposes.
Each Fund shareholder, and the shareholder's selected
dealer or agent, are authorized to make telephone requests for
exchanges unless Alliance Fund Services, Inc. receives written
instruction to the contrary from the shareholder, or the
shareholder declines the privilege by checking the appropriate
box on the Subscription Application found in the Prospectus.
Such telephone requests cannot be accepted with respect to shares
then represented by 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 Alliance Fund Services, Inc. with their account
number and other details of the exchange at (800) 221-5672
between 9:00 a.m. and 4:00 p.m., New York time, on a Fund
business day as defined above. Telephone requests for exchange
received before 4:00 p.m. New York time on a Fund business day
will be processed as of the close of business on that day.
During periods of drastic economic or market developments, such
as the market break of October 1987, it is possible that
shareholders would have difficulty in reaching Alliance Fund
Services, Inc. by telephone (although no such difficulty was
apparent at any time in connection with the 1987 market break).
If a shareholder were to experience such difficulty, the
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shareholder should issue written instructions to Alliance Fund
Services, Inc. at the address shown on the cover of this
Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
Fund shares (minimum $25) is automatically exchanged for shares
of another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto.
Neither the Alliance Funds nor the Adviser, the
Principal Underwriter or Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that a Fund reasonably believes to be genuine.
Alliance Fund Services, Inc. will employ reasonable procedures in
order to verify that telephone requests for exchanges are
genuine, including, among others, recording such telephone
instructions and causing written confirmations of the resulting
transactions to be sent to shareholders. If Alliance Fund
Services, Inc. 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 modify, restrict or
terminate the exchange privilege.
Retirement Plans
The Funds 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 Funds have available forms of
such plans pursuant to which investments can be made in a Fund
and other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "Literature" telephone number on the cover of this
Statement of Additional Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
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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 a Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals.
If the aggregate net asset value of shares of the
Alliance Mutual Funds held by 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 or Class 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 The Equitable Life Assurance Society of the United
States, which serves as custodian or trustee under the retirement
plan prototype forms available from the Funds, charges certain
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nominal fees for establishing an account and for annual
maintenance. A portion of these fees is remitted to Alliance
Fund Services, Inc. as compensation for its services to the
retirement plan accounts maintained with a Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact Alliance
Fund Services, Inc.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B or Class C Fund account, a Class A, Class
B or Class C account with one or more other Alliance Mutual Funds
may direct that income dividends and/or capital gains paid on his
or her Class A, Class B or Class C Fund shares be automatically
reinvested, in any amount, without the payment of any sales or
service charges, in shares of the same class of such other
Alliance Mutual Fund(s). Further information can be obtained by
contacting Alliance Fund Services, Inc. at the address or the
"Literature" telephone number shown on the cover of this
Statement of Additional Information. Investors wishing to
establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.
Systematic Withdrawal Plan
Any shareholder who owns or purchases shares of a 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 a Fund automatically reinvested in additional shares of that
Fund.
Shares of a Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions. Shares acquired with
reinvested dividends and distributions will be liquidated first
to provide such withdrawal payments and thereafter other shares
will be liquidated to the extent necessary, and depending upon
the amount withdrawn, the investor's principal may be depleted.
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A systematic withdrawal plan may be terminated at any time by the
shareholder or the relevant 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 a Fund's involuntary redemption provisions. See
"How to Sell Shares -- General." Purchases of additional shares
concurrently with withdrawals are undesirable because of sales
charges when purchases are made. While an occasional lump-sum
investment may be made by a shareholder of Class A shares who is
maintaining a systematic withdrawal plan, such investment should
normally be an amount equivalent to three times the annual
withdrawal or $5,000, whichever is less.
For Class A shareholders, Class B shareholders that
purchased their Class B shares under a retirement plan and Class
C shareholders, payments under a systematic withdrawal plan may
be made by check or electronically via the Automated Clearing
House ("ACH") network. Investors wishing to establish a
systematic withdrawal plan in conjunction with their initial
investment in shares of a Fund should complete the appropriate
portion of the Subscription Application found in the Prospectus,
while current Fund shareholders desiring to do so can obtain an
application form by contacting Alliance Fund Services, Inc. at
the address or the "Literature" telephone number shown on the
cover of this Statement of Additional Information.
Statements and Reports
Each shareholder 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 Trust's
independent auditors, Price Waterhouse LLP, as well as a
confirmation of each purchase and redemption. By contacting his
or her broker or Alliance Fund Services, Inc., a shareholder can
arrange for copies of his or her account statements to be sent to
another person.
NET ASSET VALUE
The net asset value of a share of each class is the
quotient obtained by dividing the value, as of such closing, of
the net assets of the Fund allocable to that class (i.e., the
value of the assets of the Fund allocated to that class less the
liabilities of the Fund allocated to that class, including
expenses payable or accrued) by the total number of shares of
such class then outstanding at such closing.
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For purposes of this computation, readily marketable
portfolio securities, including open short positions, listed on
the Exchange are valued 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, then the security is valued at the mean
of the closing bid and asked prices on such day. If no bid and
asked prices are quoted on such day, then the security is valued
by such method as the Board of Trustees of the Trust shall
determine in good faith to reflect its fair market value.
Securities 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. Securities traded only
in the over-the-counter market, excluding those admitted to
trading on the List, are valued at the mean of the current bid
and asked prices therefor 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 Board of Trustees of the
Trust deems appropriate to reflect the fair market value thereof.
Call options written or purchased by a Fund are valued at the
last sale price and put options purchased by a Fund are valued at
the last sale price. Readily marketable fixed-income securities
may be valued on the basis of prices provided by a pricing
service when such prices are believed by the Adviser to reflect
the fair market value of such securities. The prices provided by
a pricing service take into account institutional size trading in
similar groups of securities and any developments related to
specific securities. U.S. Government Securities and other debt
instruments having 60 days or less remaining until maturity are
stated at amortized cost if their original maturity was 60 days
or less, or by amortizing their fair value as of the 61st day
prior to maturity if their original term to maturity exceeded 60
days (unless in either case the Board of Trustees of the Trust
determines that this method does not represent fair value). All
other assets, including restricted securities of a Fund, are
valued in such manner as the Board of Trustees of the Trust in
good faith deems appropriate to reflect their fair market value.
The Trustees may suspend the determination of a Fund's
net asset value (and the offering and sales of shares), subject
to the rules of the SEC and other governmental rules and
regulations, at a time when: (1) the Exchange is closed, other
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<PAGE>
than customary weekend and holiday closings, (2) an emergency
exists as a result of which it is not reasonably practicable for
a Fund to dispose of securities owned by it or to determine
fairly the value of its net assets, or (3) for the protection of
shareholders, the SEC by order permits a suspension of the right
of redemption or a postponement of the date of payment on
redemption.
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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to qualify for tax treatment as a
"regulated investment company" under the Internal Revenue Code
for each taxable year. In order to qualify as a regulated
investment company, each Fund must, among other things, (1)
derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, and gains from the
sale or other disposition of stock or securities, foreign
currencies or other income (including gains from options, futures
or forward contracts) derived with respect to its business of
investing in stock, securities or currencies, (2) derive less
than 30% of its gross income from the sale or other disposition
of stock, securities, options, futures, forward contracts, and
certain foreign currencies (or options, futures, or forward
contracts on foreign currencies held for less than three months),
and (3) diversify its holdings so that at the end of each quarter
of its taxable year (i) at least 50% of the market value of the
Fund's assets is represented by cash or cash items, U.S.
Government Securities, securities of other regulated investment
companies, and other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the value of the
Fund's assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other
than U.S. Government Securities or the securities of other
regulated investment companies) or of two or more issuers that
the Fund controls and that are engaged in the same, similar, or
related trades or businesses. These requirements may restrict
the degree to which the Fund may engage in short-term trading and
limit the range of the Fund's investments. If a Fund qualifies
as a regulated investment company, it will not be subject to
federal income tax on the part of its income distributed to
shareholders, provided the Fund distributes during its taxable
year at least (a) 90% of its taxable net investment income
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(generally, dividends, interest, certain other income, and the
excess, if any, of net short- term capital gain over net long-
term loss), and (b) 90% of the excess of (i) its tax-exempt
interest income less (ii) certain deductions attributable to that
income. Each Fund intends to make sufficient distributions to
shareholders to meet this requirement. Investors should consult
their own counsel for a complete understanding of the
requirements the Funds must meet to qualify for such treatment.
The information set forth in the Prospectus and the following
discussion relates solely to Federal income taxes on dividends
and distributions by a Fund and assumes that each 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.
Dividends out 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 a Fund's dividends of
net investment income. 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 a Fund during the fiscal year. Furthermore,
provisions of the tax law disallow the dividends-received
deduction 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 a 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. Capital gains
distributions are not eligible for the dividends-received
deduction referred to above. Any dividend or distribution
received by a shareholder on shares of the Fund shortly after the
purchase of such shares by him or her will have the effect of
reducing the net asset value of such shares by the amount of such
dividend or distribution. A loss on the sale of shares held for
less than six months will be treated as a long-term capital loss
for Federal income tax purposes to the extent of any capital gain
distribution made with respect to such shares.
Dividends and distributions are taxable in the manner
described above regardless of whether they are paid to the
shareholder in cash or are reinvested in additional shares of a
Fund.
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<PAGE>
For Federal income tax purposes, when equity call
options which a Fund has written expire unexercised, the premiums
received by the Fund give rise to short-term capital gains at the
time of expiration. When a call written by a Fund is exercised,
the selling price or purchase price of stock is increased by the
amount of the premium, and the gain or loss on the sale of stock
becomes long-term or short-term depending on the holding period
of the stock. There may be short-term gains or losses associated
with closing purchase transactions.
Each Fund is required to withhold and remit to the U.S.
Treasury 31% of all dividend income paid to any shareholder
account for which an incorrect or no taxpayer identification
number has been provided or where the Fund is notified that the
shareholder has under-reported income in the past (or the
shareholder fails to certify that he or she is not subject to
such withholding). In addition, the Fund will be required to
withhold and remit to the U.S. Treasury 31% of the amount of the
proceeds of any redemption of shares of a shareholder account for
which an incorrect or no taxpayer identification number has been
provided.
The foregoing discussion relates only to U.S. Federal
income tax law as it affects U.S. shareholders. The effects of
Federal income tax law on non-U.S. shareholders may be
substantially different. Foreign investors should consult their
counsel for further information as to the U.S. tax consequences
of receipt of income from a Fund.
GENERAL INFORMATION
Description of the Trust
The Trust is organized as a Massachusetts business trust
under the laws of The Commonwealth of Massachusetts by an
Agreement and Declaration of Trust ("Declaration of Trust") dated
March 26, 1987, a copy of which is on file with the Secretary of
State of The Commonwealth of Massachusetts. The Trust is a
"series" company as described in Rule 18f-2 under the 1940 Act,
having five separate portfolios, each of which is represented by
a separate series of shares. In addition to the Funds, the other
portfolios of the Trust are the Alliance Short- Term U.S.
Government Fund, the Alliance Growth Fund and the Alliance
Strategic Balanced Fund.
The Declaration of Trust permits the Trustees to issue
an unlimited number of full and fractional shares of each series
and of each class of shares thereof. The shares of each Fund and
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<PAGE>
each class thereof do not have any preemptive rights. Upon
termination of any Fund or any class thereof, whether pursuant to
liquidation of the Trust or otherwise, shareholders of that Fund
or that class are entitled to share pro rata in the net assets of
that Fund or that class then available for distribution to such
shareholders.
The assets received by the Trust for the issue or sale
of the Class A, Class B and Class C shares of each Fund and all
income, earnings, profits, losses and proceeds therefrom, subject
only to the rights of creditors, are allocated to, and constitute
the underlying assets of, the appropriate class of that Fund.
The underlying assets of each Fund and each class of shares
thereof are segregated and are charged with the expenses with
respect to that Fund and that class and with a share of the
general expenses of the Trust. While the expenses of the Trust
are allocated to the separate books of account of each Fund and
each class of shares thereof, certain expenses may be legally
chargeable against the assets of all Funds or a particular class
of shares thereof.
The Declaration of Trust provides for the perpetual
existence of the Trust. The Trust or any Fund, however, may be
terminated at any time by vote of at least a majority of the
outstanding shares of each Fund affected. The Declaration of
Trust further provides that the Trustees may also terminate the
Trust upon written notice to the shareholders.
Capitalization
Except as noted below under "Shareholder and Trustee
Liability," all shares of the Funds when duly issued will be
fully paid and non-assessable.
Set forth below is certain information as to all persons
who owned of record or beneficially 5% or more of any class of
the Funds' outstanding shares at August 15, 1995
87
<PAGE>
Names and Addresses % of Class
___________________ __________
Conservative Investors Fund - Class A
Alliance Plan Div/FTC
C/F Jack S. Hoffman IRA
Rollover Account.......................... 6%
224 Windsor Drive
Mineral Wells, WV 26250-9623
Growth Investors Fund - Class A
Trust for Profit Sharing Plan
for Employees of ACM L.P. ................ 8%
1345 Avenue of the Americas
New York, NY 10105-0302
Voting Rights
As summarized in the Prospectus, shareholders are
entitled to one vote for each full share held (with fractional
votes for fractional shares held) and will vote (to the extent
provided herein) in the election of Trustees and the termination
of the Trust or a Fund and on other matters submitted to the vote
of shareholders.
The By-Laws of the Trust provide that the shareholders
of any particular series or class shall not be entitled to vote
on any matters as to which such series or class is not affected.
Except with respect to matters as to which the Trustees have
determined that only the interests of one or more particular
series or classes are affected or as required by law, all of the
shares of each series or class shall, on matters as to which such
series or class is entitled to vote, vote with other series or
classes so entitled as a single class. Notwithstanding the
foregoing, with respect to matters which would otherwise be voted
on by two or more series or classes as a single class, the
Trustees may, in their sole discretion, submit such matters to
the shareholders of any or all such series or classes,
separately. Rule 18f-2 under the 1940 Act provides in effect
that a series shall be deemed to be affected by a matter unless
it is clear that the interests of each series in the matter are
substantially identical or that the matter does not affect any
interest of such series. Although not governed by Rule 18f-2,
shares of each class of a Fund will vote separately with respect
88
<PAGE>
to matters pertaining to the respective Distribution Plans
applicable to each class.
The terms "shareholder approval" and "majority of the
outstanding voting securities" as used in the Prospectus and this
Statement of Additional Information mean the lesser of (i) 67% or
more of the shares of the applicable Fund or applicable class
thereof represented at a meeting at which more than 50% of the
outstanding shares of such Fund or such class are represented or
(ii) more than 50% of the outstanding shares of such Fund or such
class.
There will normally be no meetings of shareholders for
the purpose of electing Trustees except that in accordance with
the 1940 Act (i) the Trust will hold a shareholders' meeting for
the election of Trustees at such time as less than a majority of
the Trustees holding office have been elected by shareholders,
and (ii) if, as a result of a vacancy on the Board of Trustees,
less than two-thirds of the Trustees holding office have been
elected by the shareholders, that vacancy may only be filled by a
vote of the shareholders. The Funds' shares have non-cumulative
voting rights, which means that the holders of more than 50% of
the shares voting for the election of Trustees can elect 100% of
the Trustees if they choose to do so, and in such event the
holders of the remaining less than 50% of the shares voting for
such election of Trustees will not be able to elect any person or
persons to the Board of Trustees. A special meeting of
shareholders for any purpose may be called by 10% of the Trust's
outstanding shareholders.
Except as set forth above, the Trustees shall continue
to hold office and may appoint successor Trustees.
No amendment may be made to the Declaration of Trust
without the affirmative vote of a majority of the outstanding
shares of the Trust except (i) to change the Trust's name, (ii)
to establish, change or eliminate the par value of shares or
(iii) to supply any omission, cure any ambiguity or cure, correct
or supplement any defective or inconsistent provision contained
in the Declaration of Trust.
Shareholder and Trustee Liability
Under Massachusetts law shareholders could, under
certain circumstances, be held personally liable for the
obligations of the Trust. However, the Declaration of Trust
disclaims shareholder liability for acts or obligations of the
Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or
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<PAGE>
executed by the Trust or the Trustees. The Declaration of Trust
provides for indemnification out of a Fund's property for all
loss and expense of any shareholder of that Fund held liable on
account of being or having been a shareholder. Thus, the risk of
a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund of which
he was a shareholder would be unable to meet its obligations.
The Declaration of Trust further provides that the
Trustees will not be liable for errors of judgment or mistakes of
fact or law. However, nothing in the Declaration of Trust
protects a Trustee against any liability to which the Trustee
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The By-Laws of the Trust
provide for indemnification by the Trust of the Trustees and the
officers of the Trust but no such person may be indemnified
against any liability to the Trust or the Trust's shareholders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
Counsel
Legal matters in connection with the issuance of the
shares of the Funds offered hereby are passed upon by Ropes &
Gray, One International Place, Boston, Massachusetts 02110.
Independent Accountants
The financial statements of the Conservative Investors
Fund and Growth Investors Fund for the fiscal year ended April
30, 1995, which are included in this Statement of Additional
Information, have been audited by Price Waterhouse LLP, 1177
Avenue of the Americas, New York, New York 10036, the Trust's
independent auditors for such period, as stated in their report
appearing herein, and have been so included in reliance upon such
report given upon the authority of that firm as experts in
accounting and auditing.
Total Return Quotations
From time to time, a Fund may advertise its "total
return." Total return is computed separately for Class A,
Class B and Class C shares. Such advertisements disclose a
Fund's average annual compounded total return for recent one-,
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<PAGE>
five-and ten-year periods (or the life of a Fund or class, if
shorter). Total return for each such period is computed by
finding, through the use of a formula prescribed by the SEC, the
average annual compounded rate of return over such 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 a Fund are assumed to have been
reinvested when received and the maximum sales charge applicable
to purchases of Fund shares is assumed to have been paid. A Fund
will include performance data for each of the Class A, Class B
and Class C shares in any advertisement or information including
performance data of the Fund.
The average annual compounded total return for Class A
shares of the Conservative Investors and Growth Investors Funds
was 4.65% and 5.57%, respectively, for the one-year period ended
April 30, 1995. The average annual compounded total return for
Class A shares of the Conservative Investors and Growth Investors
Funds was 5.66% and 8.68%, respectively, for the period May 4,
1992 (commencement of distribution of Class A shares) through
April 30, 1995. The average annual compounded total return for
Class B shares of the Conservative Investors and Growth Investors
Funds was 3.91% and 4.83%, respectively, for the one year period
ended April 30, 1995. The average annual compounded total return
for Class B shares of the Conservative Investors and Growth
Investors Funds was 4.90% and 7.88%, respectively, for the period
May 4, 1992 (commencement of distribution of Class B shares)
through April 30, 1995. The average annual compounded total
return for Class C shares of the Conservative Investors and
Growth Investors Funds was 4.01% and 4.91% respectively, for the
one-year period ended April 30, 1995. The average annual
compounded total return for Class C shares of the Conservative
Investors and Growth Investors Funds was 0.52% and 2.62%,
respectively, for the period August 2, 1992 (commencement of
distribution of Class C shares) through April 30, 1995.
A Fund's total return is not fixed and will fluctuate in
response to prevailing market conditions or as a function of the
type and quality of the securities in the Fund's portfolio and
the Fund's expenses. Total return information is useful in
reviewing the Fund's performance but such information may not
provide a basis for comparison with bank deposits or other
investments which pay a fixed return for a stated period of time.
An investor's principal invested in the Fund is not fixed and
will fluctuate in response to prevailing market conditions.
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<PAGE>
Advertisements quoting performance rankings of a Fund as
measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc., and advertisements presenting the historical
performance of such Fund, may also from time to time be sent to
investors or placed in newspapers and magazines such as The
New York Times, The Wall Street Journal, Barrons, Investor's
Daily, Money Magazine, Changing Times, Business Week and Forbes
or other media on behalf of such Fund.
Additional Information
This Statement of Additional Information does not
contain all the information set forth in the Registration
Statement filed by the Trust with the SEC under the Securities
Act of 1933. Copies of the Registration Statement may be obtained
at a reasonable charge from the SEC or may be examined, without
charge, at the offices of the SEC in Washington, D.C.
92
00250184.AA3
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
Description of the bond ratings of Moody's Investors
Service, Inc. are as follows:
Aaa-- Bonds which are rated Aaa are judged to be of the
best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin,
and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa-- Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they
comprise what are generally known as high grade bonds. They are
rated lower than the best bond because margins of protection may
not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
greater than the Aaa securities.
A-- Bonds which are rated A possess many favorable
investment attributes and are to be considered as upper-medium-
grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the
future.
Baa-- Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor
poorly secured. Interest payments and principal security appear
adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
Ba-- Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments
may be very moderate and thereby not well safeguarded during both
good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
1
<PAGE>
B-- Bonds which are rated B generally lack
characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms
of the contract over any long period of time may be small.
Caa-- Bonds which are rated Caa are of poor standing.
Such issues may be in default of there may be present elements of
danger with respect to principal or interest.
Ca-- Bonds which are rated Ca represent obligations
which are speculative to a high degree. Such issues are often in
default or have other marked shortcomings.
C-- Bonds which are rated C are the lowest class of
bonds and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies modifiers to each rating classification from Aa
through B to indicate relative ranking within its rating
categories. The modifier "1" indicates that a security ranks in
the higher end of its rating category; the modifier "2" indicates
a mid-range ranking; and the modifier "3" indicates that the
issue ranks in the lower end of its rating category.
Descriptions of the bond ratings of Standard & Poor's
Corporation are as follows:
AAA-- Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal
is extremely strong.
AA-- Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the higher rated
issues only in small degree.
A-- Debt rated A has a strong capacity to pay interest
and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB-- Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher rated
categories.
BB, B, CCC, CC, or C -- Debt rated BB, B, CCC, CC or C
is regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay
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<PAGE>
principal in accordance with the terms of the obligation. While
such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse debt conditions.
C1-- The rating C1 is reserved for income bonds on
which no interest is being paid.
D-- Debt rated D is in default and payment of interest
and/or repayment of principal is in arrears.
The ratings from AAA to CC may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within the
major rating categories.
3
00250184.AA3
<PAGE>
PORTFOLIO OF INVESTMENTS
APRIL 30, 1995 ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-60.9%
UNITED STATES INVESTMENTS-54.0%
CONSUMER NONCYCLICALS-19.1%
BEVERAGES-0.8%
Coca-Cola Co. 10,000 $581,250
BROADCASTING-2.0%
Capital Cities ABC, Inc. 11,000 929,500
Central European Media Enterprises Ltd. 1,400 17,150
Comcast Corp., Cl. A 30,000 470,625
1,417,275
COMPUTERS-0.5%
COMPAQ Computer Corp. 8,000 304,000
DRUGS-3.3%
Merck & Co., Inc. 25,000 1,071,875
Pfizer, Inc. 14,000 1,212,750
2,284,625
ENTERTAINMENT & LEISURE-0.6%
Walt Disney Co. 8,000 443,000
FOOD-1.8%
IBP, Inc. 28,000 1,036,000
Kellogg Co. 3,000 190,500
1,226,500
HOSPITAL SUPPLIES & SERVICES-4.0%
Columbia HCA Healthcare Corp. 6,000 252,000
Medtronic, Inc. 19,000 1,413,125
U.S. Healthcare, Inc. 6,700 178,387
United Healthcare Corp. 26,300 953,375
2,796,887
SOAPS & TOILETRIES-2.4%
Gillette Co. 20,000 1,640,000
TOBACCO-3.7%
Philip Morris Cos., Inc. 30,000 $2,032,500
UST, Inc. 20,000 562,500
2,595,000
13,288,537
TECHNOLOGY-10.5%
COMPUTERS-0.5%
cisco Systems, Inc.* 8,000 318,500
ELECTRONICS-4.8%
Applied Materials, Inc.* 10,000 617,500
Linear Technology Corp. 10,000 593,750
Molex, Inc. 17,000 646,000
Motorola, Inc. 20,000 1,137,500
Silicon Graphics, Inc.* 10,000 375,000
3,369,750
OFFICE EQUIPMENT-0.9%
Oracle Systems Corp. 20,000 608,750
SEMI-CONDUCTORS & RELATED-0.4%
Intel Corp. 3,000 307,313
TELECOMMUNICATIONS-3.9%
ADC Telecommunications, Inc. 20,000 660,000
Air-Touch Communications, Inc.* 20,000 537,500
Andrew Corp.* 15,000 744,375
AT&T Corp. 10,000 507,500
MCI Communications Corp. 12,000 260,250
2,709,625
7,313,938
CREDIT SENSITIVE-5.9%
BANKS-3.4%
Bank of New York Co., Inc. 40,000 1,315,000
Citicorp 14,000 649,250
First Bank System, Inc. 11,000 445,500
2,409,750
FINANCIAL SERVICES-0.1%
Dean Witter, Discover & Co. 1,800 76,275
9
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
INSURANCE-2.4%
AFLAC, Inc. 20,000 $825,000
American International Group, Inc. 3,000 320,250
General Reinsurance Corp. 4,000 509,500
1,654,750
4,140,775
CONSUMER CYCLICALS-5.3%
AUTO RELATED-0.5%
Cooper Tire & Rubber 15,000 367,500
AUTO & TRUCKS-0.5%
AutoZone, Inc.* 15,000 346,875
BUSINESS SERVICES-0.4%
Browning Ferris Industries, Inc. 8,000 264,000
HOTELS & RESTAURANTS-0.2%
Wendy's International, Inc. 10,000 170,000
MISCELLANEOUS-0.7%
Hasbro, Inc. 15,000 476,250
RESTAURANTS & LODGING-1.6%
Marriot International Inc. 14,000 504,000
McDonald's Corp. 17,000 595,000
1,099,000
RETAIL - GENERAL-1.4%
May Department Stores Co. 12,000 435,000
Office Depot, Inc.* 24,000 546,000
981,000
3,704,625
CAPITAL GOODS-3.9%
ELECTRICAL EQUIPMENT-2.4%
General Electric Co. 30,000 1,680,000
INDUSTRIAL MACHINERY-0.6%
Tyco International, Ltd. 8,000 $420,000
MACHINERY-0.9%
Deere & Co. 8,000 656,000
2,756,000
BASIC MATERIALS-3.8%
CHEMICALS-2.0%
Hercules, Inc. 15,000 748,125
Morton International, Inc. 20,000 620,000
1,368,125
MINING & METALS-1.3%
Aluminum Co. of America 20,000 897,500
PAPER-0.5%
International Paper Co. 5,000 385,000
2,650,625
ENERGY-2.4%
OIL - DOMESTIC-1.1%
Phillips Petroleum Co. 22,000 770,000
XCL, Ltd.* 5,000 2,500
772,500
PIPELINES-1.3%
Enron Corp. 26,000 884,000
1,656,500
GENERAL BUSINESS-1.2%
BUSINESS SERVICES-1.2%
Manpower Inc. 10,000 333,750
Paychex, Inc. 11,000 524,563
858,313
BUSINESS SERVICES-1.1%
PROFESSIONAL SERVICES-1.1%
Reynolds & Reynolds Co., Cl. A 30,000 795,000
10
ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
DIVERSIFIED-0.5%
Allied-Signal, Inc. 9,000 $356,625
BASIC INDUSTRIES-0.3%
CHEMICALS-0.3%
Union Carbide Corp. 5,000 160,000
Total United States Investments
(cost $34,369,869) 37,680,938
FOREIGN INVESTMENTS-6.9%
ARGENTINA-0.0%
YPF S.A. (ADS) 500 10,125
Oil & Gas Exploration
AUSTRALIA-0.2%
AAPC, Ltd. 15,000 7,964
Food Services & Lodging
Ampolex, Ltd.* 9,000 25,987
Oil - International
Biron Corp., Ltd. 10,000 5,091
Mining & Metals
Brambles Industries, Ltd. 1,000 9,863
Trucking & Shipping
Diamond Ventures, Ltd.* 30,000 3,710
Mining & Metals
Gwalia Consolidated, Ltd. 15,000 20,183
Mining & Metals
MacMahon Holdings. Ltd.* 25,000 7,819
Building & Construction
Westralian Sands 10,000 23,056
Miscellaneous
103,673
AUSTRIA-0.1%
Ams Austria Mikros 500 49,672
Miscellaneous
Vae Eisenbahnsyst 100 9,000
Electrical Equipment
58,672
BELGIUM-0.1%
Solvay Et Cie S.A. 70 38,030
Chemicals
Tessenderlo Chemie 100 $35,226
Chemicals
73,256
CANADA-0.8%
AIT Advanced Technology Corp. 3,000 28,961
Printing, Publishing & Broadcasting
BCE Inc. 500 15,813
Telecommunications
Cinar Films, Inc.* 4,000 30,156
Leisure Related
Maax, Inc. 1,500 12,688
Household Furniture & Appliances
MacMillan Bloedel, Ltd. 1,000 12,963
Building Materials & Forest Products
Magna International, Inc. 10,000 346,250
Machinery
Miramar Mining Corp.* 1,000 5,149
Mining & Metals
Nelvana Ltd.* 3,000 27,306
Leisure Related
Orbit Oil & Gas Ltd.* 10,000 8,605
Oil-International
Prime Resources Group, Inc.* 2,000 13,791
Mining & Metals
Royal Plastics Group Ltd.(a) 5,000 53,324
Building & Construction
555,006
CHILE-0.0%
Banco Osornoy La Un (ADR) 1,000 12,000
Banks
Empresas Telex Chile S.A. (ADR) 2,000 15,750
Utility-Telephone
Enersis S.A. (ADR)* 500 14,000
Utility-Electric
41,750
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
DENMARK-0.0%
Tele Danmark As 500 $26,090
Utility - Telephone
FINLAND-0.3%
Aamulehti Yhtymae OY-II 2,000 40,366
Printing, Publishing & Broadcasting
Coflexip S.A. (ADR) 1,088 32,776
Oil-Supplies & Construction
Enso-Gutzeit OY 6,000 54,072
Forest Products
Nokia AB OY Corp. pfd. 800 32,668
Telecommunications
Tamro Yhtymae OY AB 4,000 21,028
Hospital Supplies & Services
180,910
FRANCE-0.1%
Ecco Travail Temporary 500 33,273
Miscellaneous
Lafarge Coppee S.A. 300 23,382
Building & Construction
56,655
GERMANY-0.5%
Bayer Motoren Werk pfd. 54 19,866
Auto & Trucks
Bayer Motoren Werke AG 200 49,196
Auto & Trucks
Dresdner Bank AG 100 27,736
Banks
Fag Kugelfischer 30 3,809
Machinery
Fielmann AG pfd.* 1,000 40,900
Auto & Trucks
Gea AG 60 19,693
Machinery
Hach AG pfd. 50 21,532
Auto & Trucks
Mannesmann AG (ADR) 100 27,122
Telecommunications
Plettac AG 50 31,018
Building & Construction
Sgl Carbon 1,700 $67,813
Chemical - Specialty
Veba AG 50 18,611
Utility-Electric
327,296
HONG KONG-0.3%
Asia Pacific Resources Holding Ltd. 3,300 25,988
Paper
Dao Heng Bank Group, Ltd.* 5,000 12,789
Banks
Hong Kong and China Gas Co., Ltd.
warrants expiring 12/31/95* 300 32
Utility-Gas
Hong Kong Land Holdings 15,000 28,200
Real Estate
Hopewell Holdings 35,000 24,868
Real Estate
HSBC Holdings Plc.* 1,000 11,594
Banks
International Bank Of Asia 30,000 13,661
Banks
Jardine International Motor 10,000 10,205
Auto Related
Paul Y-ITC Construction Holdings, Inc.* 50,000 7,751
Building & Construction
Sing Tao Holdings, Ltd. 20,000 13,047
Printing, Publishing & Broadcasting
148,135
INDIA-0.0%
Gujarat Narmada Vy Fertilizers (GDR) (a) 1,000 8,908
Basic material
Shiram Indl. Enterprises, Ltd.* 2,400 21,600
Food
Shiram Indl. Enterprises, Ltd.
warrants expiring 4/01/96* 800 200
Food
30,708
12
ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
IRELAND-0.2%
Allied Irish Bank 7,082 $32,796
Banks
Aran Energy 50,000 36,007
Energy
Crean James 5,000 18,785
Food
Heiton Holdings Plc. ord. 23,571 25,989
Building & Construction
Irish Continental Group 4,500 28,299
Trucking & Shipping
Ryan Hotels Plc 50,000 22,460
Food Services & Lodging
164,336
ITALY-0.1%
Industrie Natuzzi S.p.A., (ADS) 1,000 37,375
Household Products
La Rinascente S.p.A 3,000 16,612
Retail-General
Stet Societa Finanziaria
Telfonica S.p.A. 6,000 17,104
Utility-Telephone
71,091
JAPAN-2.5%
Akita Bank 3,150 27,176
Banks
Asahi Diamond Industria 2,000 29,749
Machinery
Bunkyodo Co. 300 10,353
Retail - General
Canon, Inc. 3,000 49,622
Office Equipment
Chodai Co. 1,000 34,509
Building & Construction
Chuoh Pack Ind. Co., Ltd. 1,000 7,378
Paper
Daiichi Corp. 1,200 26,703
Retail - General
Daikin Manufacturing Co. 1,000 17,374
Auto Related
Dainippon Ink & Chemical, Inc. 2,000 $9,996
Chemicals
DDI Corp. 5 44,029
Telecommunications
Denki Kagaku Kogyo 5,000 23,145
Chemicals
Eiden Sakakiya Co. 1,000 13,566
Conglomerates
Eyeful Home Technology 1,000 18,564
Building & Construction
Familymart Co. 300 14,280
Business Services
Fuji Electronics 1,000 24,514
Electronics
Fukuda Corp. 1,000 9,972
Building & Construction
Hachijuni Bank 1,000 12,733
Banks
Hitachi Metals, Ltd. 4,000 48,551
Soaps & Toiletries
Innotech Corp. 300 9,996
Electronics
Ishiguro Homa Corp. 1,000 19,040
Retail - General
Kaneshita Construction 2,000 29,036
Building & Construction
Kawasaki Kisen 1,000 3,582
Trucking & Shipping
Kawasaki Steel Co.* 2,000 8,092
Steel
Keihanshin Real Estate 2,000 16,089
Real Estate
Keyence Corp. 400 42,649
Machinery
Kinden Corp. 1,000 19,873
Building & Construction
Koa Fire & Marine 8,000 53,597
International
Mabuchi Motor Co. 500 33,022
Auto Related
Matsuyadenki Co. 1,000 10,948
Retail - General
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
Minebea Co., Ltd. 2,000 $14,827
Auto Related
Ministop Co. 1,000 22,015
Miscellaneous
Mitsubishi Bank 1,000 24,514
Banks
Mitsubishi Motors Corp. 2,000 18,587
Auto & Trucks
Mitsui Petrochemical Ind. 2,000 18,944
Chemicals
Murata Mfg Co., Ltd. 1,000 40,221
Electronics
Namura Shipbuildng 1,000 5,950
Industrial Machinery
National House Industrial 1,000 20,468
Building & Construction
New Oji Paper Co., Ltd.* 4,000 44,743
Paper
Nichiha Corp. 1,000 18,921
Building Materials & Forest Products
Nikon Corp. 1,000 8,520
Electronics
Nippon Electric Glass 1,100 19,504
Industrial Machinery
Nippon Sanso Corp. 7,000 37,068
Chemicals
Nippon Steel Corp. 2,000 7,949
Steel
Nippon Yakin Kogyo 1,000 5,831
Soaps & Toiletries
Noritz Corp. 2,000 40,697
Household Furniture & Appliances
Omron Corp. 1,000 19,635
Electrical Equipment
Oriental Construction 1,000 20,706
Building & Related
P S Corp. 1,300 25,680
Building & Construction
Promise Co. 200 8,734
Miscellaneous
Ricoh Elemex Corp. 1,000 $13,090
Office Equipment
Rohm Co. 1,000 46,290
Electric
Santen Pharmaceutical Co. 1,100 27,881
Hospital Supplies & Services
Sato Corp. 1,110 22,983
Retail - General
Sekichu Company 1,000 17,850
Retail - General
Sekisui Chemical Co. 2,000 24,990
Chemicals
Sharp Corp. 1,000 16,422
Household Furniture & Appliances
Showa Shell Sekiyu 1,000 12,733
Miscellaneous
SMC Corp. 600 31,772
Industrial Machinery
Sotoh Co. 1,000 15,470
Apparel & Textile
Takara Shuzo Co. 1,000 8,175
Food, Beverages & Tobacco
Takeda Chemical Industries 1,000 13,328
Chemicals
TDK Corp. 1,000 45,695
Electronics
Toda Corp. 2,000 21,420
Building & Construction
Toho Bank 4,000 31,891
Banks
Tokyo Broadcasting 3,000 48,194
Broadcasting
Tokyo Electron, Ltd. 1,000 31,177
Electronics
Tokyo Ohka Kogyo 1,000 31,177
Electronics
Toppan Printing Co., Ltd. 3,000 43,553
Printing, Publishing & Broadcasting
Wesco Investments, Ltd. 1,200 36,413
Building & Construction
14
ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
Xebio Co. 300 $10,567
Retail - General
Yamanouchi Pharmaceudical 2,000 44,981
Hospital Supplies & Services
York Benimaru Co. 1,000 39,507
Household Products
1,727,211
KOREA-0.0%
Yukong, Ltd.*(a) 700 7,350
Oil - International
MALAYSIA-0.1%
C.I. Holdings Berhad 4,000 14,401
Building Materials & Forest Products
Hock Hua Bank Berhad 5,000 14,260
Banks
Kim Hin Ind. Berhad 750 191
Building & Construction
Malaysian Assurance 15,000 48,847
Insurance
77,699
MEXICO-0.0%
Groupo Finance Delaware Norte 4,000 5,178
Banks
Grupo Industrial Durango
S.A. de C V (ADR)* 2,000 16,000
Forest Products
21,178
NETHERLANDS-0.4%
AKZO N.V. 300 34,792
Chemicals
Asm Lithography Hl 1,100 30,475
Electronics
KLM 1,500 45,616
Auto & Trucks
Kon Ptt Nederland (a) 2,000 69,712
Utility - Telephone
Polygram N.V. 500 28,220
Leisure Related
Ver Ned Uitgevers 300 $33,554
Printing, Publishing & Broadcasting
Wolters Kluwer N.V. 300 24,412
Printing, Publishing & Broadcasting
266,781
NORWAY-0.1%
Norsk Hydro AS 500 20,345
Oil - International
Tomra Systems AS 12,000 44,109
Environmental Control
Western Bulk Shipping AS 2,500 12,239
Trucking & Shipping
Wilrig AS 2,000 15,570
Transportation
92,263
PHILIPPINES-0.0%
Banco Latinoamericano De Exp 1,000 31,000
Banks
SINGAPORE-0.1%
Elec. & Eltek Int'l Co., Ltd. 5,000 6,400
Electronics
Hong Leong Finance, Ltd. 5,000 15,859
Financial Services
Keppel Corp.. Ltd. 2,000 16,218
Machinery
Overseas Union Bank, Ltd. 2,600 15,020
Banks
53,497
SPAIN-0.3%
Acerinox S.A. 210 24,049
Mining & Metals
Banco Popular Espanol 200 27,322
Banks
Centros Commerciales Continente S.A.* 2,000 35,411
Retail-General
Corporacion Mapfre 1,000 43,858
International
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
Repsol S.A. 1,000 $31,837
Miscellaneous
Telefonica de Espana 1,000 12,223
Utility - Telephone
Viscofan Envolturas Celulosi 1,000 13,198
Foods
187,898
SWEDEN-0.2%
Astra Corp. Series A 1,000 29,180
Drugs
Autoliv AB (ADR)* (a) 700 31,456
Auto Related
Electrolux AB 500 25,532
Household Products
Kalmar Industries AB* (a) 2,000 27,390
Machinery
SSAB Svenskt Stal AB-B Free 500 22,023
Mining & Metals
Volvo AB 1,000 18,788
Auto & Trucks
154,369
SWITZERLAND-0.1%
BBC Brown Boveri AG 25 24,664
Miscellaneous
Schweizerischer Bankverein 30 9,866
Banks
34,530
TAIWAN-0.0%
Taiwan Fund, Inc. 800 17,200
Mutual Fund-Diversified
UNITED KINGDOM-0.4%
British Steel N.E. 5,000 13,598
Mining & Metals
Chloride Group Plc.* 40,000 12,552
Building & Related
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------------
Filtronic Comtek 20,000 $78,854
Telecommunications
Hanson PLC 10,000 38,059
Conglomerates
Johnson Matthey Plc. 1,000 8,779
Mining & Metals
Powerscreen International 7,000 31,542
Environmental Control
Tate & Lyle 5,000 34,841
Food
United Newspapers Plc. 2,068 16,474
Printing, Publishing & Broadcasting
WPP Group 15,000 26,794
Professional Services
Zeneca Group Plc. 3,000 43,607
Chemicals
305,100
Total Foreign Investments
(cost $4,693,766) 4,823,779
Total Common Stocks & Other Investments
(cost $39,063,635) 42,504,717
LONG TERM DEBT SECURITIES-29.8%
BASIC MATERIALS-0.9%
Georgia Pacific
8.25%, 3/01/23 $ 675 650,207
CREDIT SENSITIVE-0.7%
General Instrument Corp.
5.00%, 6/15/00 300 447,375
MISCELLANEOUS-0.9%
Boskalis Westminister
5.25%, 6/01/00 80 45,873
Italy (Republic of)
6.875%, 9/27/23 700 576,793
622,666
16
ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------------
MORTGAGE BACKED SECURITIES-6.4%
Federal National Mortgage Association
8.00%, 4/01/25 $2,348 $2,342,000
Government National Mortgage Association
7.00%, 12/15/23 807 763,490
7.00%, 4/15/25 1,428 1,351,688
4,457,178
RETAIL-0.7%
Lowe's Cos., Inc.
3.00%, 7/22/03 360 468,450
US GOVERNMENT-20.2%
U.S. Treasury Bonds
7.50%, 11/15/24 1,690 1,712,714
7.625%, 2/15/25 425 439,412
U.S. Treasury Notes
7.125%, 9/30/99 2,170 2,190,680
7.25%, 2/15/98 3,650 3,700,187
7.50%, 2/15/05 2,400 2,473,872
7.75%, 12/31/99 2,200 2,274,250
7.875%, 11/15/04 1,250 1,318,363
14,109,478
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------------
Total Long Term Debt Securities
(cost $20,503,891) $20,755,354
SHORT-TERM DEBT SECURITIES-9.2%
Federal Home Loan Mortgage Corp.
6.00%, 6/15/95 $ 250 248,125
5.85%, 5/02/95 6,200 6,199,328
Total Short-Term Debt Securities
(amortized cost $6,447,453) 6,447,453
INVESTMENT IN AFFILIATED ISSUERS-0.1%
FRANCE-0.1%
Axa
Insurance
(cost $49,921) 1,000 52,747
TOTAL INVESTMENTS-100.0%
(cost $66,064,900) 69,760,271
Other assets less
liabilities-0.0% 2,732
NET ASSETS-100% $69,763,003
* Non-income producing.
(a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1995,
these securities amounted to $198,140 or 0.3% of net assets.
Glossary of Terms:
ADR - American Depository Receipt
ADS - American Depository Security
GDR - Global Depository Receipt
See notes to financial statements.
17
PORTFOLIO OF INVESTMENTS
APRIL 30, 1995 ALLIANCE CONSERVATIVE INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-16.1%
CONSUMER NONCYCLICALS-4.9%
BEVERAGES-0.6%
Coca-Cola Co. 5,000 $290,625
DRUGS-0.9%
Merck & Co., Inc. 4,000 171,500
Pfizer, Inc. 3,000 259,875
431,375
ENTERTAINMENT & LEISURE-0.2%
Walt Disney Co. 2,000 110,750
FOOD-0.5%
IBP, Inc. 7,000 259,000
HOSPITAL SUPPLIES & SERVICES-1.0%
Columbia HCA Healthcare Corp. 1,000 42,000
Medtronic, Inc. 4,000 297,500
Schering-Plough Corp. 1,000 75,375
U.S. Healthcare, Inc. 1,400 37,275
United Healthcare Corp. 2,200 79,750
531,900
SOAPS & TOILETRIES-0.6%
Gillette Co. 4,000 328,000
TOBACCO-1.1%
Philip Morris Cos., Inc. 6,000 406,500
UST, Inc. 5,000 140,625
547,125
2,498,775
CREDIT SENSITIVE-3.8%
BANKS-1.3%
Bank of New York Co., Inc. 15,000 493,125
Citicorp 2,000 92,750
First Bank System, Inc. 2,000 81,000
666,875
FINANCIAL SERVICES-0.3%
American Express Co. 4,000 $139,000
Dean Witter, Discover & Co. 200 8,475
147,475
INSURANCE-1.3%
AFLAC, Inc. 10,000 412,500
American International Group, Inc. 1,000 106,750
General Reinsurance Corp. 1,000 127,375
646,625
UTILITY - TELEPHONE-0.9%
Ameritech Corp. 6,000 270,000
AT & T Corp. 4,000 203,000
473,000
1,933,975
BASIC MATERIALS-1.7%
ALUMINUM-0.3%
Aluminum Co. of America 4,000 179,500
CHEMICALS-0.9%
Hercules, Inc. 6,000 299,250
Morton International, Inc. 4,000 124,000
Union Carbide Corp. 1,000 32,000
455,250
PAPER-0.5%
International Paper Co. 3,000 231,000
865,750
ENERGY-1.4%
OIL-0.8%
Amoco Corp. 1,000 65,625
Mobil Corp. 2,000 189,750
Phillips Petroleum Co. 5,000 175,000
430,375
RAILROADS-0.1%
Conrail, Inc. 1,000 54,625
UTILITY - GAS-0.5%
Enron Corp. 5,000 170,000
18
ALLIANCE CONSERVATIVE INVESTORS FUND
- -------------------------------------------------------------------------------
COMPANY SHARES VALUE
- ---------------------------------------------------------------------------
NIPSCO Industries, Inc. 2,000 $64,500
234,500
719,500
CAPITAL GOODS-1.3%
ELECTRICAL-1.0%
General Electric Co. 9,000 504,000
MACHINERY-0.3%
Deere & Co. 2,000 164,000
668,000
CONSUMER CYCLICALS-1.2%
AUTO & TRUCKS-0.2%
General Motors Corp. Cl.E 1,000 43,250
Magna International, Inc. 1,000 34,625
77,875
PHOTO & OPTICAL-0.2%
Eastman Kodak Co. 2,000 115,000
RESTAURANTS & LODGING-0.3%
McDonald's Corp. 4,000 140,000
Wendy's International, Inc. 2,000 34,000
174,000
RETAIL - GENERAL-0.5%
Gap, Inc. 2,000 63,750
Hasbro, Inc. 2,000 63,500
May Department Stores Co. 4,000 145,000
272,250
639,125
BUSINESS SERVICES-0.8%
ENVIRONMENTAL CONTROL-0.1%
Browning Ferris Industries, Inc. 2,000 66,000
PRINTING, PUBLISHING & BROADCASTING-0.4%
Capital Cities ABC, Inc. 2,000 169,000
PROFESSIONAL
SERVICES-0.3%
Reynolds & Reynolds Co. 6,000 159,000
394,000
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- ---------------------------------------------------------------------------
TECHNOLOGY-0.8%
COMPAQ Computer Corp. 1,000 $38,000
Molex, Inc. 4,000 152,000
Motorola, Inc. 4,000 227,500
417,500
DIVERSIFIED-0.2%
Allied Signal, Inc. 2,000 79,250
Total Common Stocks & Other Investments
(cost $7,368,404) 8,215,875
LONG-TERM DEBT SECURITIES-76.5%
CREDIT SENSITIVE-10.2%
General Motors Acceptance Corp.
1.00%, 10/15/02 $ 1,300 1,366,703
Georgia Pacific Corp.
8.25%, 3/01/23 1,300 1,252,251
Italy (Republic of)
6.875%, 9/27/23 1,300 1,071,187
Premier Auto Trust
7.15%, 2/04/99 1,500 1,498,594
5,188,735
MORTGAGE BACKED SECURITIES-15.5%
Federal National Mortgage Association
8.00%, 4/01/25 1,272 1,268,583
Government National Mortgage Association
7.00%, 4/15/23 266 251,485
7.00%, 6/15/23 281 265,550
7.00%, 2/15/24 2,455 2,324,090
7.00%, 4/15/25 2,142 2,027,531
7.50%, 11/15/23 1,844 1,798,605
7,935,844
U.S. GOVERNMENT-50.8%
U.S. Treasury Bonds
7.50%, 11/15/24 2,290 2,320,778
7.625%, 2/15/25 2,150 2,222,907
19
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE CONSERVATIVE INVESTORS FUND
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
COMPANY (000) VALUE
- -------------------------------------------------------------------------------
U.S.Treasury Notes
7.125%, 9/30/99 $ 3,100 $3,129,543
7.25%, 2/15/98 6,400 6,488,000
7.50%, 2/15/05 1,900 1,958,482
7.75%, 12/31/99 7,850 8,114,937
7.875%, 11/15/04 1,600 1,687,504
25,922,151
Total Long-Term Debt Securities
(cost $38,673,950) 39,046,730
SHORT-TERM DEBT SECURITIES-6.4%
Federal Home Loan Mortgage Corp.
5.85%, 5/01/95
(amortized cost $3,300,000) $ 3,300 $3,300,000
TOTAL INVESTMENTS-99.0%
(cost $49,342,354) 50,562,605
Other assets less liabilities-1.0% 503,477
NET ASSETS-100% $51,066,082
See notes to financial statements.
20
STATEMENTS OF ASSETS AND LIABILITIES ALLIANCE GROWTH INVESTORS AND
APRIL 30, 1995 CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
GROWTH CONSERVATIVE
INVESTORS INVESTORS
FUND FUND
------------ ------------
ASSETS
Investments in securities, at value (cost
$66,064,900 and $49,342,354, respectively) $69,760,271 $50,562,605
Cash -0- 57,452
Receivable for investment securities and
foreign currency sold 2,311,201 1,167,574
Interest and dividends receivable 382,880 618,292
Receivable for shares of beneficial interest sold 137,454 29,285
Receivable due from Adviser 56,927 7,819
Deferred organization expenses 19,500 19,500
Total assets 72,668,233 52,462,527
LIABILITIES
Due to custodian 17,959 -0-
Payable for investment securities and
foreign currency purchased 2,684,029 1,260,321
Distribution fee payable 44,201 30,910
Payable for shares of beneficial interest redeemed 43,264 13,783
Accrued expenses 115,777 91,431
Total liabilities 2,905,230 1,396,445
NET ASSETS $69,763,003 $51,066,082
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $58 $49
Additional paid-in capital 67,071,359 53,045,931
Undistributed net investment income 593,778 498,475
Accumulated net realized loss on investments and
foreign currency transactions (1,597,594) (3,698,418)
Net unrealized appreciation of investments and
other assets less liabilities 3,695,402 1,220,045
$69,763,003 $51,066,082
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($22,188,537/1,837,412 and $16,104,549 / 1,551,155
shares of beneficial interest issued and outstanding,
respectively) $12.08 $10.38
Sales charge-4.25% of public offering price .54 .46
Maximum offering price $12.62 $10.84
CLASS B SHARES
Net asset value and offering price per share ($43,327,596/
3,584,279 and $30,542,458 / 2,905,089 shares of beneficial
interest issued and outstanding, respectively) $12.09 $10.51
CLASS C SHARES
Net asset value, redemption and offering price per share
($4,246,870 / 351,116 and $4,419,075 / 420,130 shares
of beneficial interest issued and outstanding,
respectively) $12.10 $10.52
See notes to financial statements.
21
STATEMENTS OF OPERATIONS ALLIANCE GROWTH INVESTORS AND
YEAR ENDED APRIL 30, 1995 CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
GROWTH ONSERVATIVE
INVESTORS INVESTORS
FUND FUND
------------ ------------
INVESTMENT INCOME
Interest $1,773,462 $2,967,732
Dividends 531,825 150,365
Total income 2,305,287 3,118,097
EXPENSES
Advisory fee 464,336 385,818
Distribution fee - Class A 58,355 47,590
Distribution fee - Class B 385,615 307,217
Distribution fee - Class C 38,982 48,572
Custodian 159,361 97,921
Transfer agency 140,054 95,859
Audit and legal 89,198 68,225
Registration 57,106 60,125
Printing 46,913 25,609
Trustees' fees 27,000 27,000
Amortization of organization expenses 10,950 10,950
Miscellaneous 36,558 12,010
Total expenses 1,514,428 1,186,896
Less: expenses waived and assumed by adviser
(See Note B) (350,235) (217,650)
Net expenses 1,164,193 969,246
Net investment income 1,141,094 2,148,851
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized loss on investments and
options transactions (1,748,900) (3,216,833)
Net realized gain on foreign currency transactions 69,737 -0-
Net change in unrealized depreciation of investments 3,951,748 3,119,273
Net change in unrealized depreciation of foreign
currency denominated assets and liabilities 10,287 -0-
Net gain (loss) on investments 2,282,872 (97,560)
NET INCREASE IN NET ASSETS FROM OPERATIONS $3,423,966 $2,051,291
See notes to financial statements.
22
STATEMENTS OF CHANGES IN NET ASSETS ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
GROWTH INVESTORS FUND CONSERVATIVE INVESTORS FUND
------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS
Net investment income $1,141,094 $313,765 $2,148,851 $929,682
Net realized gain
(loss) on investments
and foreign currency
transactions (1,679,163) 121,229 (3,216,833) (47,183)
Net change in unrealized
appreciation(depreciation)
of investments and
foreign currency
denominated assets
and liabilities 3,962,035 (702,808) 3,119,273 (2,208,179)
Net increase (decrease)
in net assets from
operations 3,423,966 (267,814) 2,051,291 (1,325,680)
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income
Class A (254,436) (72,572) (685,964) (289,744)
Class B (345,858) (80,463) (1,045,681) (387,379)
Class C (35,052) (4,770) (168,380) (32,066)
Net realized gain
on investments
Class A (22,749) (74,093) -0- (184,501)
Class B (46,345) (159,336) -0- (334,032)
Class C (4,697) (3,179) -0- (23,205)
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST
Net increase 16,138,284 40,069,758 1,247,586 37,695,255
Total increase 18,853,113 39,407,531 1,398,852 35,118,648
NET ASSETS
Beginning of year 50,909,890 11,502,359 49,667,230 14,548,582
End of year (including
undistributed net
investment income of
$593,778, $168,135,
$498,475 and $249,649,
respectively) $69,763,003 $50,909,890 $51,066,082 $49,667,230
See notes to financial statements.
23
NOTES TO FINANCIAL STATEMENTS ALLIANCE GROWTH INVESTORS AND
APRIL 30, 1995 CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance Growth Investors Fund and Conservative Investors Fund (the 'Funds'),
two series of The Alliance Portfolios (the 'Trust'), are registered under the
Investment Company Act of 1940, as diversified, open-end investment companies.
Prior to August 2, 1993, the Trust was known as The Equitable Funds, and the
Funds were known as The Equitable Growth Investors Fund and Conservative
Investors Fund. Prior to August 2, 1993, each Fund offered two classes of
shares Class A and Class B. On August 2, 1993, the Board of Trustees approved
the creation of a third class of shares, Class C Shares. The Funds offer 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. Shares purchased before August 2, 1993 and redeemed within six
years of purchase are subject to different rates than shares purchased after
that date. 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 Funds.
1. SECURITY VALUATION
Portfolio securities traded on national securities exchanges are valued at the
last 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. Securities traded on
the over-the-counter market are valued at the mean of the closing bid and asked
price. Securities for which current market quotations are not readily available
(including investments which are subject to limitations as to their sale) are
valued at their fair value as determined in good faith by the Board of
Trustees. The Board of Trustees has further determined that the value of
certain portfolio debt securities, other than temporary investments in
short-term securities, be determined by reference to valuations obtained from a
pricing service. Restricted securities are valued at fair value as determined
by the Board of Trustees. Securities which mature in 60 days or less are valued
at amortized cost, which approximates market value. The ability of issuers of
debt securities held by the Funds to meet their obligations may be affected by
economic developments in a specific industry or region.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the quoted bid and asked price of the respective
currency against the U.S. dollar on the valuation date. Purchases and sales of
portfolio securities are translated at the rates of exchange prevailing when
such securities were acquired or sold. Income and expenses are translated at
rates of exchange prevailing when earned or accrued.
Net realized gain on foreign currency transactions of $69,737 for Growth
Investors Fund, represents net foreign exchange gains and losses from holdings
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on security transactions, and the difference between the
amounts of dividends and foreign taxes recorded on the Fund's books and the
U.S. dollar equivalent amounts actually received or paid. Net unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at fiscal year end exchange rates are reflected as a component of
unrealized appreciation on investments and foreign currency denominated assets
and liabilities.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $50,000 for each Fund have been deferred
and are being amortized on a straight-line basis through May, 1997.
4. OPTION WRITING
When the Fund writes an option, an amount equal to the premium received by the
Fund is recorded as a liability and is subsequently adjusted to the current
market value of the option written. Premiums received from writing options
which expire unexercised are recorded by the Funds on the expiration date as
realized gains. The difference between the premiun and the amount paid on
effecting a closing purchase transaction, including brokerage commissions, is
also treated as a realized gain, or if the premium is less than the amount paid
for the closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale in determining
whether the Fund has realized a gain or loss. As a writer of options, the Fund
bears
24
ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
the risk of unfavorable changes in the price of the financial instruments
underlying the options.
5. 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.
6. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Security gains and losses are determined on the identified
cost basis. The Fund accretes discounts and amortizes premiums as adjustments
to interest income.
7. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date.
8. INCOME AND EXPENSES
All income earned and expenses incurred by a Fund are borne on a pro-rata basis
by each outstanding class of shares, based on the proportionate interest in the
Fund represented by the shares of such Class, except that each Funds' Class B
and Class C shares bear higher distribution and transfer agent fees. Expenses
attributable to a single Fund are charged to that Fund. Expenses of the Trust
are charged to each Fund in proportion to net assets.
NOTE B: ADIVSORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Prior to July 22, 1993 Equitable Capital Management Corporation (Equitable
Capital) served as the investment adviser to the Trust. On July 22, 1993,
Alliance Capital Management, L.P. (Alliance) acquired the business and
substantially all of the assets of Equitable Capital and became the investment
adviser to the Trust.
Under the terms of an investment advisory agreement, the Funds pays Alliance an
advisory fee at an annual rate of .75% of the Fund's average daily net assets.
Under the old agreement the fee charged was the same. Such a fee is accrued
daily and paid monthly. The Investment Adviser has agreed, under the terms of
the investment advisory agreement, to voluntarily waive its fees and bear
certain expenses so that total expenses do not exceed on an annual basis 1.40%,
2.10% and 2.10% of average net assets, respectively, for the Class A, Class B
and Class C shares. Prior to August 2, 1993, the annual rate for Class B shares
was 2.15%. For the year ended April 30, 1995, such reimbursement amounted to
$350,235 and $217,650 for the Growth Investors and Conservative Investors Fund,
respectively. In addition to these voluntary arrangements, the Investment
Adviser will reduce its compensation, to the extent that expenses of the Funds
for any fiscal year (not including any distribution expenses paid by the Funds)
exceed the lowest applicable expense limitation prescribed by any state in
which the Fund's shares are qualified for sale. The Funds believe that the most
restrictive expense ratio limitation imposed by any state in which the Funds
has qualified its shares for sale is 2.5% of the first $30 million of the
Fund's average daily net assets, 2% of the next $70 million of its average
daily net assets and 1.5% of its average daily net assets in excess of $100
million.
The Funds have a Services Agreement with Alliance Fund Services, Inc. (a
wholly-owned subsidiary of the Adviser) to provide personnel and facilities to
perform transfer agency services for the Funds. Compensation under this
agreement amounted $97,970 and $58,940 for the Growth Investors and
Conservative Investors Funds, respectively for the year ended April 30, 1995.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $12,658 from the sale of Class A shares and $111,820
in contingent deferred sales charges imposed upon redemptions by shareholders
of Class B shares for the year ended April 30, 1995 for the Growth Investors
Fund. The Distributor also received front-end sales charges of $6,497 from the
sale of Class A shares and $131,358 in contingent deferred sales charges
imposed upon redemptions by shareholders of Class B shares for the year ended
April 30, 1995 for the Conservative Investors Fund.
25
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
Brokerage commissions paid on securities transactions for the year ended April
30, 1995 amounted to $143,563 and $3,758 for the Growth Investors and
Conservative Investors Funds, respectively, of which $33 was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp. ('DLJ'), an affiliate of the Adviser, nor to DLJ directly.
Trustees's fees and expenses payable included amounts owed to one of the
Trustees under the deferred compensation plan.
NOTE C: DISTRIBUTION SERVICES AGREEMENT
The Funds have adopted a Distribution Services Agreement (the 'Agreement')
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Funds pay a distribution fee to the Distributor at an annual
rate of up to .50% of each 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. Prior to August 2, 1993, Equico Securities served
as distributor to the Funds. The Funds paid a distribution fee to the
distributor at an annual rate of .25% of each Fund's average daily net assets
attributable to Class A shares. The Trustees currently limit payments under the
Class A plan to .30% of the Fund's aggregate average daily net assets
attributable to Class A shares. 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 Growth Investors Fund in the amount of
$1,129,165 and $124,579 for Class B and C shares, respectively. The Distributor
has also incurred expenses in excess of the distribution costs reimbursed by
the Conservative Investors Fund in the amount of $1,276,362 and $196,425,
respectively and for the Class B and Class C shares, respectively; such costs
may be recovered from each 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 each Fund's
shares.
NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
for the Growth Investors Fund aggregated $91,295,274 and $62,800,691,
respectively, for the year ended April 30, 1995. There were purchases of
$34,604,273 and sales of $24,810,074 of U.S. Government and government agency
obligations for the year ended April 30, 1995. At April 30, 1995, the cost of
securities for federal income tax purposes for the Growth Investors Fund was
$66,095,352. Accordingly gross unrealized appreciation of investments was
$4,788,910 and gross unrealized depreciation of investments was $1,123,991
resulting in net unrealized appreciation of $3,664,919.
The Growth Investors Fund enters into forward exchange currency contracts in
order to hedge its exposure to changes in foreign currency exchange rates on
its foreign portfolio holdings. A forward exchange currency contract is a
commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the original contracts and the closing of such contracts is included in net
realized gain or loss from foreign currency transactions. Fluctuations in the
value of forward exchange currency contracts are recorded for financial
reporting purposes as unrealized gains or losses by the Fund. Risks may arise
from the potential inability of a counter-party to meet the terms of a contract
and from unanticipated movements in the value of a foreign currency relative to
the U.S. dollar. At April 30, 1995, there were no outstanding forward exchange
currency contracts.
Purchases and sales of investment securities (excluding short-term investments)
for the Conservative Investors Fund aggregated $108,535,724 and $98,995,442,
respectively, for the year ended April 30, 1995. There were purchases of
$73,553,555 and sales of $58,226,588 of U.S. Government and government agency
obligations for the year ended April 30, 1995. At April 30, 1995, the cost of
securities for federal income tax purposes for the Con-
26
ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
servative Investors Fund was $49,536,512. Accordingly gross unrealized
appreciation of investments was $1,284,394 and gross unrealized depreciation of
investments was $258,301 resulting in net unrealized appreciation of $1,026,093.
NOTE E: SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $0.00001 par value shares of beneficial
interest authorized divided into three classes, designated Class A, Class B and
Class C shares for both Funds. Transactions in shares of beneficial interest
were as follows:
ALLIANCE GROWTH INVESTORS FUND
----------------------------------------------------
SHARES AMOUNT
------------------------ --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1995 1994
---------- ------------ ------------ ------------
CLASS A
Shares sold 878,301 1,224,513 $10,219,392 $14,527,190
Shares issued in
reinvestment of
dividends and
distributions 23,903 12,123 266,999 143,134
Shares redeemed (508,295) (101,933) (5,946,807) (1,218,333)
Net increase 393,909 1,134,703 $4,539,584 $13,451,991
CLASS B
Shares sold 1,384,786 2,121,895 $16,126,761 $25,302,089
Shares issued in
reinvestment of
dividends and
distributions 33,860 20,028 379,230 237,891
Shares redeemed (485,135) (192,181) (5,718,545) (2,290,398)
Net increase 933,511 1,949,742 $10,787,446 $23,249,582
ALLIANCE GROWTH INVESTORS FUND
-----------------------------------------------------
SHARES AMOUNT
------------------------- --------------------------
AUGUST 2, AUGUST 2,
YEAR ENDED 1993* TO YEAR ENDED 1993* TO
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1995 1994
----------- ------------ ------------ ------------
CLASS C
Shares sold 188,858 337,111 $2,197,932 $4,037,220
Shares issued in
reinvestment of
dividends and
distributions 3,451 670 38,687 7,927
Shares redeemed (122,670) (56,304) (1,425,365) (676,962)
Net increase 69,639 281,477 $811,254 $3,368,185
27
NOTES TO FINANCIAL STATEMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS FUND
-----------------------------------------------------
SHARES AMOUNT
------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1995 1994
----------- ------------ ------------ ------------
Class A
Shares sold 548,552 1,189,333 $5,617,109 $13,031,463
Shares issued in
reinvestment of
dividends and
distributions 65,422 40,811 656,166 442,601
Shares redeemed (566,559) (221,331) (5,791,900) (2,381,952)
Net increase 47,415 1,008,813 $481,375 $11,092,112
CLASS B
Shares sold 798,920 2,302,220 $8,264,467 $25,384,220
Shares issued in
reinvestment of
dividends and
distributions 94,772 62,734 960,854 687,832
Shares redeemed (825,918) (374,172) (8,495,394) (4,077,813)
Net increase 67,774 1,990,782 $729,927 $21,994,239
ALLIANCE CONSERVATIVE INVESTORS FUND
------------------------------------------------------
SHARES AMOUNT
-------------------------- --------------------------
AUGUST 2, AUGUST 2,
YEAR ENDED 1993* TO YEAR ENDED 1993* TO
APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
CLASS C
Shares sold 224,223 510,177 $2,320,546 $5,606,322
Shares issued in
reinvestment of
dividends and
distributions 15,711 4,767 159,243 51,975
Shares redeemed (237,610) (97,138) (2,443,423) (1,049,393)
Net increase 2,324 417,806 $36,366 $4,608,904
NOTE F: RECLASSIFICATION OF COMPONENTS OF NET ASSETS
In accordance with Statement of Position 93-2 Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies, permanent book and tax differences
relating to shareholder distributions have been reclassified to additional
paid-in capital. During the current period the accumulated undistributed net
investment income was charged and accumulated undistributed net realized gains
was credited for $80,105 for Alliance Growth Investors Fund. Net investment
income, net realized gains and net assets were not affected by this change.
NOTE G: TAXES
Capital and currency losses incurred after October 31 within the Fund's fiscal
year are deemed to arise on the first business day of the following fiscal
year. The Alliance Growth Investors Fund incurred and elected to defer post
October currency losses of $71,562 and capital losses of $447,337. The Alliance
Conservative Investors Fund incurred and elected to defer post October capital
losses of $812,541. At April 30, 1995, the Alliance Growth Investors Fund and
Conservative Investors Fund had net capital loss carryovers of approximately
$1,120,000 and $2,692,000, respectively. Such losses will be available to
offset capital gains arising through April 30, 2003. To the extent that any net
capital loss carryover or post-October loss is used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.
* Commencement of distribution.
28
FINANCIAL HIGHLIGHTS ALLIANCE GROWTH INVESTORS FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS A
--------------------------------
YEAR YEAR MAY 4,
ENDED ENDED 1992(A) TO
APRIL 30, APRIL 30, APRIL 30,
1995 1994 1993
--------- -------- ----------
Net asset value, beginning of period $11.61 $11.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .25* .12* .20*
Net realized and unrealized gain on investments .38 .39 1.43
Net increase in net asset value from operations .63 .51 1.63
LESS: DISTRIBUTIONS
Dividends from net investment income (.15) (.11) (.16)
Distributions from net realized gains (.01) (.14) (.12)
Total dividends and distributions (.16) (.25) (.28)
Net asset value, end of period $12.08 $11.61 $11.35
TOTAL RETURN
Total investment return based on
net asset value (b) 5.57% 4.46% 16.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $22,189 $16,759 $3,503
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.40% 1.40% 1.40%(c)
Expenses, before waivers/reimbursements 1.97% 2.33% 4.27%(c)
Net investment income 2.32% 1.67% 1.91%(c)
Portfolio turnover rate 134% 96% 114%
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------- -----------------------
YEAR YEAR MAY 4, YEAR AUGUST 2,
ENDED ENDED 1992(A) TO ENDED 1993(D) TO
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1993 1995 1994
-------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.65 $11.41 $10.00 $11.65 $11.88
INCOME FROM INVESTMENT OPERATIONS
Net investment income .17* .07* .07* .18* .08*
Net realized and unrealized gain
(loss) on investments .38 .37 1.45 .38 (.11)
Net increase (decrease) in net asset
value from operations .55 .44 1.52 .56 (.03)
LESS: DISTRIBUTIONS
Dividends from net investment income (.10) (.06) (.05) (.10) (.06)
Distributions from net realized gains (.01) (.14) (.06) (.01) (.14)
Total dividends and distributions (.11) (.20) (.11) (.11) (.20)
Net asset value, end of period $12.09 $11.65 $11.41 $12.10 $11.65
TOTAL RETURN
Total investment return based on
net asset value (b) 4.83% 3.84% 15.23% 4.91% (.26)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $43,328 $30,871 $7,999 $4,247 $3,280
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10% 2.11% 2.15%(c) 2.10% 2.10%(c)
Expenses, before waivers/reimbursements 2.67% 3.00% 4.48%(c) 2.66% 3.02%(c)
Net investment income 1.62% .95% 1.07%(c) 1.62% 1.04%(c)
Portfolio turnover rate 134% 96% 114% 134% 96%
</TABLE>
See footnote summary on page 31.
29
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE CONSERVATIVE INVESTORS FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
CLASS A
--------------------------------
YEAR YEAR MAY 4,
ENDED ENDED 1992(A) TO
APRIL 30, APRIL 30, APRIL 30,
1995 1994 1993
--------- -------- ----------
Net asset value, beginning of period $10.37 $10.79 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income .48* .31* .39*
Net realized and unrealized gain
(loss) on investment (.02) (.26) .82
Net increase in net asset value
from operations .46 .05 1.21
LESS: DISTRIBUTIONS
Dividends from net investment income (.45) (.29) (.36)
Distributions from net realized gains -0- (.18) (.06)
Total dividends and distributions (.45) (.47) (.42)
Net asset value, end of period $10.38 $10.37 $10.79
TOTAL RETURN
Total investment return based
on net asset value (b) 4.65% .35% 12.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $16,105 $15,595 $5,339
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.40% 1.40% 1.40%(c)
Expenses, before waivers/reimbursements 1.83% 2.03% 3.45%(c)
Net investment income 4.66% 3.43% 3.92%(c)
Portfolio turnover rate 248% 133% 84%
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------- -----------------------
YEAR YEAR MAY 4, YEAR AUGUST 2,
ENDED ENDED 1992(A) TO ENDED 1993(D) TO
APRIL 30, APRIL 30, APRIL 30, APRIL 30, APRIL 30,
1995 1994 1993 1995 1994
-------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.47 $10.88 $10.00 $10.47 $11.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income .46* .24* .24* .46* .18*
Net realized and unrealized gain (loss)
on investments (.02) (.26) .89 (.01) (.50)
Net increase (decrease) in net asset value
from operations .44 (.02) 1.13 .45 (.32)
LESS: DISTRIBUTIONS
Dividends from net investment income (.40) (.21) (.22) (.40) (.15)
Distributions from net realized gains -0- (.18) (.03) -0- (.18)
Total dividends and distributions (.40) (.39) (.25) (.40) (.33)
Net asset value, end of period $10.51 $10.47 $10.88 $10.52 $10.47
TOTAL RETURN
Total investment return based on
net asset value (b) 3.91% (.31)% 11.39% 4.01% (2.98)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's omitted) $30,542 $29,697 $9,210 $4,419 $4,375
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10% 2.11% 2.15%(c) 2.10% 2.10%(c)
Expenses, before waivers/reimbursements 2.52% 2.73% 3.95%(c) 2.52% 2.10%(c)
Net investment income 3.96% 2.72% 3.06%(c) 3.97% 2.94%(c)
Portfolio turnover rate 248% 133% 84% 248% 133%
</TABLE>
See footnote summary on page 31.
30
ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
FOOTNOTE SUMMARY
* Net of fee waived and expenses reimbursed by Adviser.
(a) Commencement of operations.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for a period of less than one year
is not annualized.
(c) Annualized.
(d) Commencement of distribution.
Prior to July 22, 1993, Equitable Capital Management Corporation (Equitable
Capital) served as the investment adviser to the Trust. On July 22, 1993,
Alliance Capital Management L.P. acquired the business and substantially all of
the assets of Equitable Capital and became the investment adviser to the Trust.
31
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
- -------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF ALLIANCE GROWTH INVESTORS FUND
AND ALLIANCE CONSERVATIVE INVESTORS FUND
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Alliance Growth
Investors Fund and Alliance Conservative Investors Fund (separately managed
portfolios constituting part of The Alliance Portfolios, hereafter referred to
as the 'Funds') at April 30, 1995, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the
two years in the period then ended and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
'financial statements') are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at April 30, 1995 by correspondence with the custodian and brokers
and the application of alternative auditing procedures where confirmations from
brokers were not received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
June 22, 1995
32
4
00250184.AA3
<PAGE>
C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements:
For financial statements, which are part of this
Registration Statement see "Financial Highlights" in the
Prospectuses and "Financial Statements" in the Statements of
Additional Information.
(b) Exhibits:
1. Agreement and Declaration of Trust (previously
filed with Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on July 8,
1987); Amendment No. 1 to Agreement and
Declaration of Trust (previously filed with Pre-
Effective Amendment No. 1 to the Registrant's
Registration Statement on July 8, 1987);
Amendment No. 2 to Agreement and Declaration of
Trust (previously filed with Post-Effective
Amendment No. 11 to the Registrant's Registration
Statement on June 28, 1993).
2. By-Laws (previously filed with Post-Effective
Amendment No. 1 to the Registrant's Registration
Statement on April 29, 1988); Amendment to By-
Laws dated October 16, 1991 (previously filed
with Post Effective Amendment No. 9 to the
Registrant's Registration Statement on August 31,
1992).
3. Not applicable.
4(a). Specimen Share Certificate with respect to (a)
The Equitable Growth Fund; (b) The Equitable
Balanced Fund; (c) The Equitable Government
Securities Fund; (d) The Equitable Tax Exempt
Fund; (e) The Equitable Growth and Income Fund;
and (f) The Equitable Short- Term World Income
Fund (previously filed with Post- Effective
Amendment No. 6 to the Registrant's Registration
Statement on February 8, 1991).
4(b). Specimen Share Certificate with respect to
(a) The Equitable Aggressive Growth Fund; (b) The
Equitable Short-Term U.S. Government Fund; (c)
<PAGE>
The Equitable Conservative Investors Fund; and
(d) The Equitable Growth Investors Fund
(previously filed with Post Effective Amendment
No. 9 to the Registrant's Registration Statement
on August 31, 1992).
4(c). Portions of the Registrant's Agreement and
Declaration of Trust and By-Laws pertaining to
shareholders' rights (previously filed with Post
Effective Amendment No. 11 to the Registrant's
Registration Statement on June 28, 1993).
4(d). Specimen Share Certificate with respect to Class
C shares of (a) Alliance Conservative Investors
Fund and (b) Alliance Growth Investors Fund -
filed herewith.
5(a). Form of Investment Advisory Agreement between the
Registrant and Alliance Capital Management L.P.
(previously filed with Post-Effective Amendment
No. 11 to the Registrant's Registration Statement
on June 28, 1993).
6(a). Form of Distribution Services Agreement between
the Registrant and Alliance Fund Distributors,
Inc. (previously filed with Post-Effective
Amendment No. 11 to the Registrant's Registration
Statement on June 28, 1993).
6(b). Form of Selected Dealers Agreement between
Alliance Fund Distributors, Inc. and selected
dealers offering shares of the Registrant
(previously filed with Post- Effective Amendment
No. 11 to the Registrant's Registration Statement
on June 28~ 1993).
6(c). Form of Selected Agents Agreement between
Alliance Fund Distributors, Inc. and selected
agents making available shares of the Registrant
(previously filed with Post-Effective Amendment
No. 11 to the Registrant's Registration Statement
on June 28, 1993).
7. Not applicable.
8. Custodian Agreement between the Registrant and
State Street Bank and Trust Company (previously
filed with Post-Effective Amendment No. 2 to the
2
<PAGE>
Registrant's Registration Statement on November
21, 1988).
9(a). Transfer Agent Agreement between the Registrant
and State Street Bank and Trust Company
(previously filed with Post-Effective Amendment
No. 4 to the Registrant's Registration Statement
on June 29, 1989).
9(b). Accounting Agreement between Equitable Capital
Management Corporation and State Street Bank and
Trust Company concerning (a) The Equitable Growth
Fund; (b) The Equitable Balanced Fund; (c) The
Equitable Government Securities Fund; and (d) The
Equitable Tax Exempt Fund (previously filed with
Post-Effective Amendment No. 4 to the Registrants
Registration Statement on June 29, 1989).
9(c). Transfer Agent Agreement between the Registrant
and State Street Bank and Trust Company - filed
herewith.
10(a). Opinion and Consent of Counsel (previously filed
with Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on August 31,
1992).
10(b). Opinion and Consent of Counsel - filed herewith.
11. Consent of Independent Accountants - filed
herewith.
12. Not applicable.
13. Investment Letter of The Equitable Life Assurance
Society of the United States (previously filed
with Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement on October
19, 1987).
14. Not applicable.
15(a). Amended and Restated Distribution Plan applicable
to the Registrant's Class A shares (previously
filed with Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on June 28,
1993).
3
<PAGE>
15(b). Amended and Restated Distribution Plan applicable
to the Registrant's Class B shares (previously
filed with Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on June 28,
1993).
15(c). Form of Distribution Plan applicable to the
Registrant's Class C shares (previously filed
with Post-Effective Amendment No. 11 to the
Registrant's Registration Statement on June 28,
1993).
16. Schedule for computation of performance
quotations - (previously filed with Post-
Effective Amendment No. 15 to the Registrant's
Registration Statement on January 27, 1995).
17. Financial Data Schedule - filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
As of August 25, 1995, the Registrant, The Alliance
Portfolios, believes that no person is directly or indirectly
controlled by or under common control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(as of August 15, 1995)
(1) (2)
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
______________ _________
Class A shares of
beneficial interest
of Alliance Growth Fund 22,165
Class B shares of
beneficial interest
of Alliance Growth Fund 102,509
Class C shares of
beneficial interest of
4
<PAGE>
Alliance Growth Fund 10,477
Class A shares of
beneficial interest of
Alliance Strategic Balanced
Fund 1,006
Class B shares of
beneficial interest
of Alliance Strategic
Balanced Fund 3,326
Class C shares of
beneficial interest of
Alliance Strategic
Balanced Fund 248
Class A shares of
beneficial interest of
Alliance Short-Term
U.S. Government Fund 135
Class B shares of
beneficial interest
of Alliance Short-Term
U.S. Government Fund 288
Class C shares of
beneficial interest of
Alliance Short-Term
U.S. Government Fund 150
Class A shares of
beneficial interest of
Alliance Growth Investors
Fund 2,078
Class B shares of
beneficial interest of
Alliance Growth Investors
Fund 4,587
Class C shares of
beneficial interest of
Alliance Growth Investors
Fund 484
Class A shares of
beneficial interest of
Alliance Conservative
Investors Fund 1,014
5
<PAGE>
Class B shares of
beneficial interest of
Alliance Conservative
Investors Fund 2,203
Class C shares of
beneficial interest of
Alliance Conservative
Investors Fund 389
ITEM 27. INDEMNIFICATION
Paragraph (n) of Section 3, Article IV of the
Registrant's Agreement and Declaration of Trust provides in
relevant part that the Trustees of the Trust have the power:
"(n) To purchase and pay for entirely out of
Trust property such insurance as they may deem necessary
or appropriate for the conduct of the business,
including without limitation, insurance policies
insuring the assets of the Trust and payment of
distributions and principal on its portfolio
investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents,
investment advisers or managers, principal underwriters,
or independent contractors of the Trust individually
against all claims and liabilities of every nature
arising by reason of holding, being or having held any
such office or position, or by reason of any action
alleged to have been taken or omitted by any such person
as Shareholder, Trustee, officer, employee, agent,
investment adviser or manager, principal underwriter, or
independent contractor, including any action taken or
omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to
indemnify such person against such liability;"
Section 2 of Article VII of the Registrant's Agreement
and Declaration of Trust provides in relevant part:
"Limitation of Liability
Section 2. The Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any officer,
agent, employee, manager or principal underwriter of the Trust,
nor shall any Trustee be responsible for the act or omission of
any other Trustee, but nothing herein contained shall protect any
Trustee against any liability to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross
6
<PAGE>
negligence or reckless disregard of the duties involved in the
conduct of his or her office."
Article VIII of the Registrant's Agreement and
Declaration of Trust provides in relevant part:
ARTICLE VIII
INDEMNIFICATION
"Section 1. The Trust shall indemnify 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 referred to as a "Covered Person") against
all liabilities and expenses, including but not limited
to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection
with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which
such Covered Person may be or may have been involved as
a party or otherwise or with which such Covered Person
may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a
Covered Person except with respect to any matter as to
which such Covered Person shall have been finally
adjudicated in any such action, suit or other proceeding
to be liable to the Trust or its Shareholders by reason
of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of such Covered Person's office. Expenses, including
counsel fees so incurred by any such Covered Person (but
excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from
time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such
Covered Person to repay amounts so paid to the Trust if
it is ultimately determined that indemnification of such
expenses is not authorized under this Article, provided,
however, that either (a) such Covered Person shall have
provided appropriate security for such undertaking, (b)
the Trust shall be insured against losses arising from
any such advance payments or (c) either a majority of
the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees
then in office act on the matter), or independent legal
counsel in a written opinion, shall have determined,
based upon a review of readily available facts (as
7
<PAGE>
opposed to a full trial type inquiry) that there is
reason to believe that such Covered Person will be found
entitled to indemnification under this Article.
"Section 2. As to any matter disposed of (whether
by a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication by a court, or by any
other body before which the proceeding was brought, that
such Covered Person is liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of his or her office,
indemnification shall be provided if (a) approved as in
the best interests of the Trust, after notice that it
involves such indemnification, by at least a majority of
the disinterested Trustees acting on the matter
(provided that a majority of the disinterested Trustees
then in office act on the matter) upon a determination,
based upon a review of readily available facts (as
opposed to a full trial type inquiry) that such Covered
Person is not liable to the Trust or its Shareholders by
reason or wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved
in the conduct of his or her office, or (b) there has
been obtained an opinion in writing of independent legal
counsel, based upon a review of readily available facts
(as opposed to a full trial type inquiry) to the effect
that such indemnification would not protect such Person
against any liability to the Trust to which he would
otherwise be subject by reason of wilful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Any
approval pursuant to this Section shall not prevent the
recovery from any Covered Person in accordance with this
Section as indemnification if such Covered Person is
subsequently adjudicated by a Court of competent
jurisdiction to have been liable to the Trust or its
Shareholders by reason or wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
Section 3. The right of indemnification hereby
provided shall not be exclusive of or affect any other
rights to which such Covered Person may be entitled. As
used in this Article VIII, the term "Covered Person"
shall include such person's heirs, executors and
administrators and a "disinterested Trustee" is a
Trustee who is not an "interested person" of the Trust
as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended, (or who has been exempted from
being an "interested person" by any rule, regulation or
8
<PAGE>
order of the Commission) and against whom none of such
actions, suits or other proceedings or another action,
suit or proceeding on the same or similar grounds is
then or has been pending. Nothing contained in this
Article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees or
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 2 of Article IX of the Registrant's Agreement
and Declaration of Trust provides in relevant part:
"TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY
Section 2. The exercise by the Trustees of their powers
and discretions hereunder shall be binding upon everyone
interested. A Trustee shall be liable for his or her 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. The Trustees may take advice of
counsel or other experts with respect to the meaning and
operation of this Declaration of Trust, and shall be under no
liability for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is
required."
The form of Investment Advisory Agreement between
the Registrant and Alliance Capital Management L.P.
provides that Alliance Capital Management L.P. will not
be liable under such agreement for any mistake of
judgment or in any event whatsoever except for lack of
good faith and that nothing therein shall be deemed to
protect, or purport to protect, Alliance Capital
Management L.P. against any liability to the Registrant
or its shareholders to which it would otherwise be
subject by reason or willful misfeasance, bad faith or
gross negligence in the performance of its duties
thereunder, or by reason or reckless disregard of its
obligations or duties thereunder.
The form of 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
9
<PAGE>
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, Prospectus or Statement of
Additional Information or arising out of, or based upon,
any alleged omission to state a material fact required
to be stated in any one of the foregoing or necessary to
make the statements in 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
or willful misfeasance, bad faith or gross negligence in
the performance of its duties thereunder, or by reason
of reckless disregard of its obligations or duties
thereunder.
The foregoing summaries are qualified by the
entire text of Registrant's Agreement and Declaration of
Trust, the Advisory Agreement between the Registrant and
Alliance Capital Management L.P., the Advisory
Agreements between the Registrant and Equitable Capital
Management Corporation and the Distribution Services
Agreement between the Registrant and Alliance Fund
Distributors, Inc.
The Registrant participates in a joint directors
and officers liability policy for the benefit of its
Trustees and officers.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 (the "Act") may
be permitted to Trustees, Officers and controlling
persons of the Trust 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 act, and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Trust of expenses incurred or paid by a
Trustee, Officer or controlling person of the Trust 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 Trust will, unless in the opinion
of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification
10
<PAGE>
by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF ADVISER.
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Trust" in the Prospectus
and in the Statement of Additional Information constituting Parts
A and B, respectively, of this Registration Statement are
incorporated by reference herein.
Alliance Capital Management L.P. acts as investment
adviser to, in addition to Registrant, the following
investment companies:
ACM Government Income Fund, Inc.
ACM Government Opportunity Fund, Inc.
ACM Government Securities Fund, Inc.
ACM Government Spectrum Fund, Inc.
ACM Managed Dollar Income Fund, Inc.
ACM Managed Income Fund, Inc.
ACM Municipal Securities Income Fund, Inc.
ACM Institutional Reserves, Inc.
AFD Exchange Reserves, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance All-Market Advantage 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 Environment Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Government Reserves
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Income Fund, Inc.
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.
11
<PAGE>
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Dollar Government Fund, Inc.
Alliance World Dollar Government Fund II, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Hudson River Trust
The Alliance Fund, Inc.
The Global Privatization Fund, Inc.
The Austria Fund, Inc.
The Korean Investment Fund, Inc.
The Southern Africa Fund, Inc.
The Spain Fund, Inc.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the general
partner of Alliance Capital Management L.P., set forth in
Alliance Capital Management L.P.'s Form ADV filed with the
Securities and Exchange Commission on April 21, 1988 (File No.
801-32361) and amended through the date hereof, is incorporated
by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Alliance Fund Distributors, Inc., the
Registrant's Principal Underwriter in connection
with the sale of shares of the Registrant, also
acts as principal Underwriter or Distributor for
the following investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
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 Government Reserves
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.
Alliance Municipal Income Fund II
12
<PAGE>
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
Alliance Technology Fund, Inc.
The Hudson River Trust
(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
POSITION AND OFFICES OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
____ ____________________ _______________
Michael J. Laughlin Chairman
Robert L. Errico President
Kimberly A.
Baumgardner Senior Vice President
Edmund P. Bergan, Senior Vice President, Secretary
Jr. Secretary & General
Counsel
Daniel J. Dart Senior Vice President
Byron M. Davis Senior Vice President
Geoffrey L. Hyde Senior Vice President
Barbara J. Krumsiek Senior Vice President
Stephen R. Laut Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G.
13
<PAGE>
Poleondakis Senior Vice President
Gregory K.
Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
James P. Syrett Senior Vice President
Peter J. Szabo Senior Vice President
Richard A. Winge Senior Vice President
Warren W. Babcock III Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
William P.
Beanblossom 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
Linda A. Finnerty Vice President
William C. Fisher Vice President
Robert M. Frank Vice President
Gerard J. Friscia Vice President
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
14
<PAGE>
James E. Gunter Vice President
Alan Halfenger Vice President
George R. Hrabovsky Vice President
Robert H. Joseph Vice President
& Treasurer
Richard D. Keppler Vice President
Sheila M. Lamb Vice President
Donna M. Lamback Vice President
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
Christopher J.
MacDonald Vice President
Daniel D. McGinley Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Nicole M.
Nolan-Keister Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Raymond S. Sclafani Vice President
William J. Strott, Jr. Vice President
Richard E. Tambourine Vice President
Nicholas K. Willett Vice President
15
<PAGE>
Neil B. 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
Sohaila S. Farsheed Assistant Vice President
Leon M. Fern Assistant Vice President
William B. Hanigan Assistant Vice President
Vicky M. Hayes Assistant Vice President
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
Michael F. Mahoney Assistant Vice President
Renate S. Mars Assistant Vice President
Shawn P. McClain Assistant Vice President
Thomas F. Monnerat Assistant Vice President
Joanna D. Murray Assistant Vice President
Jeanette M. Nardella Assistant Vice President
Carol H. Rappa Assistant Vice President
Karen C. Satterberg Assistant Vice President
Robert M. Smith Assistant Vice President
Joseph T. Tocyloski Assistant Vice President
16
<PAGE>
Mark R. Manley Assistant Secretary
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
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 State Street Bank and Trust Company, the Registrant's
Custodian, 225 Franklin Street, Boston, Massachusetts 02110. All
other records so required to be maintained are maintained at the
offices of Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York 10105.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Not applicable.
17
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********************
NOTICE
A copy of the Agreement and Declaration of Trust of The
Alliance Portfolios (the "Trust") is on file with the Secretary
of State of The Commonwealth of Massachusetts and notice is
hereby given that this Registration Statement has been executed
on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the
obligations of or arising out of this Registration Statement are
not binding upon any of the Trustees, officers or shareholder
individually but are binding only upon the assets and property of
the Trust.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it meets all of the
requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York
and State of New York, on the 25th day of August, 1995.
THE ALLIANCE PORTFOLIOS
by /s/ John D. Carifa
___________________
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment to the Registration Statement
has been signed below by the following persons in the capacities
and on the dates indicated:
SIGNATURE TITLE DATE
_________ _____ ____
1) Principal
Executive Officer
/s/ John D. Carifa Chairman and August 25, 1995
__________________ President
John D. Carifa
2) Principal Financial
and Accounting Officer
/s/ Mark D. Gersten Treasurer and Chief August 25, 1995
___________________ Financial Officer
Mark D. Gersten
19
<PAGE>
ALL OF THE TRUSTEES
Alberta B. Arthurs
Ruth Block
John D. Carifa
Richard W. Couper
Brenton W. Harries
Donald J. Robinson
by \s\ Edmund P. Bergan. Jr. August 25, 1995
_________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
20
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
_______ ___________ __________
4(d). Specimen Share Certificates
9(c). Transfer Agent Agreement
10(b). Opinion and Consent of Counsel
11. Consent of Independent
Accountants
17. Financial Data Schedules
21
00250184.AA3
<PAGE>
Exhibit 4(d)
-------------
Alliance Capital [logo]
Number Shares
Alliance Conservative Investors Fund
CERTIFICATE FOR CLASS C SHARES OF BENEFICIAL INTEREST,
PAR VALUE $.00001 PER SHARE
ACCOUNT No. ALPHA CODE CUSIP 01877F 85 6
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the registered holder of
FULLY PAID AND NON-ASSESSABLE, CLASS C SHARES OF BENEFICIAL
INTEREST, PAR VALUE $.00001 PER SHARE, IN
- ---- ALLIANCE CONSERVATIVE INVESTORS FUND - CLASS C SHARES -----
under, in accordance with, and subject to all the provisions of,
an Agreement and Declaration of Trust dated March 26, 1987,
amended April 21, 1993, a copy of which has been filed with the
Secretary of the commonwealth of Massachusetts, to all of which
provisions, as the same may be in effect from time to time, the
holder and every transferee and assignee hereof agrees by the
acceptance of this share certificate.
This certificate is not valid until countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trustees under said Agreement and
Declaration of Trust, acting not individually, but as such
Trustees, have caused to be affixed to this certificate the
facsimile Seal of the Trust and the facsimile signature of two
duly authorized officers of the Trust, acting not individually,
but as such officers.
Dated:
[Seal of the Alliance Portfolios, 1987 Massachusetts Trust]
/s/ Edmund P. Bergan Jr. /s/ David H. Dievler
Secretary Chairman of the Trustees
Countersigned TRANSFER AGENT
BY Alliance Fund Services Inc. Authorized Signature
R. Used under license from the owner Alliance Capital Management
L.P.
00250184.AA8
<PAGE>
Exhibit 4(d)
-------------
Alliance Capital [logo]
Number Shares
Alliance Growth Investors Fund
CERTIFICATE FOR CLASS C SHARES OF BENEFICIAL INTEREST,
PAR VALUE $.00001 PER SHARE
ACCOUNT No. ALPHA CODE CUSIP 01877F 88 0
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
is the registered holder of
FULLY PAID AND NON-ASSESSABLE, CLASS C SHARES OF BENEFICIAL
INTEREST, PAR VALUE $.00001 PER SHARE, IN
---- ALLIANCE GROWTH INVESTORS FUND - CLASS C SHARES -----
under, in accordance with, and subject to all the provisions of,
an Agreement and Declaration of Trust dated March 26, 1987,
amended April 21, 1993, a copy of which has been filed with the
Secretary of the commonwealth of Massachusetts, to all of which
provisions, as the same may be in effect from time to time, the
holder and every transferee and assignee hereof agrees by the
acceptance of this share certificate.
This certificate is not valid until countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trustees under said Agreement and
Declaration of Trust, acting not individually, but as such
Trustees, have caused to be affixed to this certificate the
facsimile Seal of the Trust and the facsimile signature of two
duly authorized officers of the Trust, acting not individually,
but as such officers.
Dated:
[Seal of the Alliance Portfolios, 1987 Massachusetts Trust]
/s/ Edmund P. Bergan Jr. /s/ David H. Dievler
Secretary Chairman of the Trustees
Countersigned TRANSFER AGENT
BY Alliance Fund Services Inc. Authorized Signature
R. Used under license from the owner Alliance Capital Management
L.P.
00250184.AA8
<PAGE>
ALLIANCE FUND SERVICES, INC.
TRANSFER AGENCY AGREEMENT
AGREEMENT, dated as of August 2, 1993, between THE
ALLIANCE PORTFOLIOS, a Massachusetts business trust and an open-
end investment company registered with the Securities and
Exchange Commission (the "SEC") under the Investment Company Act
of 1940 (the "Investment Company Act"), having its principal
place of business at 1345 Avenue of Americas, New York, New York
10105 (the "Fund"), and ALLIANCE FUND SERVICES, INC., a Delaware
corporation registered with the SEC as a transfer agent under the
Securities Exchange Act of 1934, having its principal place of
business at 500 Plaza Drive, Secaucus, New Jersey 07094 ("Fund
Services"), provides as follows:
WHEREAS, Fund Services has agreed to act as transfer
agent to the Fund for the purpose of recording the transfer,
issuance and redemption of shares of each series of the common
stock or shares of beneficial interest, as applicable, of the
Fund ("Shares" or "Shares of a Series"), transferring the Shares,
disbursing dividends and other distributions to shareholders of
the Fund, and performing such other services as may be agreed to
pursuant hereto;
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the parties do hereby
agree as follows:
<PAGE>
SECTION 1. The Fund hereby appoints Fund Services as
its transfer agent, dividend disbursing agent and
shareholderservicing agent for the Shares, and Fund Services
agrees to act in such capacities upon the terms set forth in this
Agreement. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings assigned to them in
SECTION 30.
SECTION 2.
(a) The Fund shall provide Fund Services with copies of
the following documents:
(1) Specimens of all forms of certificates for Shares;
(2) Specimens of all account application forms and
other documents relating to Shareholders' accounts;
(3) Copies of each Prospectus;
(4) Specimens of all documents relating to withdrawal
plans instituted by the Fund, as described in SECTION 16; and
(5) Specimens of all amendments to any of the foregoing
documents.
(b) The Fund shall furnish to Fund Services a supply of
blank Share Certificates for the Shares and, from time to time,
will renew such supply upon Fund Services' request. Blank Share
Certificates shall be signed manually or by facsimile signatures
of officers of the Fund authorized to sign by law or pursuant to
the by-laws of the Fund and, if required by Fund Services, shall
bear the Fund's seal or a facsimile thereof.
2
<PAGE>
SECTION 3. Fund Services shall make original issues of
Shares in accordance with SECTIONS 13 and 14 and the Prospectus
upon receipt of (i) Written Instructions requesting the issuance,
(ii) a certified copy of a resolution of the Fund's Board
ofDirectors or Trustees authorizing the issuance, (iii) necessary
funds for the payment of any original issue tax applicable to
such Shares, and (iv) an opinion of the Fund's counsel as to the
legality and validity of the issuance, which opinion may provide
that it is contingent upon the filing by the Fund of an
appropriate notice with the SEC, as required by Rule 24f-2 of the
Investment Company Act, as amended from time to time.
SECTION 4. Transfers of Shares shall be registered and,
subject to the provisions of SECTION 10 in the case of Shares
evidenced by Share Certificates, new Share Certificates shall be
issued by Fund Services upon surrender of outstanding Share
Certificates in the form deemed by Fund Services to be properly
endorsed for transfer, which form shall include (i) all necessary
endorsers' signatures guaranteed by a member firm of a national
securities exchange or a domestic commercial bank or through
other procedures mutually agreed to between the Fund and Fund
Services, (ii) such assurances as Fund Services may deem
necessary to evidence the genuineness and effectiveness of each
endorsement and (iii) satisfactory evidence of compliance with
all applicable laws relating to the payment or collection of
taxes.
3
<PAGE>
SECTION 5. Fund Services shall forward Share
Certificates in "non-negotiable" form by first-class or
registered mail, or by whatever means Fund Services deems equally
reliable and expeditious. While in transit to the addressee, all
deliveries of Share Certificates shall be insured by Fund
Services as it deems appropriate. Fund Services shall not mail
Share Certificates in "negotiable" form, unless requested in
writing by the Fund and fully indemnified by the Fund to Fund
Services' satisfaction.
SECTION 6. In registering transfers of Shares, Fund
Services may rely upon the Uniform Commercial Code as in effect
from time to time in the State in which the Fund is incorporated
or organized or, if appropriate, in the State of New Jersey;
provided, that Fund Services may rely in addition or
alternatively on any other statutes in effect in the State of New
Jersey or in the state under the laws of which the Fund is
incorporated or organized that, in the opinion of Fund Services'
counsel, protect Fund Services and the Fund from liability
arising from (i) not requiring complete documentation in
connection with an issuance or transfer, (ii) registering a
transfer without an adverse claim inquiry, (iii) delaying
registration for purposes of an adverse claim inquiry or (iv)
refusing registration in connection with an adverse claim.
SECTION 7. Fund Services may issue new Share
Certificates in place of those lost, destroyed or stolen, upon
4
<PAGE>
receiving indemnity satisfactory to Fund Services; and may issue
new Share Certificates in exchange for, and upon surrender of,
mutilated Share Certificates as Fund Services deems appropriate.
SECTION 8. Unless otherwise directed by the Fund, Fund
Services may issue or register Share Certificates reflecting the
signature, or facsimile thereof, of an officer who has
died,resigned or been removed by the Fund. The Fund shall file
promptly with Fund Services' approval, adoption or ratification
of such action as may be required by law or by Fund Services.
SECTION 9. Fund Services shall maintain customary stock
registry records for Shares of each Series noting the issuance,
transfer or redemption of Shares and the issuance and transfer of
Share Certificates. Fund Services may also maintain for Shares
of each Series an account entitled "Unissued Certificate
Account," in which Fund Services will record the Shares, and
fractions thereof, issued and outstanding from time to time for
which issuance of Share Certificates has not been requested.
Fund Services is authorized to keep records for Shares of each
Series containing the names and addresses of record of
Shareholders, and the number of Shares, and fractions thereof,
from time to time owned by them for which no Share Certificates
are outstanding. Each Shareholder will be assigned a single
account number for Shares of each Series, even though Shares for
which Certificates have been issued will be accounted for
separately.
5
<PAGE>
SECTION 10. Fund Services shall issue Share
Certificates for Shares only upon receipt of a written request
from a Shareholder and as authorized by the Fund. If Shares are
purchased or transferred without a request for the issuance of a
Share Certificate, Fund Services shall merely note on its stock
registry records the issuance or transfer of the Shares and
fractions thereof and credit or debit, as appropriate, the
Unissued Certificate Account and the respective Shareholders'
accounts with the Shares. Whenever Shares, and fractions
thereof, owned by Shareholders are surrendered for redemption,
Fund Services may process the transactions by making appropriate
entries in the stock transfer records, and debiting the Unissued
Certificate Account and the record of issued Shares outstanding;
it shall be unnecessary for Fund Services to reissue Share
Certificates in the name of the Fund.
SECTION 11. Fund Services shall also perform the usual
duties and function required of a stock transfer agent for a
corporation, including but not limited to (i) issuing Share
Certificates as treasury Shares, as directed by Written
Instructions, and (ii) transferring Share Certificates from one
Shareholder to another in the usual manner. Fund Services may
rely conclusively and act without further investigation upon any
list, instruction, certification, authorization, Share
Certificate or other instrument or paper reasonably believed by
it in good faith to be genuine and unaltered, and to have been
6
<PAGE>
signed, countersigned or executed or authorized by a duly-
authorized person or persons, or by the Fund, or upon the advice
of counsel for the Fund or for Fund Services. Fund Services may
record any transfer of Share Certificates which it reasonably
believes in good faith to have been duly authorized, or may
refuse to record any transfer of Share Certificates if, in good
faith, it reasonably deems such refusal necessary in order
toavoid any liability on the part of either the Fund or Fund
Services.
SECTION 12. Fund Services shall notify the Fund of any
request or demand for the inspection of the Fund's share records.
Fund Services shall abide by the Fund's instructions for granting
or denying the inspection; provided, however, Fund Services may
grant the inspection without such instructions if it is advised
by its counsel that failure to do so will result in liability to
Fund Services.
SECTION 13. Fund Services shall observe the following
procedures in handling funds received:
(a) Upon receipt at the office designated by the Fund
of any check or other order drawn or endorsed to the Fund or
otherwise identified as being for the account of the Fund, and,
in the case of a new account, accompanied by a new account
application or sufficient information to establish an account as
provided in the Prospectus, Fund Services shall stamp the
transmittal document accompanying such check or other order with
7
<PAGE>
the name of the Fund and the time and date of receipt and shall
forthwith deposit the proceeds thereof in the custodial account
of the Fund.
(b) In the event that any check or other order for the
purchase of Shares is returned unpaid for any reason, Fund
Services shall, in the absence of other instructions from the
Fund, advise the Fund of the returned check and prepare such
documents and information as may be necessary to cancel
promptlyany Shares purchased on the basis of such returned check
and any accumulated income dividends and capital gains
distributions paid on such Shares.
(c) As soon as possible after 4:00 p.m., Eastern time
or at such other times as the Fund may specify in Written or Oral
Instructions for any Series (the "Valuation Time") on each
Business Day Fund Services shall obtain from the Fund's Adviser a
quotation (on which it may conclusively rely) of the net asset
value, determined as of the Valuation Time on that day. On each
Business Day Fund Services shall use the net asset value(s)
determined by the Fund's Adviser to compute the number of Shares
and fractional Shares to be purchased and the aggregate purchase
proceeds to be deposited with the Custodian. As necessary but no
more frequently than daily (unless a more frequent basis is
agreed to by Fund Services), Fund Services shall place a purchase
order with the Custodian for the proper number of Shares and
fractional Shares to be purchased and promptly thereafter shall
8
<PAGE>
send written confirmation of such purchase to the Custodian and
the Fund.
SECTION 14. Having made the calculations required by
SECTION 13, Fund Services shall thereupon pay the Custodian the
aggregate net asset value of the Shares purchased. The aggregate
number of Shares and fractional Shares purchased shall then be
issued daily and credited by Fund Services to the Unissued
Certificate Account. Fund Services shall also credit each
Shareholder's separate account with the number of Sharespurchased
by such Shareholder. Fund Services shall mail written
confirmation of the purchase to each Shareholder or the
Shareholder's representative and to the Fund if requested. Each
confirmation shall indicate the prior Share balance, the new
Share balance, the Shares for which Stock Certificates are
outstanding (if any), the amount invested and the price paid for
the newly-purchased Shares.
SECTION 15. Prior to the Valuation Time on each
Business Day, as specified in accordance with SECTION 13, Fund
Services shall process all requests to redeem Shares and, with
respect to each Series, shall advise the Custodian of (i) the
total number of Shares available for redemption and (ii) the
number of Shares and fractional Shares requested to be redeemed.
Upon confirmation of the net asset value by the Fund's Adviser,
Fund Services shall notify the Fund and the Custodian of the
redemption, apply the redemption proceeds in accordance with
9
<PAGE>
SECTION 16 and the Prospectus, record the redemption in the stock
registry books, and debit the redeemed Shares from the Unissued
Certificates Account and the individual account of the
Shareholder.
In lieu of carrying out the redemption procedures
described in the preceding paragraph, Fund Services may, at the
request of the Fund, sell Shares to the Fund as repurchases from
Shareholders, provided that the sale price is not less than the
applicable redemption price. The redemption procedures shall
then be appropriately modified.
SECTION 16. Fund Services will carry out the following
procedures with respect to Share redemptions:
(a) As to each request received by the Fund from or on
behalf of a Shareholder for the redemption of Shares, and unless
the right of redemption has been suspended as contemplated by the
Prospectus, Fund Services shall, within seven days after receipt
of such redemption request, either (i) mail a check in the amount
of the proceeds of such redemption to the person designated by
the Shareholder or other person to receive such proceeds or, (ii)
in the event redemption proceeds are to be wired through the
Federal Reserve Wire System or by bank wire pursuant to
procedures described in the Prospectus, cause such proceeds to be
wired in Federal funds to the bank or trust company account
designated by the Shareholder to receive such proceeds. Funds
Services shall also prepare and send a confirmation of such
10
<PAGE>
redemption to the Shareholder. Redemptions in kind shall be made
only in accordance with such Written Instructions as Fund
Services may receive from the Fund. The requirements as to
instruments of transfer and other documentation, the
determination of the appropriate redemption price and the time of
payment shall be as provided in the Prospectus, subject to such
additional requirements consistent therewith as may be
established by mutual agreement between the Fund and Fund
Services. In the case of a request for redemption that does not
comply in all respects with the requirements for redemption, Fund
Services shall promptly so notify the Shareholder and shalleffect
such redemption at the price in effect at the time of receipt of
documents complying with such requirements. Fund Services shall
notify the Fund's Custodian and the Fund on each Business Day of
the amount of cash required to meet payments made pursuant to the
provisions of this paragraph and thereupon the Fund shall
instruct the Custodian to make available to Fund Services in
timely fashion sufficient funds therefor.
(b) Procedures and standards for effecting and
accepting redemption orders from Shareholders by telephone or by
such check writing service as the Fund may institute may be
established by mutual agreement between Fund Services and the
Fund consistent with the Prospectus.
(c) For purposes of redemption of Shares that have been
purchased by check within fifteen (15) days prior to receipt of
11
<PAGE>
the redemption request, the Fund shall provide Fund Services with
Written Instructions concerning the time within which such
requests may be honored.
(d) Fund Services shall process withdrawal orders duly
executed by Shareholders in accordance with the terms of any
withdrawal plan instituted by the Fund and described in the
Prospectus. Payments upon such withdrawal orders and redemptions
of Shares held in withdrawal plan accounts in connection with
such payments shall be made at such times as the Fund may
determine in accordance with the Prospectus.
(e) The authority of Fund Services to perform its
responsibilities under SECTIONS 15 and 16 with respect to
theShares of any Series shall be suspended if Fund Services
receives notice of the suspension of the determination of the net
asset value of the Series.
SECTION 17. Upon the declaration of each dividend and
each capital gains distribution by the Fund's Board of Directors
or Trustees, the Fund shall notify Fund Services of the date of
such declaration, the amount payable per Share, the record date
for determining the Shareholders entitled to payment, the payment
and the reinvestment date price.
SECTION 18. Upon being advised by the Fund of the
declaration of any income dividend or capital gains distribution
on account of its Shares, Fund Services shall compute and prepare
for the Fund records crediting such distributions to
12
<PAGE>
Shareholders. Fund Services shall, on or before the payment date
of any dividend or distribution, notify the Fund and the
Custodian of the estimated amount required to pay any portion of
a dividend or distribution which is payable in cash, and
thereupon the Fund shall, on or before the payment date of such
dividend or distribution, instruct the Custodian to make
available to Fund Services sufficient funds for the payment of
such cash amount. Fund Services will, on the designated payment
date, reinvest all dividends in additional shares and promptly
mail to each Shareholder at his address of record a statement
showing the number of full and fractional Shares (rounded to
three decimal places) then owned by the Shareholder and the net
asset value of such Shares; provided, however, that if
aShareholder elects to receive dividends in cash, Fund Services
shall prepare a check in the appropriate amount and mail it to
the Shareholder at his address of record within five (5) business
days after the designated payment date, or transmit the
appropriate amount in Federal funds in accordance with the
Shareholder's agreement with the Fund.
SECTION 19. Fund Services shall prepare and maintain
for the Fund records showing for each Shareholder's account the
following:
A. The name, address and tax identification number of
the Shareholder;
13
<PAGE>
B. The number of Shares of each Series held by the
Shareholder;
C. Historical information including dividends paid and
date and price for all transactions;
D. Any stop or restraining order placed against such
account;
E. Information with respect to the withholding of any
portion of income dividends or capital gains distributions as are
required to be withheld under applicable law;
F. Any dividend or distribution reinvestment election,
withdrawal plan application, and correspondence relating to the
current maintenance of the account;
G. The certificate numbers and denominations of any
Share Certificates issued to the Shareholder; and
H. Any additional information required by Fund
Services to perform the services contemplated by this Agreement.
Fund Services agrees to make available upon request by
the Fund or the Fund's Adviser and to preserve for the periods
prescribed in Rule 31a-2 of the Investment Company Act any
records related to services provided under this Agreement and
required to be maintained by Rule 31a-1 of that Act, including:
(i) Copies of the daily transaction register for each
Business Day of the Fund;
(ii) Copies of all dividend, distribution and
reinvestment blotters;
14
<PAGE>
(iii) Schedules of the quantities of Shares of each
Series distributed in each state for purposes of any state's laws
or regulations as specified in Oral or Written Instructions given
to Fund Services from time to time by the Fund or its agents; and
(iv) Such other information, including Shareholder
lists, and statistical information as may be agreed upon from
time to time by the Fund and Fund Services.
SECTION 20. Fund Services shall maintain those records
necessary to enable the Fund to file, in a timely manner, form N-
SAR (Semi-Annual Report) or any successor report required by the
Investment Company Act or rules and regulations thereunder.
SECTION 21. Fund Services shall cooperate with the
Fund's independent public accountants and shall take reasonable
action to make all necessary information available to such
accountants for the performance of their duties.
SECTION 22. In addition to the services described
above, Fund Services will perform other services for the Fund as
may be mutually agreed upon in writing from time to time, which
may include preparing and filing Federal tax forms with the
Internal Revenue Service, and, subject to supervisory oversight
by the Fund's Adviser, mailing Federal tax information to
Shareholders, mailing semi-annual Shareholder reports, preparing
the annual list of Shareholders, mailing notices of Shareholders'
meetings, proxies and proxy statements and tabulating proxies.
Fund Services shall answer the inquiries of certain Shareholders
15
<PAGE>
related to their share accounts and other correspondence
requiring an answer from the Fund. Fund Services shall maintain
dated copies of written communications from Shareholders, and
replies thereto.
SECTION 23. Nothing contained in this Agreement is
intended to or shall require Fund Services, in any capacity
hereunder, to perform any functions or duties on any day other
than a Business Day. Functions or duties normally scheduled to
be performed on any day which is not a Business Day shall be
performed on, and as of, the next Business Day, unless otherwise
required by law.
SECTION 24. For the services rendered by Fund Services
as described above, the Fund shall pay to Fund Services an
annualized fee at a rate to be mutually agreed upon from time to
time. Such fee shall be prorated for the months in which this
Agreement becomes effective or is terminated. In addition,
theFund shall pay, or Fund Services shall be reimbursed for, all
out-of-pocket expenses incurred in the performance of this
Agreement, including but not limited to the cost of stationery,
forms, supplies, blank checks, stock certificates, proxies and
proxy solicitation and tabulation costs, all forms and statements
used by Fund Services in communicating with Shareholders of the
Fund or especially prepared for use in connection with its
services hereunder, specific software enhancements as requested
by the Fund, costs associated with maintaining withholding
16
<PAGE>
accounts (including non-resident alien, Federal government and
state), postage, telephone, telegraph (or similar electronic
media) used in communicating with Shareholders or their
representatives, outside mailing services, microfiche/microfilm,
freight charges and off-site record storage. It is agreed in
this regard that Fund Services, prior to ordering any form in
such supply as it estimates will be adequate for more than two
years' use, shall obtain the written consent of the Fund. All
forms for which Fund Services has received reimbursement from the
Fund shall be the property of the Fund.
SECTION 25. Fund Services shall not be liable for any
taxes, assessments or governmental charges that may be levied or
assessed on any basis whatsoever in connection with the Fund or
any Shareholder, excluding taxes assessed against Fund Services
for compensation received by it hereunder.
SECTION 26.
(a) Fund Services shall at all times act in good faith
and with reasonable care in performing the services to be
provided by it under this Agreement, but shall not be liable for
any loss or damage unless such loss or damage is caused by the
negligence, bad faith or willful misconduct of Fund Services or
its employees or agents.
(b) The Fund shall indemnify and hold Fund Services
harmless from all loss, cost, damage and expense, including
reasonable expenses for counsel, incurred by it resulting from
17
<PAGE>
any claim, demand, action or suit in connection with the
performance of its duties hereunder, or as a result of acting
upon any instruction reasonably believed by it to have been
properly given by a duly authorized officer of the Fund, or upon
any information, data, records or documents provided to Fund
Services or its agents by computer tape, telex, CRT data entry or
other similar means authorized by the Fund; provided that this
indemnification shall not apply to actions or omissions of Fund
Services in cases of its own bad faith, willful misconduct or
negligence, and provided further that if in any case the Fund may
be asked to indemnify or hold Fund Services harmless pursuant to
this Section, the Fund shall have been fully and promptly advised
by Fund Services of all material facts concerning the situation
in question. The Fund shall have the option to defend Fund
Services against any claim which may be the subject of this
indemnification, and in the event that the Fund so elects it
willso notify Fund Services, and thereupon the Fund shall retain
competent counsel to undertake defense of the claim, and Fund
Services shall in such situations incur no further legal or other
expenses for which it may seek indemnification under this
paragraph. Fund Services shall in no case confess any claim or
make any compromise in any case in which the Fund may be asked to
indemnify Fund Services except with the Fund's prior written
consent.
Without limiting the foregoing:
18
<PAGE>
(i) Fund Services may rely upon the advice of the Fund
or counsel to the Fund or Fund Services, and upon statements of
accountants, brokers and other persons believed by Fund Services
in good faith to be expert in the matters upon which they are
consulted. Fund Services shall not be liable for any action
taken in good faith reliance upon such advice or statements;
(ii) Fund Services shall not be liable for any action
reasonably taken in good faith reliance upon any Written
Instructions or certified copy of any resolution of the Fund's
Board of Directors or Trustees, including a Written Instruction
authorizing Fund Services to make payment upon redemption of
Shares without a signature guarantee; provided, however, that
upon receipt of a Written Instruction countermanding a prior
Instruction that has not been fully executed by Fund Services,
Fund Services shall verify the content of the second Instruction
and honor it, to the extent possible. Fund Services may rely
upon the genuineness of any such document, or copy
thereof,reasonably believed by Fund Services in good faith to
have been validly executed;
(iii) Fund Services may rely, and shall be protected by
the Fund in acting, upon any signature, instruction, request,
letter of transmittal, certificate, opinion of counsel,
statement, instrument, report, notice, consent, order, or other
paper or document reasonably believed by it in good faith to be
19
<PAGE>
genuine and to have been signed or presented by the purchaser,
the Fund or other proper party or parties; and
(d) Fund Services may, with the consent of the Fund,
subcontract the performance of any portion of any service to be
provided hereunder, including with respect to any Shareholder or
group of Shareholders, to any agent of Fund Services and may
reimburse the agent for the services it performs at such rates as
Fund Services may determine; provided that no such reimbursement
will increase the amount payable by the Fund pursuant to this
Agreement; and provided further, that Fund Services shall remain
ultimately responsible as transfer agent to the Fund.
SECTION 27. The Fund shall deliver or cause
to be delivered over to Fund Services (i) an accurate list of
Shareholders, showing each Shareholder's address of record,
number of Shares of each Series owned and whether such Shares are
represented by outstanding Share Certificates or by non-
certificated Share accounts and (ii) all Shareholder records,
files, and other materials necessary or appropriate for proper
performance of the functions assumed by Fund Services under
thisAgreement (collectively referred to as the "Materials"). The
Fund shall indemnify Fund Services and hold it harmless from any
and all expenses, damages, claims, suits, liabilities, actions,
demands and losses arising out of or in connection with any
error, omission, inaccuracy or other deficiency of such
Materials, or out of the failure of the Fund to provide any
20
<PAGE>
portion of the Materials or to provide any information in the
Fund's possession needed by Fund Services to knowledgeably
perform its functions; provided the Fund shall have no obligation
to indemnify Fund Services or hold it harmless with respect to
any expenses, damages, claims, suits, liabilities, actions,
demands or losses caused directly or indirectly by acts or
omissions of Fund Services or the Fund's Adviser.
SECTION 28. This Agreement may be amended from time to
time by a written supplemental agreement executed by the Fund and
Fund Services and without notice to or approval of the
Shareholders; provided this Agreement may not be amended in any
manner which would substantially increase the Fund's obligations
hereunder unless the amendment is first approved by the Fund's
Board of Directors or Trustees, including a majority of the
Directors or Trustees who are not a party to this Agreement or
interested persons of any such party, at a meeting called for
such purpose, and thereafter is approved by the Fund's
Shareholders if such approval is required under the Investment
Company Act or the rules and regulations thereunder. The parties
hereto may adopt procedures as may be appropriate or
practicalunder the circumstances, and Fund Services may
conclusively rely on the determination of the Fund that any
procedure that has been approved by the Fund does not conflict
with or violate any requirement of its Articles of Incorporation
21
<PAGE>
or Declaration of Trust, By-Laws or Prospectus, or any rule,
regulation or requirement of any regulatory body.
SECTION 29. The Fund shall file with Fund Services a
certified copy of each operative resolution of its Directors or
Trustees authorizing the execution of Written Instructions or the
transmittal of Oral Instructions and setting forth authentic
signatures of all signatories authorized to sign on behalf of the
Fund and specifying the person or persons authorized to give Oral
Instructions on behalf of the Fund. Such resolution shall
constitute conclusive evidence of the authority of the person or
persons designated therein to act and shall be considered in full
force and effect, with Fund Services fully protected in acting in
reliance therein, until Fund Services receives a certified copy
of a replacement resolution adding or deleting a person or
persons authorized to give Written or Oral Instructions. If the
officer certifying the resolution is authorized to give Oral
Instructions, the certification shall also be signed by a second
officer of the Fund.
SECTION 30. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or supplement
hereto, shall have the meanings specified below, insofar as the
context will allow.
(a) Business Day: Any day on which the Fund is open
for business as described in the Prospectus.
22
<PAGE>
(b) Custodian: The term Custodian shall mean the
Fund's current custodian or any successor custodian acting as
such for the Fund.
(c) Fund's Adviser: The term Fund's Adviser shall mean
Alliance Capital Management L.P. or any successor thereto who
acts as the investment adviser or manager of the Fund.
(d) Oral Instructions: The term Oral Instructions
shall mean an authorization, instruction, approval, item or set
of data, or information of any kind transmitted to Fund Services
in person or by telephone, vocal telegram or other electronic
means, by a person or persons reasonably believed in good faith
by Fund Services to be a person or persons authorized by a
resolution of the Board of Directors or Trustees of the Fund to
give Oral Instructions on behalf of the Fund. Each Oral
Instruction shall specify whether it is applicable to the entire
Fund or a specific Series of the Fund.
(e) Prospectus: The term Prospectus shall mean a
prospectus and related statement of additional information
forming part of a currently effective registration statement
under the Investment Company Act and, as used with the respect to
Shares or Shares of a Series, shall mean the prospectuses and
related statements of additional information covering the Shares
or Shares of the Series.
(f) Securities: The term Securities shall mean bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and
23
<PAGE>
other securities and investments from time to time owned by the
Fund.
(g) Series: The term Series shall mean any series of
Shares of the common stock or of beneficial interest of the Fund
that the Fund may establish from time to time.
(h) Share Certificates: The term Share Certificates
shall mean the stock certificates or certificates representing
shares of beneficial interest for the Shares.
(i) Shareholders: The term Shareholders shall mean the
registered owners from time to time of the Shares, as reflected
on the stock registry records of the Fund.
(j) Written Instructions: The term Written
Instructions shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to
Fund Services in original writing containing original signatures,
or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or
documentary means, at the request of a person or persons
reasonably believed in good faith by Fund Services to be a person
or persons authorized by a resolution of the Board of Directors
or Trustees of the Fund to give Written Instruction shall specify
whether it is applicable to the entire Fund or a specific Series
of the Fund.
SECTION 31. Fund Services shall not be liable for the
loss of all or part of any record maintained or preserved by it
24
<PAGE>
pursuant to this Agreement or for any delays or errors occurring
by reason of circumstances beyond its control, including but not
limited to acts of civil or military authorities, national
emergencies, fire, flood or catastrophe, acts of God,
insurrection, war, riot, or failure of transportation,
communication or power supply, except to the extent that Fund
Services shall have failed to use its best efforts to minimize
the likelihood of occurrence of such circumstances or to mitigate
any loss or damage to the Fund caused by such circumstances.
SECTION 32. The Fund may give Fund Services sixty (60)
days and Fund Services may give the Fund (90) days written notice
of the termination of this Agreement, such termination to take
effect at the time specified in the notice. Upon notice of
termination, the Fund shall use its best efforts to obtain a
successor transfer agent. If a successor transfer agent is not
appointed within ninety (90) days after the date of the notice of
termination, the Board of Directors or Trustees of the Fund
shall, by resolution, designate the Fund as its own transfer
agent. Upon receipt of written notice from the Fund of the
appointment of the successor transfer agent and upon receipt of
Oral or Written Instructions Fund Services shall, upon request of
the Fund and the successor transfer agent and upon payment of
Fund Services reasonable charges and disbursements, promptly
transfer to the successor transfer agent the original or copiesof
all books and records maintained by Fund Services hereunder and
25
<PAGE>
cooperate with, and provide reasonable assistance to, the
successor transfer agent in the establishment of the books and
records necessary to carry out its responsibilities hereunder.
SECTION 33. Any notice or other communication required
by or permitted to be given in connection with this Agreement
shall be in writing, and shall be delivered in person or sent by
first-class mail, postage prepaid, to the respective parties.
Notice to the Fund shall be given as follows until
further notice:
The Alliance Portfolios
1345 Avenue of the Americas
New York, New York 10105
Attention: Clerk
Notice to Fund Services shall be given as follows until
further notice:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
SECTION 34. The Fund represents and warrants to Fund
Services that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly
authorized by resolution of the Fund's Board of Directors or
Trustees. Fund Services represents and warrants to the Fund that
the execution and delivery of this Agreement by the undersigned
officer of Fund Services has also been duly and validly
authorized.
SECTION 35. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original,
26
<PAGE>
and shall become effective on the last date of signature below
unless otherwise agreed by the parties. Unless sooner terminated
pursuant to SECTION 32, this Agreement will continue until July
31, 1994 and will continue in effect thereafter for successive 12
month periods only if such continuance is specifically approved
at least annually by the Board of Directors or Trustees or by a
vote of the stockholders of the Fund and in either case by a
majority of the Board of Directors or Trustees who are not
parties to this Agreement or interested persons of any such
party, at a meeting called for the purpose of voting on this
Agreement.
SECTION 36. This Agreement shall extend to and shall
bind the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of Fund
Services or by Fund Services without the written consent of the
Fund, authorized or approved by a resolution of the Fund's Board
of Directors or Trustees. Notwithstanding the foregoing, either
party may assign this Agreement without the consent of the other
party so long as the assignee is an affiliate, parent or
subsidiary of the assigning party and is qualified to act under
the Investment Company Act, as amended from time to time.
SECTION 38. This Agreement shall be governed by the
laws of the State of New Jersey.
27
<PAGE>
WITNESS the following signatures:
THE ALLIANCE PORTFOLIOS
BY: /s/ Barbara J. Krumsiek
___________________________
Barbara J. Krumsiek
TITLE:Vice President-Marketing
_________________________
ALLIANCE FUND SERVICES, INC.
BY: /s/ George Hrabovsky
___________________________
George Hrabovsky
TITLE: President
__________________________
28
00250184.AA9
<PAGE>
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
(617)951-7000
August 24, 1995
The Alliance Portfolios (the "Trust")
1345 Avenue of the Americas
New York, New York 10105
Ladies and Gentlemen:
You have informed us that you propose to offer and sell from
time to time 72,378 shares of beneficial interest, $.00001 par
value per share, of the Alliance Conservative Investors Fund and
247,686 shares of beneficial interest, $.00001 par value per
share (collectively, the "Shares") of the Alliance Short-Term
U.S. Government Fund, each a portfolio series (a "Fund"), of The
Alliance Portfolios (the "Trust"), for cash or securities at the
net asset value per share, which Shares are in addition to your
shares of beneficial interest which you have previously offered
and sold or which you are currently offering.
We have examined copies of your Agreement and Declaration of
Trust as on file at the office of the Secretary of State of The
Commonwealth of Massachusetts. We are familiar with the actions
taken by your Trustees to authorize the issue and sale from time
to time of your shares of beneficial interest. We have assumed
that upon the issuance of the Shares, the Trust will receive the
net asset value thereof, which in all cases will at least be
equal to the par value thereof. We have also examined a copy of
your Bylaws and such other documents as we have deemed necessary
for the purposes of this opinion.
We assume that appropriate action will be taken to register
or qualify the sale of the Shares under any applicable state and
federal laws regulating offerings and sales of securities.
Based upon the foregoing, we are of the opinion that:
1. The Trust is a legally organized and validly existing
voluntary association with transferable shares of beneficial
interest under the laws of The Commonwealth of Massachusetts and
is authorized to issue an unlimited number of shares of
beneficial interest.
2. Upon the issue of any of the Shares referred to in the
first paragraph hereof for cash or securities at net asset value,
and the receipt of the appropriate consideration thereof, such
<PAGE>
Shares so issued will be validly issued, fully paid and
nonassessable by the Trust.
The Trust is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law,
shareholders could, under certain circumstances, be held
personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or its
Trustees. 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 such Fund solely by reason of his
being or having been a shareholder. Thus, the risk of a
shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations.
We understand that this opinion is to be used in connection
with the registration of the Shares for offering and sale
pursuant to the Securities Act of 1933, as amended, and the
provisions of Rule 24e-2 under the Investment Company Act of
1940, as amended. We consent to the filing of this opinion with
and as a part of Post-Effective No. 17 to your Registration
Statement on Form N-1A.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
2
00250184.AA4
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional
Information constituting part of this Post-Effective Amendment
No. 17 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated June 22, 1995,
relating to the financial statements and financial highlights of
Alliance Growth Investors Fund and Alliance Conservative
Investors Fund, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report
into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the
headings "Statements and Reports" and "Independent Accountants"
in such Statement of Additional Information and to the reference
to us under the heading "Financial Highlights" in such
Prospectus.
We also consent to the incorporation by reference of our report
dated September 24, 1994 relating to the financial statements and
financial highlights of Alliance Strategic Balanced Fund, our
report dated October 14, 1994 relating to the financial
statements and financial highlights of Alliance Short-Term U.S.
Government Fund and our report dated December 21, 1994 relating
to the financial statements and financial highlights of Alliance
Growth Fund into this Registration Statement and to the
references to us under the headings "Statements and Reports" and
"Independent Accountants" in such Statement of Additional
Information and to the reference to us under the heading
"Financial Highlights" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
August 25, 1995
00250184.AB1
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PAGE>
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2
<PAGE>
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[NUMBER] 5
<NAME> CONSERVATIVE INVESTORS FUND
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[OTHER-ITEMS-LIABILITIES] 136124
[TOTAL-LIABILITIES] 1396445
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3
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4
00250184.ab3
</TABLE>
