<PAGE>
As filed with the Securities and Exchange Commission
on August 28, 1997
File No. 33-12988
811-05088
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 26
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
Amendment No. 28
________________________________
THE ALLIANCE PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, N.Y. 10105
(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, N.Y. 10105
(Name and address of Agent for Service)
It is proposed that this filing will become effective (check
appropriate box):
X immediately upon filing pursuant to paragraph (b)
on September 1, 1997 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)(2)
on (date) pursuant to paragraph (a)(2) of Rule 485.
<PAGE>
The Registrant has previously registered an
indefinite number or amount of its shares of beneficial
interest pursuant to Rule 24f-2. The Registrant filed a
Rule 24f-2 Notice with respect to Alliance Short-Term U.S.
Government Fund's fiscal year ended August 31, 1996 on
October 29, 1996, Alliance Strategic Balanced Fund's fiscal
year ended July 31, 1996 on September 27, 1996, Alliance
Conservative Investors Fund's fiscal year ended April 30,
1997 on June 26, 1997, Alliance Growth Investors Fund's
fiscal year ended April 30, 1997 on June 26, 1997 and
Alliance Growth Fund's fiscal year ended October 31, 1996 on
December 27, 1996.
<PAGE>
Cross Reference Sheet
(as required by Rule 481(a))
ITEM NUMBER OF FORM N-1A PROSPECTUS LOCATION
PART A OR CAPTION
________________________ ___________________
Cover Page Front Cover Page
Synopsis Expense Information
3. Condensed Financial Information Financial Highlights
4. General Description of
Registrant General Information;
Description of the
Funds
5. Management of the Trust Management of the
Funds
5A. Management's Discussion of
Fund's Performance Not Applicable
6. Capital Stock and Other
Securities General Information;
Dividends,
Distributions and
Taxes
7. Purchase of Securities
Being Offered Purchase and Sale of
Shares; Management of
the Funds
8. Redemption or Repurchase Purchase and Sale of
Shares
9. Pending Legal Proceedings Not Applicable
<PAGE>
STATEMENT OF
ADDITIONAL
ITEM NUMBER IN PART B INFORMATION CAPTION
_____________________ ___________________
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and
Policies Investment Objectives
and Policies;
Investment
Techniques;
Investment
14. Management of the Fund Management of the
Trust
15. Control Persons and Principal
Holders of Securities General Information
16. Investment Advisory and
Other Services Management of the
Trust; Expenses of
the Funds
17. Brokerage Allocation and
Other Practices Portfolio
Transactions;
Expenses of the Funds
18. Capital Stock and Other
Securities General Information
19. Purchase, Redemption and Pricing
of Securities Being Offered Purchase and
Redemption of Shares;
Net Asset Value
20. Tax Status Dividends,
Distribution and
Taxes
21. Underwriters Expenses of the
Funds; Purchase and
Redemption of Shares
22. Calculation of Performance Data General Information
<PAGE>
23. Financial Statements Financial Statements
This Post-Effective Amendment No. 26 relates solely to
Alliance Conservative Investors and Growth Investors Funds. No
information contained in the Registrant's Registration Statement
relating to any other series of the Registrant is amended or
superseded hereby.
<PAGE>
<PAGE>
ALLIANCE
- --------------------------------------------------------------------------------
ASSET
- --------------------------------------------------------------------------------
ALLOCATION FUNDS
- --------------------------------------------------------------------------------
P.O. Box 1520, Seaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
September 2, 1997
Alliance Growth Investors Fund
Alliance Conservative Investors Fund
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
The Funds at a Glance................................................... 2
Expense Information..................................................... 3
Financial Highlights.................................................... 5
Description of the Funds................................................ 8
Purchase and Sale of Shares............................................. 12
Management of the Funds................................................. 14
Dividends, Distributions and Taxes...................................... 16
General Information..................................................... 16
Appendix A.............................................................. A-1
</TABLE>
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 2, 1997, 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.
This Prospectus offers three classes of shares which may be purchased at the
investor's choice at a price equal to their net asset value (i) plus an initial
sales charge imposed at the time of purchase (the "Class A shares"), (ii) with a
contingent deferred sales charge imposed on most redemptions made within four
years of purchase (the "Class B shares"), or (iii) without any initial or
contingent deferred sales charge, as long as the shares are held for one year or
more (the "Class C shares"). See "Purchases 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.
Investment Adviser [LOGO OF ALLIANCE APPEARS HERE]
Alliance Capital Management L.P.
1345 Avenue of the Americas (R)/SM These are registered marks used
New York, New York 10105 under license from the owner, Alliance
Capital Management L.P.
<PAGE>
THE FUNDS AT A GLANCE
The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.
THE FUNDS 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 the 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 fix-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 more than 100 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world, with over $199
billion in assets under management as of June 30, 1997. Alliance provides
investment management services to 29 of the FORTUNE 100 companies.
GETTING STARTED...
Shares of the Funds are available through your financial representative and most
banks, insurance companies and brokerage firms nationwide. Shares can be
purchased for a minimum initial investment of $250, and subsequent investments
can be made for as little as $50. In addition, Alliance offers several time and
money savings services to investors. Be sure to ask your financial
representative about:
Automatic Reinvestment
Automatic Investment Program
Retirement Plans
Dividend Direction Plans
Shareholders Communications
Auto Exchange
Systematic Withdrawals
A Choice Of Purchase Plans
Telephone Transactions
24 Hour Information
[LOGO OF ALLIANCE APPEARS HERE]
(R)/SM These are registered marks used under license
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.
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 1.0% during
the first year, decreasing the first year,
1.0% annually 0% thereafter
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(c)..................................... 0.75% 0.75% 0.75%
Rule 12b-1 fees........................................ 0.30%(d) 1.00% 1.00%
Other expenses(e)...................................... 0.69% 0.70% 0.70%
---- ---- ----
Total Fund operating expenses............................ 1.74% 2.45% 2.45%
==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1.0% deferred
sales charge if redeemed within one year of purchase. See "Purchase and Sale
of Shares--How to Buy Shares"--page 12.
(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 13.
(c) Reflects the termination by Alliance of a waiver of a portion of its
management fee. Actual management fees and actual Total Fund operating
expenses were .75%, 75%, and .75% and 1.73% and 2.44% and 2.43% for Class A,
Class B and Class C, respectively.
(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 the number of shareholder
accounts maintained for the Fund. The expenses shown do not reflect the
application of credits that reduce fund expenses.
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 $1,000
investment, assuming (i) a 5% annual return throughout
the period and (ii) redemption at the end of the period:
Class A................................................. $59 $95 $133 $239
Class B................................................. $65 $96 $131 $261(a)
Class C................................................. $35 $76 $131 $279
An investor would pay the following expenses on the
same $1,000 investment assuming no redemption at
the end of the period:
Class A................................................. $59 $95 $133 $239
Class B................................................. $25 $76 $131 $261(a)
Class C................................................. $25 $76 $131 $279
</TABLE>
- --------------------------------------------------------------------------------
(a) Assumes the Class B shares converted to Class A shares after eight years.
See not (b) above.
3
<PAGE>
CONSERVATIVE 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 divident reinvestments................. None None None
Deferred sales charge (as a percentage of original purchase
price or redemption proceeds, whichever is lower............ None 4.0% during 1.0% during
the first year, decreasing the first year,
1.0% annually 0% thereafter
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).............................. 0.25% 0.25% 0.25%
Rule 12b-1 fees................................................ 0.30%(d) 1.00% 1.00%
Other expenses(e).............................................. 0.85% 0.85% 0.85%
---- ---- ----
Total Fund operating expenses (after waiver)(f).................. 1.40% 2.10% 2.10%
==== ==== ====
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1.0% deferred
sales charge if redeemed within one year of purchase. See "Purchase and Sale
of Shares-- How to Buy Shares"--page 12.
(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 13.
(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 the number of shareholder
accounts maintained for the Fund. The expenses shown do not reflect the
application of credits that reduce fund expenses.
(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 1.90%, 2.61% and 2.60%, 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 period and (ii) redemption at the end of the period:
Class A................................................... $56 $85 $116 $203
Class B................................................... $61 $86 $113 $225(a)
Class C................................................... $31 $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 Conduct Rules 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 regulations of the Securities
and Exchange Commission (the "Commission"). The examples should not be
considered a representation of future expenses; actual expenses may be greater
or less than those shown. Actual return will vary.
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 Year Ended Year Ended 1992(a)
April 30, April 30, April 30, April 30, To April 30,
1997 1996 1995 1994 1993
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............................. $ 14.08 $ 12.08 $ 11.61 $ 11.35 $ 10.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income............................................ .16* .10* .25* .12* .20*
Net realized and unrealized gain on investments.................. .76 2.75 .38 .39 1.43
------- ------- ------- ------- -------
Net increase in net asset value from operations.................. .92 2.85 .63 .51 1.63
------- ------- ------- ------- -------
Less: Distributions
Dividends from net investment income............................. (.19) (.26) (.15) (.11) (.16)
Distributions from net realized gains............................ (1.69) (.59) (.01) (.14) (.12)
------- ------- ------- ------- -------
Total dividends and distributions................................ (1.88) (.85) (.16) (.25) (.28)
------- ------- ------- ------- -------
Net asset value, end of period................................... $ 13.12 $ 14.08 $ 12.08 $ 11.61 $ 11.35
======= ======= ======= ======= =======
Total Return
Total investment return based on net asset value(b).............. 6.69% 23.87% 5.57% 4.46% 16.32%
======= ======= ======= ======= =======
Ratios/Supplemental Data:
Net assets, end of year (000's omitted).......................... $27,453 $30,608 $22,189 $16,759 $ 3,503
Ratios to average net assets of:
Expenses, net of waivers/reimbursements........................ 1.55% 1.40% 1.40% 1.40% 1.40%(c)
Expenses, before waivers/reimbursements........................ 1.73%(d) 1.65% 1.97% 2.33% 4.27%(c)
Net investment income.......................................... 1.14% 2.02% 2.32% 1.67% 1.91%(c)
Portfolio turnover rate.......................................... 133% 209% 134% 96% 114%
Average commission rate(c)....................................... $ .0435 - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the footnotes on page 7.
5
<PAGE>
<TABLE>
<CAPTION>
Growth Investors Fund
Class B
------------------------------------------------------------------
May 4,
Year Ended Year Ended Year Ended Year Ended Year Ended
April 30, April 30, April 30, April 30, To April 30,
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 14.08 $ 12.09 $ 11.65 $ 11.41 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations
Net investment income....................................... .06* .06* .17* .07* .07*
Net realized and unrealized gain (loss) on investments...... .77 2.70 .38 .37 1.45
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value from operations.. .83 2.76 .55 .44 1.52
Less; Distributions
Dividends from net investment income........................ (.11) (.18) (.10) (.06) (.05)
Distributions from net realized gains....................... (1.69) (.59) (.01) (.14) (.06)
-------- -------- -------- -------- --------
Total dividends and distributions........................... (1.80) (.77) (.11) (.20) (.11)
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 13.11 $ 14.08 $ 12.09 $ 11.65 $ 11.41
======== ======== ======== ======== ========
Total Return
Total investment return based on net asset value(b)......... 5.98% 23.05% 4.83% 3.84% 15.23%
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)..................... $ 61,709 $ 59,978 $ 43,328 $ 30,871 $ 7,999
Ratios to average net assets of:
Expenses, net of waivers/reimbursements................... 2.26% 2.10% 2.10% 2.11% 2.15%(c)
Expenses, before waivers/reimbursements................... 2.44%(d) 2.35% 2.67% 3.00% 4.48%(c)
Net investment income..................................... .42% 1.15% 1.62% .95% 1.07%(c)
Portfolio turnover rate..................................... 1.33% 209% 134% 96% 114%
Average commission rate(c).................................. $ .0435 - - - -
</TABLE>
<TABLE>
<CAPTION>
Growth Investors Fund
Class C
----------------------------------------------------
August 2,
Year Ended Year Ended Year Ended Year Ended
April 30, April 30, April 30, April 30,
1997 1996 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 14.09 $ 12.10 $ 11.65 $ 11.88
-------- -------- -------- --------
Income from Investment Operations
Net investment income....................................... .06* .06* .18* .08*
Net realized and unrealized gain (loss) on investments...... .77 2.70 .38 (.11)
-------- -------- -------- --------
Net increase (decrease) in net asset value from operations.. .83 2.76 .56 (.03)
-------- -------- -------- --------
Less; Distributions
Dividends from net investment income........................ (.11) (.18) (.10) (.06)
Distributions from net realized gains....................... (1.69) (.59) (.01) (.14)
-------- -------- -------- --------
Total dividends and distributions........................... (1.80) (.77) (.11) (.20)
-------- -------- -------- --------
Net asset value, end of period.............................. $ 13.12 $ 14.09 $ 12.10 $ 11.65
======== ======== ======== ========
Total Return
Total investment return based on net asset value(b)......... 5.97% 23.04% 4.91% (.26)%
======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)..................... $ 6,033 $ 5,915 $ 4,247 $ 3,280
Ratios to average net assets of:
Expenses, net of waivers/reimbursements................... 2.26% 2.10% 2.10% 2.10%(c)
Expenses, before waivers/reimbursements................... 2.43%(d) 2.36% 2.66% 3.02%(c)
Net investment income..................................... .42% 1.15% 1.62% 1.04%(c)
Portfolio turnover rate..................................... 133% 209% 134% 96%
Average commission rate(c).................................. $ .0435 - - -
</TABLE>
<TABLE>
<CAPTION>
Conservative Investors Fund
Class A
------------------------------------------------------------------
May 4,
Year Ended Year Ended Year Ended Year Ended 1992(a)
April 30, April 30, April 30, April 30, To April 30,
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........................ $ 11.14 $ 10,38 $ 10.37 $ 10.79 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income....................................... .41* .51* .48* .31* .39*
Net realized and unrealized gain (loss) on investments...... .46 .80 (.02) (.26) .82
-------- -------- -------- -------- --------
Net increase in net asset value from operations............. .87 1.31 .46 .05 1.21
-------- -------- -------- -------- --------
Less: Distributions
Dividends from net investment income........................ (.45) (.55) (.45) (.29) (.36)
Distributions from net realized gains....................... (.25) -0- -0- (.18) (.06)
-------- -------- -------- -------- --------
Total dividends and distributions........................... (.70) (.55) (.45) (.47) (.42)
-------- -------- -------- -------- --------
Net asset value, end of period.............................. $ 11.31 $ 11.14 $ 10.38 $ 10.37 $ 10.79
======== ======== ======== ======== ========
Total Return
Total investment return based on net asset value(b)......... 7.90% 12.59% 4.65% .35% 12.25%
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of year (000's omitted)..................... $ 11,860 $ 14,161 $ 16,105 $ 15,595 $ 5,339
Ratios to average net assets of:
Expenses, net of waivers/reimbursements................... 1.40% 1.40% 1.40% 1.40% 1.40%(c)
Expenses, before waivers/reimbursements................... 1.90%(d) 1.73% 1.83% 2.03% 3.45%(c)
Net investment income..................................... 3.66% 4.43% 4.66% 3.43% 3.92%(c)
Portfolio turnover rate..................................... 1.74% 267% 248% 133% 84%
Average commission rate(c).................................. $ .0428 - - - -
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on page 7.
6
<PAGE>
<TABLE>
<CAPTION>
Conservative Investors Fund
Class B
-------------------------------------------------------------
May 4,
Year Ended Year Ended Year Ended Year Ended 1992(a)
April 30, April 30, April 30, April 30, To April 30,
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $ 11.31 $ 10.51 $ 10.47 $ 10.88 $ 10.00
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income.......................... .34* .43* .46* .24* .24*
Net realized and
unrealized gain (loss) on investments........ .46 .82 (.02) (.26) .89
-------- -------- -------- -------- --------
Net increase (decrease) in net
asset value from operations.................. .80 1.25 .44 (.02) 1.13
-------- -------- -------- -------- --------
Less: Distributions
Dividends from net
investment income............................ (.37) (.45) (.40) (.21) (.22)
Distributions from net
realized gains............................... (.25) -0- -0- (.18) (.03)
-------- -------- -------- -------- --------
Total dividends and distributions.............. (.62) (.45) (.40) (.39) (.25)
-------- -------- -------- -------- --------
Net asset value, end of period................. $ 11.49 $ 11.31 $ 10.51 $ 10.47 $ 10.88
======== ======== ======== ======== ========
Total Return
Total investment return based
on net asset value(b)........................ 7.10% 11.95% 3.91% (.31)% 11.39%
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of
year (000's omitted)......................... $ 28,037 $ 31,979 $ 30,542 $ 29,697 $ 9,210
Ratios to average net assets of:
Expenses, net of
waivers/reimbursements..................... 2.10% 2.10% 2.10% 2.11% 2.15%(c)
Expenses, before
waivers/reimbursements..................... 2.61%(d) 2.44% 2.52% 2.73% 3.95%(c)
Net investment income........................ 2.96% 3.72% 3.96% 2.72% 3.06%(c)
Portfolio turnover rate........................ 174% 267% 248% 133% 84%
Average commission rate(e)..................... $ .0428 - - - -
<CAPTION>
Conservative Investors Fund
Class C
------------------------------------------------
August 2,
Year Ended Year Ended Year Ended 1993(f)
April 30, April 30, April 30, To April 30,
1997 1996 1995 1994
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period.......................... $ 11.31 $ 10.52 $ 10.47 $ 11.12
-------- -------- -------- --------
Income from Investment
Operations:
Net investment income.......................... .34* .41* .46* .18*
Net realized and
unrealized gain (loss) on investments........ .46 .83 (.01) (.50)
-------- -------- -------- --------
Net increase (decrease) in net
asset value from operations.................. .80 1.24 .45 (.32)
-------- -------- -------- --------
Less: Distributions
Dividends from net
investment income............................ (.37) (.45) (.40) (.15)
Distributions from net
realized gains............................... (.25) -0- -0- (.18)
-------- -------- -------- --------
Total dividends and distributions.............. (.62) (.45) (.40) (.33)
-------- -------- -------- --------
Net asset value, end of period................. $ 11.49 $ 11.31 $ 10.52 $ 10.47
======== ======== ======== ========
Total Return
Total investment return based
on net asset value(b)........................ 7.10% 11.84% 4.01% (2.98)%
======== ======== ======== ========
Ratios/Supplemental Data:
Net assets, end of
year (000's omitted)......................... $ 4,150 $ 5,326 $ 4,419 $ 4,375
Ratios to average net assets of:
Expenses, net of
waivers/reimbursements..................... 2.10% 2.10% 2.10% 2.10%(c)
Expenses, before
waivers/reimbursements..................... 2.60%(d) 2.45% 2.52% 2.69%(c)
Net investment income........................ 2.96% 3.71% 3.97% 2.94%(c)
Portfolio turnover rate........................ 174% 267% 248% 133%
Average commission rate(e)..................... $ .0428 - - -
</TABLE>
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* 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) For the year ended April 30, 1997, the Growth Investors Fund and
Conservative Investors Fund benefited from an expense offset arrangement
with the transfer agent. Had such expense offsets not been in effect, the
ratios of expenses before waiver/reimbursements to average net assets would
have been 1.74%, 2.45%, and 2.45% for Class A, B and C shares of the Growth
Investors Fund, respectively, and 1.91%, 2.62% and 2.61% for Class A, B and
C shares of the Conservative Investors Fund, respectively.
(e) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission per share for trades on which commissions
are charged.
(f) Commencement of distribution.
7
<PAGE>
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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 selecting specific securities 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. The 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 is therefore intended to provide for upside potential
without excessive volatility.
Alliance has established an asset allocation committee (the "Committee"), 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 rages 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 an assessment of 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 to 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 U.S. and non-U.S. issuers.
All fixed-income securities owned by the Fund will be of investment grade at the
time of purchase. This means that they will be in one of the top four rating
categories assigned by Standard & Poor's ("S&P"), Moody's Investors Service,
Inc. ("Moody's"), Duff & Phelps Credit Rating Co. ("Duff & Phelps") or Fitch
Investors Service, L.P. ("Fitch"), or will be unrated securities of comparable
quality as determined by Alliance. Securities in the fourth such rating category
(rated BBB by S&P, Duff & Phelps or Fitch, or Baa by Moody's) 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 appropriate under 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 Alliance expects to
exceed that of the U.S. 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.
8
<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 without limit 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, in the opinion of Alliance, 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.,BB or lower by S&P, Duff & Phelps
or Fitch or Ba or lower by Moody's) 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 at the time of
purchase below investment grade, that is, securities rated BB or lower by S&P or
Ba or lower by Moody's, or in unrated securities deemed to be of comparable
quality at the time of purchase 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 without limit 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 or nationalization of assets, 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 that 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 increased with respect to 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.
Securites of issuers located in these countries tend to have volatile prices and
may offer significant potential for loss.
The value of foreign investments measured in U.S. dollars will rise or fail
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 that 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
9
<PAGE>
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 be able to sell them only 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 may vary, it is not possible to
predict accurately the realized yield or average life of a particular issue of
pass-through certificates. 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. Conversely,
during periods of rising interest rates, a reduction in prepayments may increase
the effective maturities of the securities, subjecting them to a greater risk of
decline in market value in response to rising interest rates. 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 in 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 the 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 of credit card receivables are subject to
prepayment, which may reduce the overall return to certificate holders.
Certificate holders may also experience delays in payment on the certificates if
the full amounts due on underlying sales contracts or receivables are not
realized by the trust because of unanticipated legal or administrative costs of
enforcing the contracts or because of depreciation or damage to the collateral
(usually automobiles) securing certain contracts, or other factors. If
consistent with its investment objective and policies, each of 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 or purchase
Ba or lower by Moody's or BB or lower by S&P, Duff & Phelps or Fitch, or, if
unrated, judged by Alliance to be of comparable quality ("High-Yield
Securities"). The Growth Investors Fund will generally invest in securities
rated at the time or purchase at least Caa- by Moody's or CCC- by S&P, Duff &
Phelps or Fitch, or in unrated securities judged by Alliance to be of comparable
quality at the time of purchase. However, from time to time, the Fund may invest
in securities rated in the lowest grades of Moody's S&P, Duff & Phelps or Fitch,
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, 1997, 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 incidence of default) than comparable higher-rated
securities because issuers are more vulnerable to economic downturns, higher
interest rates or adverse
10
<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 or 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 increase 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, S&P, Duff & Phelps and Fitch, 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 of 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 appropriate under the circumstances.
Securities rated Baa by Moody's or BBB by S&P, Duff & Phelps or Fitch or judged
by the advisor to be of comparable quality share some of the speculative
characteristics of the High-Yield Securities described above.
Convertible Securities. Each Fund may invest in convertible securities. These
securities normally provide a yield that is higher than that of the underlying
stock but lower than that of a fixed-income security without the conversion
feature. Also, the price of the convertible security will normally vary to some
degree with changes in the price of the underlying stock. In addition, the price
of the convertible security will also generally 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.
Equity-Linked Debt Securities. Equity-linked debt securities are securities
with respect to which the amount of interest and/or principal that the issuer
thereof is obligated to pay is linked to the performance of a specified index of
equity securities. Such amount may be significantly greater or less than
payment obligations in respect of other types of debt securities. Adverse
changes in equity securities indices and other adverse changes in the securities
markets may reduce payments made under, and/or the principal of, equity-linked
debt securities held by a Fund. Furthermore, as with any debt securities, the
values of equity-linked debt securities will generally vary inversely with
changes in interest rates. A Fund's ability to dispose of equity-linked debt
securities will depend on the availability of liquid markets for such
securities. Investment in equity-linked debt securities may be considered to be
speculative. As with other securities, a Fund could lose its entire investment
in equity-linked debt securities.
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 to liquidate other investments in order to
satisfy its dividend requirements at times when Alliance would not otherwise
deem it advisable to do so.
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
11
<PAGE>
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 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: (1) invest
more than 5% of its total assets in the securities of any one issuer (other
than U.S. Government securities and repurchase agreement 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.
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PURCHASE AND SALE
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OF SHARES
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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.
Existing shareholders may make subsequent purchases by electronic funds transfer
if they have completed the Telephone Transactions section of the Subscription
Application or the Shareholder Options form obtained from Alliance Fund
Services, Inc. ("AFS"). Telephone purchase orders can be made by calling (800)
221-5672, may not exceed $500,000, must be received by the Fund by 3:00 p.m.
Eastern time on a Fund business day and will be made at the next day's net asset
value (less any applicable sales charge).
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%
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$100,000 to less
than $250,000 3.36 3.25 3.00
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$250,000 to less
than $500,000 2.30 2.25 2.00
- --------------------------------------------------------------------------------
$500,000 to less
than $1,000,000 1.78 1.75 1.50
- --------------------------------------------------------------------------------
</TABLE>
On purchases of $1,000,000 or more, you pay no initial sales charge but may pay
a contingent deferred sales charge ("CDSC") equal to 1% of the lesser of net
asset value at the time of redemption or original cost if you redeem within one
year; Alliance may pay the dealer or agent a fee of up to 1% of the dollar
amount purchased. Certain purchases of Class A shares may qualify for reduced or
eliminated sales charges in
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<PAGE>
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 CDSC if you redeem shares within four years after
purchase. The amount of the CDSC (expressed as a percentage of the lesser of the
current net asset value or original cost) will vary according to the number of
years from the purchase of 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>
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). Because of
these higher fees, 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 at net asset value without any initial sales
charge. The Fund will thus receive the full amount of your purchase, and, if you
hold your shares for one year or more, you will receive the entire net asset
value of your shares upon redemption. Class C shares incur higher distribution
fees than Class A shares and do not convert to any other class of shares of the
Fund. Because of these higher fees, Class C shares pay correspondingly lower
dividends and may have a lower net asset value than Class A shares.
Class C shares redeemed within one year of purchase will be subject to a CDSC
equal to 1.0% of the lesser of their original cost or net asset value at the
time of redemption.
APPLICATION OF THE CDSC
Shares obtained from dividend or distribution reinvestment are not subject to
any CDSC. The CDSC is deducted from the amount of the redemption and is paid to
AFD. The CDSC will be waived on redemptions of shares following the death or
disability of a shareholder, to meet the requirements of certain qualified
retirement plans or pursuant to a monthly, bimonthly or quarterly systematic
withdrawal plan. See the Statement of Additional Information.
HOW THE FUNDS VALUE THEIR SHARES
The net asset value of each Class of shares of a Fund is calculated by dividing
the value of the Fund's net assets allocable to that Class by the outstanding
shares of that Class. Shares are valued each day the New York Stock Exchange
("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 most 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, after one year, 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 $1,000,000. 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 may 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 through your financial intermediary. The price you
will receive is the net asset value (less any applicable CDSC for Class B
shares) next calculated after the Fund receives your request in proper form.
Proceeds generally will be sent to you within seven days. However, for shares
recently purchased by check, 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
Your broker must receive your request before 4:00 p.m. Eastern time and your
broker must transmit your request to the Fund by 5:00 p.m. Eastern time to
receive that day's net asset value (less any applicable CDSC). 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 AFS
13
<PAGE>
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, representatives, fiduciaries and surviving joint owners. For
details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
1-800-221-5672
Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to (800) 221-5672.
Telephone redemption requests must be made by 4:00 p.m. Eastern time on a Fund
business day in order to receive that day's net asset value, and generally may
be made only once in any 30-day period. A shareholder who has completed the
Shareholder Options form obtained from AFS, can elect to have the proceeds of
his or her redemption sent to his or her bank via an electronic funds transfer.
Proceeds of telephone redemptions also may be sent by check to a shareholder's
address of record. Redemption requests by electronic funds transfer may not
exceed $100,000 and redemption requests by check may not exceed $50,000.
Telephone redemption is not available for shares held in nominee or street name
accounts or retirement plan accounts or shares held by a shareholder who has
changed his or her address of record within the previous 30 calendar days.
General
The sale of shares is a taxable transaction for Federal tax purposes. Under
unusual circumstances, 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 before the
account is closed and may make additional purchases during that time to prevent
the closing of the account.
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 your should issue written instructions
to AFS. AFS is not responsible for the authenticity of telephonic requests to
purchase, sell or exchange shares. AFS will employ reasonable procedures to
verify that telephone requests are genuine, and could be liable for losses
resulting from unauthorized transactions if it failed to do so. Dealers and
agents may charge a commission for handling telephonic requests. The telephone
service may be suspended or terminated at any time without notice.
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. Telephone exchange requests must be received by
AFS by 4:00 p.m. Eastern time on a Fund business day in order to receive that
day's net asset value.
Shares will continue to age without regard to exchanges for purposes of
determining the CDSC, if any, upon redemption and, in the case of Class B
shares, conversion to Class A shares. After an exchange, your Class B shares
will automatically convert to Class A shares in accordance with the conversion
schedule applicable to the Class B shares of the Alliance Mutual Fund you
originally purchased for cash ("original shares"). When redemption occurs, the
CDSC applicable to the original shares is applied.
Please read carefully the prospectus of the 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. Nicholas D.P. Carn is the person principally responsible
for the day-to-day management of each Fund's portfolio. Mr. Carn has been a Vice
President of Alliance Capital Management Corporation since 1997. Prior thereto,
he was Chief Investment Officer and Portfolio Manager of Draycott Partners.
Alliance is a leading international investment manager supervising client
accounts with assets as of June 30, 1997 totalling more than $199 billion (of
which more than $71 billion represents the assets of investment companies).
Alliance's clients are primarily major corporate employee benefit plans, public
employee retirement plans, insurance companies, banks, foundations and endowment
funds. The 54 registered investment companies managed by Alliance comprising
more than 116 separate investment portfolios currently have nearly three million
shareholder accounts. As of June 30, 1997,
14
<PAGE>
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 the Conservative Investors
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
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 Fund's
shares.
The Funds are not obligated under the Plans to pay any distribution services fee
in excess of the amounts set forth above. 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 Fund's 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, 1997 with
respect to the Class B shares of the Conservative Investors Fund amounted to
approximately $1,743,587, or approximately 6.22% of the net assets represented
by Class B shares on that date. Unreimbursed distribution expenses incurred as
of April 30, 1997 with respect to the Class C shares of the Conservative
Investors Fund amounted to approximately $369,224, or approximately 8.90% of the
net assets represented by Class C shares on that date. Unreimbursed
distribution expenses incurred as of April 30, 1997 with respect to the Class B
shares of the Growth Investors Fund amounted to approximately $2,420,294, or
approximately 3.92% of the net assets represented by Class B shares on that
date. Unreimbursed distribution expenses incurred as of April 30, 1997 with
respect to the Class C shares of the Growth Investors Fund amounted to
approximately $289,999, or approximately 4.81% 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
15
<PAGE>
underwriter or distributor of securities. However, in the opinion of 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 120 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 Funds to distribute net
investment income quarterly and any net realized capital gains at least
annually. It is the intention of Growth Investors Fund to distribute any
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 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 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, expect 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 with respect to a dividend unless the
corporation hold shares in the Fund on the ex-dividend date and for at least 45
more days during the 90-day period surrounding the ex-dividend date. Futhermore,
the dividends-received deduction will be disallowed to the extent that a
corporation's investment in shares of a Fund is financed with indebtedness.
Pursuant to the Taxpayer Relief Act of 1997, two different tax rates apply to
net capital gains-that is, the excess of net gains from capital assets held for
more than one year ("long-term capital assets") over net losses from capital
assets held for not more than one year ("short-term capital assets"). One rate
(generally 28%) applies to net gains on capital assets held for more than one
year but not more than 18 months ("mid-term gains") and a second, preferred rate
(generally 20%) applies to the balance of such net capital gains ("adjusted net
capital gains"). Distributions of net capital gains will be treated in the hands
of shareholders as mid-term gains to the extent designated by the Fund as
deriving from net gains from assets held for more than one year but not more
than 18 months, and the balance will be treated as adjusted net capital gains.
Distributions of mid-term gains and adjusted net capital gains will be taxable
to shareholders as such, regardless of how long a shareholder has held the
shares in the Fund.
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 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 divided or distribution. Futhermore, 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 extent of any capital gain
distributions received by the shareholder with respect to such shares.
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 Conduct Rules of the National Association of Securities
Dealers, Inc, and subject to seeking best price nd 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 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
16
<PAGE>
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 classes of shares, three of which, designated Class A
shares, Class B shares and Class C shares, are offered by this Prospectus. 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 a dollar amount (determined by
reference to the total number of shareholder accounts for all Alliance funds in
the Fund's broad investment category) charged to the Fund for each shareholder
account. The transfer agency fee with respect to the Class B and Class C shares
will be higher than the transfer agency fee with respect to the Class A shares,
reflecting the differential costs associated with the Class B and Class C
contingent deferred sales charge.
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.
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. 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.
17
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A:
- --------------------------------------------------------------------------------
BOND RATINGS
- --------------------------------------------------------------------------------
STANDARD & POOR'S
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.
MOODY'S INVESTORS SERVICE, INC.
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 then 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 issue 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.
DUFF & PHELPS RATING CO.
AAA--Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA- --High credit quality. Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
A+, A, A- --Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
A-1
<PAGE>
BBB+, BBB, BBB--Below average protection factors but still considered sufficient
for prudent investment. Considerable variability in risk during economic
cycles.
BB+, BB, BB--Below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according
to industry conditions or company fortunes. Overall quality may move up or
down frequently within this category.
B+, B, B--Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely according
to economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC--Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal or interest. Protection factors are narrow and
risk can be substantial with unfavorable economic/industry conditions, and/or
with unfavorable company developments.
DD--Defaulted debt obligations. Issuer failed to meet scheduled principal and/or
Interest payments.
FITCH INVESTORS SERVICE, L.P.
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated F 1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity
throughout the life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default.
The ability to meet obligations requires an advantageous business and economic
environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are in imminent default in payment of interest or principal.
DDD, DD, D--Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. DDD
represents the highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.
Plus(+) Minus (-)--Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the AAA, DDD, DD or D categories.
NR--Indicates that Fitch does not rate the specific issue.
A-2
<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 Alliance Fund Services
is informed otherwise.
[_] GIFT/TRANSFER TO A MINOR
-----------------------------------------------------------------------------
Custodian - One Name Only (First Name) (MI) (Last Name)
-----------------------------------------------------------------------------
Minor (First Name) (MI) (Last Name)
--------------------------------------------------------
Minor's Social Security Number (Required to open account)
Under the State of ____ (Minor's Residence) Uniform Gifts/Transfer to Minors
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, Investment only retirement plan, or other
----------
Entity
--------------------------- ----------------------------------------------
Tax ID Number Trustee Name (Retirement Plans Only)
- --------------------------------------------------------------------------------
2. YOUR ADDRESS
- --------------------------------------------------------------------------------
-----------------------------------------------------------------------------
Street
-----------------------------------------------------------------------------
City State Zip Code
-----------------------------------------------------------------------------
If Non-U.S., Specify Country
------------------------------------ ---------------------------------
Daytime Phone Evening Phone
I am a: [_] U.S. Citizen [_] Non-Resident Alien
[_] Resident Alien [_] Other
-- --
| |
For Alliance Use Only
| |
-- --
<PAGE>
- --------------------------------------------------------------------------------
3. YOUR INITIAL INVESTMENT
- --------------------------------------------------------------------------------
The minimum investment is $250 per fund. The maximum investment in Class B is
$250,000; Class C is $1,000,000.
I hereby subscribe for shares of the following Fund(s) and elect distribution
options as indicated.
Dividend and Capital Gain
Distribution Options: R Reinvest distributions into my fund account.
- ----------------------
C Send my distributions in cash to the
- -----------------------------
- -------------------------- address I have provided in Section 2.
BROKER/DEALER USE ONLY (Complete Section 4D for direct deposit to
WIRE CONFIRM # your bank account. Complete Section 4E for
- -------------------------- payment to a third party).
- -------------------------- D Direct my distributions to another Alliance
- -------------------------------------------
Fund. Complete the appropriate portion of
----
Section 4A to direct your distributions
(dividends and capital gains) to another
Alliance Fund (the $250 minimum investment
requirement applies to Funds into which
distributions are directed).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS OF SHARES
Make all checks payable to: ----------------------------------------------------------- DISTRIBUTIONS OPTIONS
Alliance Fund Services CONTINGENT *CIRCLE*
INITIAL SALES DEFERRED ASSET-BASED ------------------------------------
- -------------------------------- CHARGE SALES CHARGE SALES CHARGE CAPITAL
ALLIANCE FUND NAME A B C DIVIDENDS GAINS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Conservative Investors Fund $ (42) $ (53) $ (342) R C D R C D
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Investors Fund (47) (59) (347) R C D R C D
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
R C D R C D
- ------------------------------------------------------------------------------------------------------------------------------------
R C D R C D
- -------------------------------------- --------------------------------------------------------------------------------------------
- -------------------------------------- ------------------------------------------------------
TOTAL INVESTMENT $ $ $
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MY SOCIAL SECURITY (TAX IDENTIFICATION) NUMBER IS: |_||_||_||_||_||_||_||_||_|
- --------------------------------------------------------------------------------
4. YOUR SHAREHOLDER OPTIONS
- --------------------------------------------------------------------------------
- -------------------------------------
A. AUTOMATIC INVESTMENT PLANS (AIP)
- -------------------------------------
[_] WITHDRAW FROM MY BANK ACCOUNT
I authorize Alliance to draw on my bank account for investment in my fund
account(s) as indicated below (Complete Section 4D also).
<TABLE>
<CAPTION>
Monthly Dollar Amount Day of Withdrawal
Fund Name ($25 minimum) (1st thru 31st) Circle "all" or applicable months
<S> <C> <C> <C>
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Your bank must be a member of the National Automated Clearing House Association
(NACHA).
[_] DIRECT MY DISTRIBUTIONS
As indicated in Section 3, I would like my dividends and/or capital gains
directed to the same class of shares of another Alliance fund.
<TABLE>
<CAPTION>
"From" Fund Name "From" Fund Account # (if existing) "To" Fund Name "To" Fund Account # (if existing)
<S> <C> <C> <C>
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[_] EXCHANGE SHARES MONTHLY
I authorize Alliance to transact monthly exchanges within the same class of
shares between my fund accounts as listed below.
<TABLE>
<CAPTION>
"From" Fund Account # Dollar Amount Day of Exchange** "To" Fund Account #
"From" Fund Name (if existing) ($25 minimum) (1st thru 31st) "To" Fund Name (if existing)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
[_] New
[_] Existing
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
**Shares exchanged will be redeemed at the net asset value on the "Day of
Exchange" (If the "Day of Exchange" is not a fund business day, the exchange
transaction will be processed on the next fund business day). The exchange
privilege is not available if stock certificates have been issued.
- -------------------------------------
B. SYSTEMATIC WITHDRAWAL PLANS (SWP)
- -------------------------------------
In order to establish a SWP, you must reinvest all dividends and capital gains
and own or purchase shares of the Fund having a current net asset value of at
least: .$10,000 for monthly payments, .$5,000 for bi-monthly payments,
.$4,000 for quarterly or less frequent payments
Your bank must be a member of the National Automated Clearing House Association
(NACHA) in order for you to receive SWP proceeds directly into your checking
account.
[_] I authorize Alliance to transact periodic redemptions from my fund account
and send the proceeds to me as indicated below.
<TABLE>
<CAPTION>
Fund Name and Class of Shares Dollar Amount ($50 minimum) Circle "all" or applicable months
<S> <C> <C>
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
All J F M A M J J A S O N D
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PLEASE SEND MY SWP PROCEEDS TO:
[_] MY CHECKING ACCOUNT (via EFT) - (1st-31st)
I would like to have these payments occur on or about the [ ]
of the months circled above. (Complete Section 4D)
[_] MY ADDRESS OF RECORD (via CHECK)
[_] THE PAYEE AND ADDRESS SPECIFIED IN SECTION 4E (via CHECK)
<PAGE>
- -----------------------------------------
C. PURCHASES AND REDEMPTIONS VIA EFT
- -----------------------------------------
You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.
Instructions: . Review the information in the Prospectus about telephone
transaction services.
. If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face of a
check from the bank account you wish to use and attach it
to Section 4D of this application.
Purchases and 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.
In the case of shares purchased by check, redemption proceeds may not be
made available until the Fund is reasonably assured that the check has
cleared, normally 15 calendar days after the purchase date.
- ---------------------------
D. BANK INFORMATION
- ---------------------------
This bank account information will be used for:
<TABLE>
<S> <C>
[_] Distributions (Section 3) [_] Automatic Investments (Section 4A)
[_] Systematic Withdrawals (Section 4B) [_] Telephone Transactions (Section 4C)
</TABLE>
Please attach a voided check:
-----------------------------------------------------------------------------
Tape Preprinted Voided Check Here.
We Cannot Establish These Services Without it.
-----------------------------------------------------------------------------
Your bank must be a member of the National Automated Clearing House
Association (NACHA) in order to have EFT transactions processed to your fund
account. For EFT transactions, the fund requires signatures of bank account
owners exactly as they appear on bank records.
- ---------------------------------
E. THIRD PARTY PAYMENT DETAILS
- ---------------------------------
This third party payee information will be used for:
[_] Distributions (Section 3) [_] Systematic Withdrawals (Section 4B)
-------------------------------------------------------------------------
Name
-------------------------------------------------------------------------
Address - Line 1
-------------------------------------------------------------------------
Address - Line 2
-------------------------------------------------------------------------
Address - Line 3
- ------------------------------------
F. REDUCED CHARGES (CLASS A ONLY)
- ------------------------------------
If you, your spouse or minor children own shares in other Alliance Funds, you
may be eligible for a reduced sales charge. Please complete the Right of
Accumulation section or the Statement of Intent section.
A. Right of Accumulation
[_] Please link the tax identification numbers or account numbers listed
below for Right of Accumulation privileges, so that this and future
purchases will receive any discount for which they are eligible.
B. Statement of Intent
[_] I want to reduce my sales charge by agreeing to invest the following
amount over a 13-month period:
[_] $100,000 [_] $250,000 [_] $500,000 [_] $1,000,000
If the full amount indicated is not purchased within 13 months, I
understand that an additional sales charge must be paid from my account.
- -------------------------- ----------------------------- -----------------------
Tax ID or Account # Tax ID or Account # Tax ID or Account #
<PAGE>
- --------------------------------------------------------------------------------
5. SHAREHOLDER AUTHORIZATION This section MUST be completed
----
- --------------------------------------------------------------------------------
Telephone Exchanges and Redemptions by Check
Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an authorized
employee of an investment dealer or agent requesting a redemption or exchange on
my behalf. (NOTE: Telephone exchanges may only be processed between accounts
that have identical registrations.) Telephone redemption checks will only be
mailed to the name and address of record; and the address must have no change
within the last 30 days. The maximum telephone redemption amount is $50,000.
This service can be enacted once every 30 days.
[_] I do not elect the [_] I do not elect the telephone
--- ---
telephone exchange service. redemption by check service.
I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and that
I have not been notified that this account is subject to backup withholding.
By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund agent will be liable for any loss, injury, damage or expense
as a result of acting upon telephone instructions purporting to be on my behalf
that the Fund reasonably believes to be genuine, and that neither the Fund nor
any such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Fund at any time. I understand and agree that the Fund
reserves the right to refuse any telephone instructions and that my investment
dealer or agent reserves the right to refuse to issue any telephone instructions
I may request.
For non-residents only: Under penalties of perjury, I certify that to the best
of my knowledge and belief, I qualify as a foreign person as indicated in
Section 2.
I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certification required to avoid backup withholding.
- --------------------------------- ----------------
Signature Date
- --------------------------------- ---------------- --------------------------
Signature Date Acceptance Date
- --------------------------------------------------------------------------------
DEALER/AGENT AUTHORIZATION For Selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------
We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee the
signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
- --------------------------------- --------------------------------------------
Dealer/Agent Firm Authorized Signature
- --------------------------------- ----------- -------------------------------
Representative First Name MI Last Name
- -------------------------------------------------------------------------------
Representative Number
- -------------------------------------------------------------------------------
Branch Office Address
- -------------------------------------------------------------------------------
City State Zip Code
( )
- -------------------------------------------------------------------------------
Branch Number Branch Phone
<PAGE>
- --------------------------------------------------------------------------------
ALLIANCE SUBSCRIPTION APPLICATION
- --------------------------------------------------------------------------------
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
For certified or overnight deliveries, send to:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
- ---------
Section 1 Your Account Registration (Required)
- ---------
Complete one of the available choices. To ensure proper tax reporting to the
IRS:
+ Individuals, Joint Tenants and Gift/Transfer to a Minor:
. Indicate your name(s) exactly as it appears on your social security
card.
+ Trust/Other:
. Indicate the name of the entity exactly as it appeared on the notice
you received from the IRS when your Employer Identification number
was assigned.
- ---------
Section 2 Your Address (Required)
- ---------
Complete in full.
- ---------
Section 3 Your Initial Investment (Required)
- ---------
For each fund in which you are investing: 1) Write the dollar amount of your
initial purchase in the column corresponding to the class of shares you have
chosen (If you are eligible for a reduced sales charge, you must also complete
Section 4F) 2) Circle a distribution option for your dividends 3) Circle a
distribution option for your capital gains. All distributions (dividends and
capital gains) will be reinvested into your fund account unless you direct
otherwise. If you want distributions sent directly to your bank account, then
you must complete Section 4D and attach a voided check for that account. If you
want your distributions sent to a third party you must complete Section 4E.
- ---------
Section 4 Your Shareholder Options (Complete only those options you want)
- ---------
A. Automatic Investment Plans (AIP) - You can make periodic investments into any
of your Alliance Funds in one of three ways. First, by a periodic withdrawal
($25 minimum) directly from your bank account and invested into an Alliance
Fund. Second, you can direct your distributions (dividends and capital gains)
from one Alliance Fund into another Fund. Or third, you can automatically
exchange monthly ($25 minimum) shares of one Alliance Fund for shares of
another Fund. To elect one of these options, complete the appropriate portion
of Section 4A.
B. Systematic Withdrawal Plans (SWP) - Complete this option if you wish to
periodically redeem dollars from one of your fund accounts. Payments can be
made via Electronic Funds Transfer (EFT) to your bank account or by check.
C. Telephone Transactions via EFT - Complete this option if you would like to
be able to transact via telephone between your fund account and your bank
account.
D. Bank Information - If you have elected any options that involve transactions
between your bank account and your fund account or have elected cash
distribution options and would like the payments sent to your bank account,
please tape a voided check to this section of the application.
E. Third Party Payment Details - If you have chosen cash distributions and/or a
Systematic Withdrawal Plan and would like the payments sent to a person
and/or address other than those provided in section 1 or 2, complete this
option.
F. Reduced Charges (Class A only) - Complete if you would like to link fund
accounts that have combined balances that might exceed $100,000 so that
future purchases will receive discounts. Complete if you intend to purchase
over $100,000 within 13 months.
- ---------
Section 5 Shareholder Authorization (Required)
- ---------
All owners must sign. If it is a custodial, corporate, or trust account, the
custodian, an authorized officer, or the trustee respectively must sign.
If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At: (800)
221-5672.
<PAGE>
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 2, 1997
_____________________________________________________________
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 the "For
Literature" telephone numbers shown above.
TABLE OF CONTENTS
INVESTMENT POLICIES AND RESTRICTIONS.........................
ADDITIONAL INVESTMENT TECHNIQUES OF THE FUNDS................
INVESTMENT RESTRICTIONS......................................
MANAGEMENT OF THE FUNDS......................................
PORTFOLIO TRANSACTIONS.......................................
EXPENSES OF THE FUNDS........................................
PURCHASE OF SHARES...........................................
REDEMPTION AND REPURCHASE OF SHARES..........................
SHAREHOLDER SERVICES.........................................
NET ASSET VALUE..............................................
DIVIDENDS, DISTRIBUTIONS AND TAXES...........................
GENERAL INFORMATION..........................................
FINANCIAL STATEMENTS.........................................
REPORT OF INDEPENDENT ACCOUNTANTS ...........................
APPENDIX..................................................A-1
<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."
Stripped Mortgage-Related Securities. Each Fund may
invest in stripped mortgage-related securities ("SMRS"). SMRS
are derivative multi-class mortgage-related securities. SMRS may
be issued by the U.S. 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
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.
2
<PAGE>
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. Alliance Capital Management L.P. (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.
For transaction 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
3
<PAGE>
engage in such "cross hedging" activities when it believes that
such transactions provide significant hedging opportunities for a
Fund.
_____________________________________________________________
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 U.S. 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 incur various expenses in the
attempted enforcement and may be subject to various delays and
risks of loss, including (a) possible declines in the value of
the underlying security, (b) possible reduced levels of income
and lack of access to and (c) possible inability to enforce
rights.
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.
4
<PAGE>
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 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, Fitch, or
Duff & Phelps.
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Asset-Backed Securities
The Funds 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").
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
The Funds may seek to increase 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
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. The value of the securities loaned will not
exceed 25% of the value of such Fund's total assets at the time
any such loan is made.
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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 the Fund is required to create a
segregated account with the Trust's custodian and to maintain in
that account liquid assets 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, in the opinion of the Adviser, 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 basis 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
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).
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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
liquid assets 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 may 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 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
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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
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
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<PAGE>
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 on the underlying
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
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<PAGE>
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 option, the Fund
holds in its portfolio securities the price changes of which are,
in the opinion 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 option 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 option, the
Fund maintains with its custodian in a segregated account liquid
assets 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 the value
of portfolio securities. 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
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 call options on
securities the Fund owns.
Futures Contracts and Options on Futures Contracts
Futures Contracts. Each Fund may enter into interest
rate 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
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<PAGE>
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 were to increase, the value 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
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<PAGE>
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
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
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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
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
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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.
Each Fund has established procedures consistent with SEC
policies concerning purchases of foreign currency through Forward
Contracts. Accordingly, a Fund will segregate liquid assets in
an amount least equal to the Fund's obligations under any Forward
Contracts.
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 could 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 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
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<PAGE>
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
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 could 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
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the fact that a narrower index is more susceptible to rapid and
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.
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
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
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<PAGE>
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
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
18
<PAGE>
to meet margin requirements, it may be necessary to liquidate
portfolio securities at a time when, in the opinion of the
Adviser, 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 of some Futures Contracts 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
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
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<PAGE>
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.
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
20
<PAGE>
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
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 States 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
21
<PAGE>
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.
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 total 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.
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<PAGE>
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
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 the OCC 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 a segregated liquid assets account
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.
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<PAGE>
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
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 in part 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. Furthermore,
in certain circumstances use of options, futures and forward
contracts that substantially eliminate risk of loss and the
24
<PAGE>
opportunity for gain in an "appreciated financial position" will
accelerate gain to the Funds.
Future Developments
The above discussion relates to each Fund's proposed use
of Futures Contracts, Forward 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 the fundamental
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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<PAGE>
(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
26
<PAGE>
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
short position 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
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<PAGE>
of the Trust and officers and directors of the
Adviser who beneficially own more than 0.5% of
the shares of securities of that issuer
together own more than 5%.
(g) Purchase securities issued by any other
registered open-end 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 such
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,
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<PAGE>
foreign currency futures contracts, forward
foreign currency exchange contracts and
options (including options on any of the
foregoing) to the extent such 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
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,
1997 of more than $199.3 billion (of which more than $71 billion
represented the assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. As of June 30, 1997, the
Adviser was returned as an investment manager of employee benefit
fund assets for 29 of the FORTUNE 100 companies. As of that
date, the Adviser and its subsidiaries employed approximately
1,450 employees who operated out of five domestic offices and the
offices of subsidiaries in Bombay, Istanbul, London, Paris, Sao
Paolo, Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore.
29
<PAGE>
The 54 registered investment companies comprising 116 separate
investment portfolios managed by the Adviser currently have more
than two million shareholders.
Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly- owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA-UAP, a French insurance holding company. As of March 1,
1997, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
together with Equitable, owned in the aggregate approximately 58%
of the issued and outstanding units representing assignments of
beneficial ownership of limited partnership interests in the
Adviser ("Units"). As of March 1, 1997, approximately 33% and 9%
of the Units were owned by the public and employees of the
Adviser and its subsidiaries, respectively, including an employee
of the Adviser who serves as a Director of the Fund.
As of March 1, 1997, AXA-UAP and its subsidiaries owned
60.7% of the issued and outstanding shares of the capital stock
of ECI. ECI is a public company with shares traded on the
Exchange. AXA-UAP, a French company, is the holding company for
an international group of insurance and related financial
services companies. AXA-UAP's insurance operations include
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities principally in Western Europe, North America and
the Asia/Pacific area. AXA-UAP is also engaged in asset
management, investment banking, securities trading, brokerage,
real estate and other financial services activities principally
in the United States, as well as in Western Europe and the
Asia/Pacific area.
Based on information provided by AXA-UAP, on March 1,
1997, 22.5% of the issued ordinary shares (representing 33.0% of
the voting power) of AXA-UAP were controlled directly and
indirectly by Finaxa, a French holding company. As of March 1,
1997, 61.4% of the shares (representing 72.0% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 34.9% of the shares, representing 40.0%
of the voting power), and 23.7% of the shares of Finaxa
(representing 14.6% of the voting power) were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary
shares owned by Finaxa, on March 1, 1997, the Mutuelles AXA
directly or indirectly controlled 26.0% of the issued ordinary
30
<PAGE>
shares (representing 38.1% of the voting power) of AXA-UAP.
Acting as a group, the Mutuelles AXA control AXA-UAP and Finaxa.
In November 1996, AXA offered (the "Exchange Offer") to
acquire 100% of the ordinary shares ("UAP Shares") of FF10 each
of Compagnie UAP, a societe anonyme organized under the laws of
France ("UAP"), in exchange for ordinary shares ("Shares") and
Certificates of Guaranteed Value ("Certificates") of AXA. Each
UAP shareholder that tendered UAP Shares in the Exchange Offer
received two Shares and two Certificates for every five UAP
Shares so tendered. On January 24, 1997, AXA acquired 91.37% of
the outstanding UAP Shares. AXA-UAP currently intends to merge
(the "Merger") with UAP at some future date in 1997. It is
anticipated that approximately 11,706,826 additional Shares will
be issued in connection with the Merger to UAP shareholders who
did not tender UAP Shares in the Exchange Offer. If the Merger
had been completed at March 1, 1997, Finaxa would have
beneficially owned (directly and indirectly) approximately 21.7%
of the Shares (representing approximately 32.0% of the voting
power), and the Mutuelles AXA would have controlled (directly or
indirectly through their interest in Finaxa) 25.1% of the issued
ordinary shares (representing 36.8% of the voting power) of AXA-
UAP. On January 17, 1997, AXA announced its intention to redeem
its outstanding 6% Bonds (the "Bonds"). Between February 14,
1997 and May 14, 1997, holders of the Bonds has the option to
convert each Bond into 5.15 Shares. On May 15, 1997, each Bond
still outstanding was redeemed into cash at FF1,285 plus FF9.29
accrued interest. Finaxa converted the Bonds it had owned into
2,153,308 Shares. After giving effect to the conversion of all
outstanding Bonds into Shares and to the Merger as if it had been
completed at March 1, 1997, Finaxa would have beneficially owned
(directly and indirectly) approximately 21.4% of the Shares
(representing 31.3% of the voting power), and the Mutuelles AXA
would have controlled (directly or indirectly through their
interest in Finaxa) 24.7% of the issued ordinary shares
(representing 36.0% of the voting power) of AXA-UAP.
INVESTMENT ADVISORY CONTRACT AND EXPENSES
The Adviser serves as investment manager and adviser of
each of the Funds and continuously furnishes 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 the
Conservative Investors Fund and has agreed to bear certain
31
<PAGE>
expenses of the Class A, Class B, Class C shares of each Fund to
the extent that expenses exceed an annual rate of 1.40% for
Class A shares 2.10% for Class B and Class C shares. Effective
December 12, 1996, the Adviser has discontinued the advisory fee
waiver on the Growth Investors Fund. 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 with respect to the
Funds. The First Investment Advisory Contract 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.
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. Most recently, the continuance of the Investment
Advisory Contract until July 31, 1998 was approved by a vote,
cast in person, of the Board of Trustees, including a majority of
the Trustees who are not parties to the Investment Advisory
Contract or interested persons of any such party, at their
Regular Meeting held on July 16, 1997.
During the period May 1, 1996 through April 30, 1997,
the Adviser earned $363,977 in management fees from the
Conservative Investors Fund (an additional $245,071 in fees were
waived) and $723,109 from the Growth Investors Fund (an
additional $167,543 in fees were waived). During the period May
1, 1995 through April 30, 1996, the Adviser earned $387,903 in
management fees from the Conservative Investors Fund (an
additional $174,857 in fees were waived) and $632,516 from the
Growth Investors Fund (an additional $214,077 in fees were
waived). 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).
32
<PAGE>
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
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 to delete the word
"Alliance" from their names.
The Investment Advisory Contract provides that the
Adviser 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,1 52, 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.
Ruth Block, 66, 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
_________________________
1An "interested person" of the Trust, as defined by the 1940
Act.
33
<PAGE>
Incorporated (specialty chemicals) and Amoco Corporation (oil and
gas). Her address is Box 4653, Stamford, Connecticut 06903.
Richard W. Couper, 74, 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.
William H. Foulk, Jr., 64, is an Investment Adviser and
an Independent Consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment adviser, with
which he had been associated since prior to 1991. His address is
2 Hekma Road, Greenwich, Connecticut 06831.
Brenton W. Harries, 69, 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, 63, was formerly a partner at
Orrick, Herrington & Sutcliffe and is currently counsel to that
firm. His address is 666 Fifth Avenue, 19th Floor, New York, New
York 10103.
Officers
*John D. Carifa, President, see biography above.
Edmund P. Bergan, Jr., 47, 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, 46, 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.
Vincent S. Noto, 32, Controller and Chief Accounting
Officer, is a Vice President of Alliance Fund Services, Inc. His
address is 500 Plaza Drive, Secaucus, New Jersey 07094.
Bruce W. Calvert, 50, Vice President, is the Vice
Chairman and Chief Investment Officer of Alliance Capital
Management Corporation, the general partner of the Adviser. His
address is 1345 Avenue of the Americas, New York, New York 10105.
Kathleen A. Corbet, 37, Vice President, is an Executive
Vice President of Alliance Capital Management Corporation, the
general partner of the Adviser. Prior thereto, she was employed
by Equitable Capital since prior to 1992. Her address is 1345
Avenue of the Americas, New York, New York 10105.
34
<PAGE>
Wayne D. Lyski, 55, Vice President, is Executive Vice
President of Alliance Capital Management Corporation, the general
partner of the Adviser. His address is 1345 Avenue of the
Americas, New York, New York 10105.
The aggregate compensation paid to each of the Trustees
by the Conservative Investors Fund and by the Growth Investors
Fund for the fiscal year ended April 30, 1997, the aggregate
compensation paid to each of the Trustees during calendar year
1996 by all of the funds to which the Adviser provides investment
advisory services (collectively, the "Alliance Fund Complex") and
the total number of registered investment companies in the
Alliance Fund Complex with respect to which each of the Trustees
serves as a director or trustee, are set forth below. Neither of
the Funds nor any fund in the Alliance Fund Complex provides
compensation in the form of pension or retirement benefits to any
of its directors or trustees. Each of the Trustees is a director
or trustee of one or more other registered investment companies
in the Alliance Fund Complex.
Total Number
of Funds
in the
Alliance
Total Fund Complex,
Aggregate Aggregate Compensation Including
Compensation Compensation from the the Trust,
from the from the Alliance as to which
Conservative Growth Fund Complex the Trustee
Name of Trustee Investors Investors Including is a Director
of the Fund Fund Fund the Trust* or Trustee
Ruth Block $5,632 $5,632 $157,500 40
John D. Carifa $ -- $ -- $ -- 52
Richard W. Couper $5,600 $5,600 $85,000 2
William H. Foulk $2,808 $2,808 $140,574 33
Brenton W. Harries $5,800 $5,800 $86,000. 2
Donald J. Robinson $5,427 $5,427 $137,250 41
____________________________
* As of June 30, 1997 there were 116 investment companies or
portfolios thereof in the Alliance Fund Complex.
As of August 15, 1997, the Trustees and officers of the
Trust as a group owned less than 1% of the outstanding shares of
any Fund or of the Trust as a whole.
The Trust undertakes to provide assistance to
shareholders in communications concerning the removal of any
35
<PAGE>
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, the Adviser believes that its
receipt by 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.
36
<PAGE>
Aggregate securities transactions for the Funds during
the fiscal year ended April 30, 1997 were as follows: with
respect to the Conservative Investors Fund, $68,744,431 and, in
connection therewith, brokerage commissions of $52,669 (100%)
were allocated to persons or firms supplying research
information; and with respect to the Growth Investors Fund,
$179,271,861 and, in connection therewith, brokerage commissions
of $280,483 (100%) were allocated to persons or firms supplying
research information. Aggregate securities transactions for the
Funds during the fiscal year ended April 30, 1996 were as
follows: with respect to the Conservative Investors Fund,
$260,211,306 and, in connection therewith, brokerage commissions
of $75,237 (100%) were allocated to persons or firms supplying
research information; and with respect to the Growth Investors
Fund, $322,321,206 and, in connection therewith, brokerage
commission of $386,197 (100%) were allocated to persons or firms
supplying research information. 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.
For the fiscal year ended April 30, 1997, the
Conservative Investors Fund paid an aggregate of $52,669 in
brokerage commissions; and the Growth Investors Fund paid an
aggregate of $280,483 in brokerage commissions.For the fiscal
year ended April 30, 1996, the Conservative Investors Fund paid
an aggregate of $75,237 in brokerage commissions; and the Growth
Investors Fund paid an aggregate of $386,197 in brokerage
commissions. 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.
The extent to which commissions that will be charged by
broker-dealers selected by the Funds may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Funds place portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Funds; on the other hand, certain research
services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in servicing the Funds. Consistent with the Conduct Rules
of the National Association of Securities Dealers, Inc. and
37
<PAGE>
subject to seeking best execution, the Funds may consider sales
of shares of the Funds or other investment companies managed by
the Adviser as a factor in the selection of broker-dealers to
execute portfolio transactions for the Funds.
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 commissions. 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 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.
The brokerage transactions engaged in by the Funds with
DLJ and its affiliates during the fiscal years ended April 30,
1995, April 30, 1996 and April 30, 1997, are set forth below:
% of Fund's
% of Fund's Aggregate
Fiscal Amount Aggregate Dollar
Year Brokerage Brokerage Amount of
Ended Fund Commission Commissions Transactions
April 30, 1997 Growth
Investors $ 50 0.02% 0%
April 30, 1997 Conservative
Investors 123 0.23% 0%
The annual portfolio turnover rates of the Conservative
Investors Fund and the Growth Investors Fund for the fiscal years
ended April 30, 1997 and April 30, 1996 were 174% and 267% for
Conservative Investors and 133% and 209% for Growth Investors,
respectively.
38
<PAGE>
_____________________________________________________________
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, Class B 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
39
<PAGE>
other investment companies which it 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 $39,343 and $87,204 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, 1997. 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
$45,690 and $81,307 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, 1996. For
services rendered by the Principal Underwriter in connection with
40
<PAGE>
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 in
connection with the distribution of Class B shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $304,539 and $613,255 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, 1997 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
$316,700 and $523,545 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, 1996. 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 in
connection with the distribution of Class C shares pursuant to
the Plan applicable to such shares, the Principal Underwriter
received $49,620 and $60,207 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, 1997. 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
$48,204 and $48,786 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, 1996. 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.
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:
41
<PAGE>
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, 1997) April 30, 1997) April 30, 1997)
Advertising/
Marketing $ 35,433 $ 52,099 $13,564
Printing and
Mailing of
Prospectuses
and Semi-Annual
and Annual
Reports to Other
than Current
Shareholders $ 4,492 $ 10,087 $ 2,863
Compensation to
Underwriters $ 67,316 $ 91,373 $22,816
Compensation to
Dealers $ 46,563 $169,878 $52,407
Compensation to
Sales Personnel $ 7,851 $ 4,035 $ 1,026
Interest, Carrying or
Other Financing
Charges $ -0- $ 39,028 $ 1,601
Other (includes
personnel costs
of those home
office employees
involved in the
distribution effort
and the travel-
related expenses
incurred by the
marketing personnel
conducting
seminars) $ 67,161 $102,053 $ 27,149
Total $228,816 $468,553 $121,426
======== ======== ========
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<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, 1997) April 30, 1997) April 30, 1997)
Advertising/
Marketing $ 29,544 $ 65,301 $ 17,127
Printing and
Mailing of
Prospectuses
and Semi-Annual
and Annual Reports
to Other than
Current Share-
holders $ 8,070 $ 16,187 $ 4,314
Compensation to
Underwriters $ 52,666 $117,218 $ 31,216
Compensation
to Dealers $ 72,457 $434,418 $ 69,993
Compensation to
Sales Personnel $ 12,934 $ 9,300 $ 3,333
Interest,
Carrying or
Other Financing
Charges $ -0- $ 78,701 $ 2,277
Other (includes
personnel
costs of those
home office
employees
involved in the
distribution
effort and the
travel-related
expenses incurred
by the marketing
personnel conducting
seminars) $ 80,200 $134,212 $ 34,611
TOTAL $255,871 $855,337 $162,871
======== ======== ========
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<PAGE>
Custodial Arrangements
State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA, 02110 ("State Street Bank") is the Trust's
custodian.
Transfer Agency Arrangements
Alliance Fund Services, Inc. ("AFS"), an indirect
wholly-owned subsidiary of the Adviser, receives a transfer
agency fee per account holder of each of the Class A, Class B and
Class C shares of the Trust, plus reimbursement for out-of-pocket
expenses. The transfer agency fee with respect to the Class B
and Class C shares is higher than the transfer agency fee with
respect to the Class A shares, reflecting the additional costs
associated with the Class B and Class C contingent deferred sales
charge.
_____________________________________________________________
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 "Class A shares"), with a
contingent deferred sales charge (the "Class B shares"), without
any initial sales charge, as long as the shares are held for one
year or more, without any contingent deferred sales charge (the
"Class C shares"),in each case as described below. Shares of the
Funds that are offered subject to a sales charge 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"), and (iii) the Principal
Underwriter.
The minimum for initial investments for any class of
shares 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
44
<PAGE>
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 for any reason. The Funds
reserve the right to suspend the sale of their shares to the
public in response to conditions in the securities markets or for
other reasons.
Investors may purchase shares of the Funds through
selected dealers, agents or financial representatives directly
through the Principal Underwriter. 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.
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 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 Class A shares, a
sales charge which will vary depending on the amount of the
purchase alternative chosen by the investor, as shown in the
table in the Prospectus under "Purchase and Sales of Shares." 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. Eastern 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. A Fund business day is any day on which the
Exchange is open for trading.
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
45
<PAGE>
be lower than the per share net asset value of the Class A
shares, as a result of the differential daily expense accruals of
the distribution and transfer agency fees applicable with respect
to those classes of shares. Even under those circumstances, the
per share net asset values of the four 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.
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, if applicable, Class A
sales charges) as described below. Orders received by the
Principal Underwriter prior to the close of regular trading on
the Exchange on each day the Exchange is open for trading are
priced at the net asset value computed as of the close of regular
trading on the Exchange on that day (plus, if applicable, Class A
sales charges). In the case of orders for purchase of shares
placed through selected dealers, agents or financial
representatives, as applicable, the applicable public offering
price will be the net asset value as so determined, but only if
the selected dealer, agent or financial representative receives
the order prior to the close of regular trading on the Exchange
and transmits it to the Principal Underwriter prior to 5:00 p.m.
Eastern time. The selected dealer, agent or financial
representative, as applicable, is responsible for transmitting
such orders by 5:00 p.m. Eastern time. If the selected dealer,
agent or financial representative, as applicable, fails to do so,
the investor's right to purchase shares at that day's closing
price must be settled between the investor and the selected
dealer, agent or financial representatives, as applicable. If
the selected dealer, agent or financial representative, as
applicable, either 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, both of which may be obtained by calling the "For
Literature" telephone number shown on the cover of this Statement
of Additional Information. Except with respect to certain
omnibus accounts, telephone purchase orders may not exceed
$500,000. Payment for shares purchased by telephone can be made
only by Electronic Funds Transfer from a bank account maintained
by the shareholder at a bank that is a member of the National
Automated Clearing House Association ("NACHA"). If a
shareholder's telephone purchase request is received before
3:00 p.m. Eastern time on a Fund business day, the order to
46
<PAGE>
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,
agent or financial representative. This facilitates later
redemption and relieves the shareholder of the responsibility for
and inconvenience of lost or stolen certificates. No
certificates are issued for fractional 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 EQ Financial Consultants, Inc., formerly Equico
Securities, Inc. an affiliate of the Principal Underwriter
("Equico", 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 seminars, meals,
sporting events or theater performances, or payment incurred in
connection with travel, lodging and entertainment incurred in
connection with travel taken 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.
Class A, Class B and Class C shares each represent an
interest in the same portfolio of investments of the Fund, have
the same rights and are identical in all respects, except that
(i) Class A shares bear the expense of the initial sales charge
(or contingent deferred sales charge, when applicable) and
Class B and Class C shares bear the expense of the deferred sales
charge, (ii) Class B shares and Class C shares each bear the
expense of a higher distribution services fee than that borne by
Class A shares, (iii) Class B and Class C shares bear higher
transfer agency costs than those borne by Class A shares,
(iv) each class has exclusive voting rights with respect to
47
<PAGE>
provisions of 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,
provided that, if the Fund submits to a vote to Class A
shareholders, an amendment to the Rule 12b-1 Plan that would
materially increase the amount to be paid thereunder with respect
to the Class A shares, the Class A shareholders, the Class B
shareholders will vote separately by Class, and (v) Class B
shares are subject to a conversion feature. Each class has
different exchange privileges and certain different shareholder
service options available.
The Trustees of the Trust have determined that currently
no conflict of interest exists between or among the Class A,
Class B and Class C shares. On an ongoing basis, the Trustees of
the Trust, pursuant to their fiduciary duties under the 1940 Act
and state law, will seek to ensure that no such conflict arises.
Alternative Retail Purchase Arrangements -- Class A, Class B and
Class C Shares
The alternative purchase arrangements available with
respect to Class A shares, Class B shares and Class C shares
permit an investor to choose the method of purchasing shares that
is most beneficial given the amount of the purchase, the length
of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the
anticipated life of their investment in the Funds, the
accumulated distribution services fee and contingent deferred
sales charges on Class B shares prior to conversion, or the
accumulated distribution services fee and contingent deferred
sales charge on Class C shares, would be less than the initial
sales charge and accumulated distribution services fee on Class A
shares purchased at the same time, and to what extent such
differential would be offset by the higher return of Class A
shares. Class A shares will normally be more beneficial than
Class B shares to the investor who qualifies for reduced initial
sales charges on Class A shares, as described below. In this
regard, the Principal Underwriter will reject any order (except
orders from certain retirement plans) for more than $250,000 for
Class B shares. Class C shares will normally not be suitable for
the investor who qualifies to purchase Class A shares at net
asset value. For this reason, the Principal Underwriter will
reject any order for more than $1,000,000 for Class C shares.
Class A shares are subject to a lower distribution
services fee and, accordingly, pay correspondingly higher
dividends per share than Class B shares or Class C shares.
However, because initial sales charges are deducted at the time
of purchase, investors purchasing Class A shares would not have
all their funds invested initially and, therefore, would
48
<PAGE>
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
being subject to a contingent deferred sales charge for a four-
year and one-year period, respectively. For example, based on
current fees and expenses, an investor subject to the 4.25%
initial sales charge on Class A shares 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 on 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.
Class A Shares
The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below:
49
<PAGE>
Discount or
Commission
As % of to Dealers
As % of the or Agents
Net Public As % of
Amount of Amount Offering Offering
Purchase Invested Price Price
Less than
$100,000 4.44% 4.25% 4.00%
$100,000 but
less than
$250,000 3.36 3.25 3.00
$250,000 but
less than
$500,000 2.30 2.25 2.00
$500,000 but
less than
$1,000,000* 1.78 1.75 1.50
____________________
* There is no initial sales charge on transactions of
$1,000,000 or more.
With respect to purchases of $1,000,000 or more, Class A
shares redeemed within one year of purchase will be subject to a
contingent deferred sales charge equal to 1% of the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. In
determining the contingent deferred sales charge applicable to a
redemption of Class A shares, it will be assumed that the
redemption is, first, of any shares that are not subject to a
contingent deferred sales charge (for example, because an initial
sales charge was paid with respect to the shares, or they have
been held beyond the period during which the charge applies or
were acquired upon the reinvestment of dividends or
distributions) and, second, of shares held longest during the
time they are subject to the sales charge. 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 $1,000,000 or more
made through selected dealers or agents, the Adviser may,
pursuant to the Rule 12b-1 Plans described above, pay such
50
<PAGE>
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.
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, or (ii) in exchange for
Class A shares of other Alliance Mutual Funds (as that term is
defined under "Combined Purchase Privilege" below), except that
an initial sales charge will be imposed on Class A shares issued
in exchange for Class A shares of AFD Exchange Reserves ("AFDER")
that were purchased for cash without the payment of an initial
sales charge and without being subject to a contingent deferred
sales charge. The 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
indicated in the table above. In this regard, the Principal
Underwriter may elect to reallow the entire sales charge to
selected dealers and agents for all sales with respect to which
orders are placed with the Principal Underwriter. A selected
dealer or agent 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, 1997:
Conservative Investors Fund
Net Asset Value per Class A Share
at April 30, 1997: $11.31
Per Share Sales Charge - 4.25%
of offering price (4.42% of net
asset value per share) $ .50
______
Class A Per Share Offering
Price to the Public $11.81
======
51
<PAGE>
Growth Investors Fund
Net Asset Value per Class A Share
at April 30, 1997 $13.12
Per Share Sales Charge - 4.25%
of offering price (4.42% of net
asset value per share) $ .58
______
Class A Per Share Offering
Price to the Public $13.70
======
Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but be subject in most cases to a contingent
deferred sales charge) or (ii) a reduced initial sales charge.
The circumstances under which such investors may pay a reduced
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 two 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:
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
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<PAGE>
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund, Inc.
Alliance Mortgage Securities Income Fund, 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 New Europe Fund, Inc.
Alliance North American Government Income Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
The Alliance Fund, Inc.
The Alliance Portfolios
-Alliance Conservative Investors Fund
-Alliance Growth Fund
-Alliance Growth Investors Fund
-Alliance Strategic Balanced Fund
-Alliance Short-Term U.S. Government Fund
53
<PAGE>
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting AFS at the address or the
"For 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
(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with that
of the investor into a single "purchase" (see
above).
For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the initial sales charge for the $100,000
purchase would be at the rate 2.25% applicable to a single
$300,000 purchase of shares of the Fund, rather than the 3.25%
rate.
To qualify for the Combined Purchase Privilege or to
obtain the Cumulative Quantity Discount on a purchase through a
selected dealer or agent, the investor or selected dealer or
agent must provide the Principal Underwriter with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
Statement of Intention. Class A investors may also
obtain the reduced initial sales charges shown in the 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
54
<PAGE>
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 only be necessary to invest
only a total of $60,000 during the following 13 months in shares
of the Fund or any other Alliance Mutual Fund to qualify for the
3.25% sales charge on the total amount being invested, the sales
charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation
upon the investor to purchase the full amount indicated. The
minimum initial investment under a Statement of Intention is 5%
of such amount. Shares purchased with the first 5% of such
amount will be held in escrow (while remaining shares will be
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 the initial sales charge applicable to the actual amount of
the aggregate purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
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 AFS at the address or
telephone numbers shown on the cover of this Statement of
Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of a Fund or
any other Alliance Mutual Fund at a reduced initial sales charge
55
<PAGE>
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 above, to an investment 13 times larger than such initial
purchase. The sales charge applicable to each succeeding monthly
purchase will be that normally applicable, under such schedule,
to an investment equal to the sum of (i) the total purchases
previously made during the 13-month period and (ii) the current
month's purchase multiplied by the number of months (including
the current month) remaining in the 13-month period. Sales
charges previously paid during such period will not be
retroactively adjusted on the basis of later purchases.
Reinstatement Privilege. A shareholder who has caused
any or all of his or her Class A or Class B 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
(i) such reinvestment is made within 120 calendar days after the
redemption or repurchase date and (ii) for Class B shares, a
contingent deferred sales charge has been paid and the Principal
Underwriter has approved, at its discretion, the reinvestment of
such shares. 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 within 30 calendar days
after the redemption or repurchase transaction. 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 more than once 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
management 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; the Principal Underwriter, AFS and
their affiliates; officers and directors of ACMC, the Principal
56
<PAGE>
Underwriter, AFS and their affiliates; officers, directors and
present and full-time employees of selected dealers or agents;
the spouse, sibling, direct ancestor or direct descendant
(collectively "relatives") of any such person; 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) the Adviser, Principal Underwriter, AFS and their
affiliates; certain employee benefit plans for employees of the
Adviser, the Principal Underwriter, AFS and their affiliates;
(iv) registered investment advisers or other financial
intermediaries who charge a management, consulting or other fee
for their service and who purchase shares through a broker or
agent approved by the Principal Underwriter and clients of such
registered investment advisers or financial intermediaries whose
accounts are linked to the master account of such investment
advisor or financial intermediary on the books of such approved
broker or agent; (v) persons participating in a fee-based
program, sponsored and maintained by a registered broker-dealer
and approved by the Principal Underwriter, pursuant to which such
persons pay an asset- based fee to such broker-dealer, or its
affiliate or agent, for service in the nature of investment
advisory or administrative services; (vi) persons who establish
to the Principal Underwriter's satisfaction that they are
investing in the Fund, within such time period as may be
designated by the Principal Underwriter, proceeds of their
redemption of shares of such other registered investment
companies as may be designated from time to time by the Principal
Underwriter; and (vii) employer-sponsored qualified pension or
profit-sharing plans (including Section 401(k) plans), custodial
accounts maintained pursuant to Section 403(b)(7) retirement
plans and individual retirement accounts (including individual
retirement accounts to which simplified employee pension (SEP)
contributions are made), if such plans or accounts are
established or administered under programs sponsored by
administrators or other persons that have been approved by the
Principal Underwriter.
Class B Shares
Investors may 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
57
<PAGE>
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 that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below.
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
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 between the date
of payment for the purchase of Class B shares and the date of
redemption of such shares.
58
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Contingent Deferred Sales Charge as a % of Dollar Amount
Shares
Purchased Shares
On or After Purchased
Years since Shares August 2, 1993 On or
Purchase Purchased but Before After
Subject to Before November 19, November 19,
Change August 2, 1993 1993 1993
__________ ______________ _____________ ____________
First 5.00% 5.50% 4.00%
Second 4.00% 4.50% 3.00%
Third 3.00% 3.50% 2.00%
Fourth 2.00% 2.50% 1.00%
Fifth 1.00% 1.50% None
Thereafter None .50% None
In determining the contingent deferred sales charge
applicable to a redemption of Class b, it will be assumed that
the redemption consists first, of any shares were acquired upon
the reinvestment of dividends or distributions and, second, of
shares held longest during the time they are subject to the sales
charge. When shares acquired in an exchange are redeemed, the
applicable contingent deferred sales charge and conversion
schedules will be the schedules that applied at the time of
purchase of shares originally purchased by the shareholder.
The contingent deferred sales charge is waived on
redemptions of shares (i) following the death or disability, as
defined in the Internal Revenue Code of 1986, as amended (the
"Code"), of a shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who
has attained the age of 70-1/2, (iii) that had been purchased by
present or former Trustees of the Trust, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative, or
(iv) pursuant to a systematic withdrawal plan (see "Shareholder
Services - Systematic Withdrawal Plan" below).
Conversion Feature. 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
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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.
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 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.
Class C Shares
Investors may 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, as long as the
shares are held for at least one year, 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, as long as the shares are held for one year or more, 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, as long as the shares are
held for one year or more. Class C shares do not convert to any
other class of shares and incur higher distribution services fees
and transfer agency costs than Class A shares. Class C share
will thus have a higher expense ratio and pay correspondingly
lower dividends than Class A shares.
Class C shares that are redeemed within one year of
purchase will be subject to a contingent deferred sales charge of
1%, charged as a percentage of the lesser of their original cost
or their net asset value at the time of redemption. Accordingly,
no sales charge will be imposed on increases in net asset value
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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 C shares will be waived on the types of
redemptions with respect to which a Class B contingent deferred
sales charge would be waived (see above under "--Class B
Shares"), and will be applied to redemptions of shares by
shareholders who hold both Class C shares and shares of one or
more other classes subject to a contingent deferred sales charge
as described above under "--Class B Shares."
Proceeds from the contingent deferred sales charge are
paid to the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution- related services to the Fund
in connection with the sale of the Class C shares, such as the
payment of compensation to selected dealers and agents for
selling Class C shares. The combination of the contingent
deferred sales charge and the distribution services fee enables
the Fund to sell the Class C shares without a sales charge being
deducted at the time of purchase. The higher distribution
services fee incurred by Class C shares will cause such shares to
have a higher expense ratio and to pay lower dividends than those
paid with respect to 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
Shares--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
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, Class B and
Class C 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. If a shareholder has any
questions regarding what documents are required by his or her
fee-based program or employee benefit plan, the shareholder
should contact his or her financial representative.
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
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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 SEC may by order permit
for the protection of security holders of a Fund.
Payment of the redemption price may be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of a Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds will reflect the deduction of
the applicable contingent deferred sales charge, if applicable.
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, may result in
capital gains or losses, the nature of which depends 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. Each
Fund shareholder is entitled to request redemption by Electronic
Funds Transfer once in any 30-day period, except for certain
omnibus accounts which may make such redemption requests, without
limit, of shares for which no share certificates have been issued
by telephone at (800) 221-5672 by a shareholder who has completed
the appropriate portion of the Subscription Application found in
the Prospectus or, in the case of an existing shareholder, an
"Autosell" application obtained from AFS A telephone redemption
request may not exceed $100,000 (except for certain omnibus
accounts), and must be made by 4:00 p.m. Eastern time on a Fund
business day as defined above. Proceeds of telephone redemptions
will be sent by Electronic Funds Transfer to a shareholder's
designated bank account at a bank selected by the shareholder
that is a member of the NACHA.
Telephone Redemption By Check. Except for certain
omnibus accounts or as noted below, each Fund shareholder is
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<PAGE>
eligible to request redemption by check, once in any 30-day
period, of Fund shares for which no share certificates have been
issued, by telephone at (800) 221-5672 before 4:00 p.m. Eastern
time on a Fund business day in an amount not exceeding $50,000.
Proceeds of such redemptions are remitted by check to the
shareholder's address of record. Telephone redemption by check
is not available with respect to shares (i) for which
certificates have been issued, (ii) held in nominee or "street
name" accounts, (iii) held by a shareholder who has changed his
or her address of record within the preceding 30 calendar days or
(iv) held in any retirement plan account. A shareholder
otherwise eligible for telephone redemption by check may cancel
the privilege by written instruction to AFS, or by checking the
appropriate box on the Subscription Application found in the
Prospectus.
TELEPHONE REDEMPTIONS--GENERAL. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching AFS by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
AFS at the address shown on the cover of 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 nor AFS will be responsible for the authenticity of
telephone requests for redemptions that a Fund reasonably
believes to be genuine. AFS 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 AFS 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.
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<PAGE>
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, selected financial intermediaries 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),
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 the
close of regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary, selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. Eastern time. If the
financial intermediary or 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 selected dealer
or agent. A shareholder may offer 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).
Normally, if shares of the Funds are offered through a financial
intermediary, 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 90 consecutive
days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed. No
contingent deferred sales charge will be deducted from the
proceeds of this redemption. In the case of a redemption or
repurchase of shares of the 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.
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<PAGE>
_____________________________________________________________
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 classes of shares unless
otherwise indicated.
Automatic Investment Program
Investors may purchase shares of the Funds through an
automatic investment program utilizing Electronic Funds Transfers
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 agent
designated by the investor at the public offering price next
determined after the Principal Underwriter receives the proceeds
from the investor's bank. 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 AFS at the
address or telephone numbers shown on the cover of this Statement
of Additional Information to establish an automatic investment
program.
Exchange Privilege
You may exchange your investment in the Funds for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by the Adviser).
In addition, (i) present officers and full-time employees of the
Adviser, (ii) present Directors or Trustees of any Alliance
Mutual Fund and (iii) certain employee benefit plans for
employees of the Adviser, the Principal Underwriter, AFS and
their affiliates may exchange Class A shares of any Alliance
Mutual Fund for Advisor Class shares of any other Alliance Mutual
Fund, including the Fund. Exchanges of shares are made at the net
asset value next determined after receipt of a properly completed
exchange request and without sales or service charges. Exchanges
may be made by telephone or written request. Telephone exchange
requests must be received by AFS by 4:00 p.m. Eastern time on a
Fund business day in order to receive that day's net asset
value.
Shares will continue to age without regard to exchanges
for purpose of determining the CDSC, if any, upon redemption and,
65
<PAGE>
in the case of Class B shares, for the purpose of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.
Please read carefully the prospectus of the mutual fund
into which you are exchanging before submitting the request.
Call AFS. at (800) 221-5672 to exchange uncertificated shares.
An exchange is a taxable capital transaction for federal tax
purposes. The exchange service may be changed, suspended or
terminated on 60 days' written notice.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for federal income tax purposes.
Each Fund shareholder, and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless AFS
receives written instruction to the contrary from the
shareholder, or the shareholder declines the privilege by
checking the appropriate box on the Subscription Application
found in the Prospectus. Such telephone requests cannot be
accepted with respect to shares then represented by share
certificates. Shares acquired pursuant to a telephone request
for exchange will be held under the same account registration as
the shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange
should telephone AFS with their account number and other details
of the exchange at (800) 221-5672 before 4:00 p.m. Eastern time,
on a Fund business day as defined above. Telephone requests for
exchanges received before 4:00 p.m. Eastern time on a Fund
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<PAGE>
business day will be processed as of the close of business on
that day. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching AFS
by telephone (although no such difficulty was apparent at any
time in connection with the 1987 market break). If a shareholder
were to experience such difficulty, the shareholder should issue
written instructions to AFS at the address shown on the cover of
this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount 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.
None of the Alliance Mutual Funds, the Adviser, the
Principal Underwriter or AFS will be responsible for the
authenticity of telephone requests for exchanges that a Fund
reasonably believes to be genuine. AFS 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 AFS did
not employ such procedures, it could be liable for losses arising
from unauthorized or fraudulent telephone instructions. Selected
dealers, agents or financial representatives, as applicable, 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 legally be
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 AFS at the "For Literature"
telephone number on the cover of this Statement of Additional
Information, or write to:
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Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self- employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by 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. The minimum
initial investment requirement may be waived with respect to
certain of these qualified plans.
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
retirement 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.
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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
nominal fees for establishing an account and for annual
maintenance. A portion of these fees is remitted to AFS as
compensation for its services to the retirement plan accounts
maintained with a Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact AFS at the
address or "For Literature" telephone number shown on the cover
of this Statement of Additional Information.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B or Class C Fund accounts, a Class A,
Class B or Class C account with one or more other Alliance Mutual
Funds may direct that income dividends and/or capital gains paid
on his or her Class A, Class B or Class C Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting AFS at the address or the "For 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 AFS to establish a dividend direction
plan.
Systematic Withdrawal Plan
General. 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 and, except as discussed
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<PAGE>
below, any applicable contingent deferred sales charge. Shares
acquired with reinvested dividends and distributions will be
liquidated first to provide such withdrawal payments and
thereafter other shares will be liquidated to the extent
necessary, and depending upon the amount withdrawn, the
investor's principal may be depleted. A systematic withdrawal
plan may be terminated at any time by the shareholder or the
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 imposed 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.
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 AFS at the address or the "For Literature"
telephone number shown on the cover of this Statement of
Additional Information.
CDSC Waiver for Class B Shares and Class C Shares.
Under a systematic withdrawal plan, up to 1% monthly, 2%
bi-monthly or 3% quarterly of the value at the time of redemption
of the Class B or Class C shares in a shareholder's account may
be redeemed free of any contingent deferred sales charge.
With respect to Class B shares, the waiver applies only
with respect to shares acquired after July 1, 1995. Class B
shares that are not subject to a contingent deferred sales charge
(such as shares acquired with reinvested dividends or
distributions) will be redeemed first and will count toward the
foregoing limitations. Remaining Class B shares that are held
the longest will be redeemed next. Redemptions of Class B shares
in excess of the foregoing limitations will be subject to any
otherwise applicable contingent deferred sales charge.
With respect to Class C shares, shares held the longest
will be redeemed first and will count toward the foregoing
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<PAGE>
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.
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 AFS, 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 the close of
regular trading on the Exchange (currently 4:00 p.m. Eastern
time), of the net assets of the Fund represented by 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.
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
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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
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. The net asset value of each class will be
determined separately by subtracting the accrued expenses and
liabilities allocated to that class from the assets belonging to
that class pursuant to a multi-class plan adopted by the Trust
pursuant to Rule 18f-3 under the 1940 Act.
72
<PAGE>
_____________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
_____________________________________________________________
UNITED STATES FEDERAL INCOME TAXATION OF DIVIDENDS AND
DISTRIBUTIONS
_____________________________________________________________
General. Each Fund intends to qualify for tax treatment
as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended, 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,
and (2) diversify its holdings so that at the end of each quarter
of its taxable year, the following two conditions are met: (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 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 (generally, dividends, interest, certain other
income, and the excess, if any, of net short-term capital gain
over net long-term capital 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.
In addition, if a Fund fails to distribute in a calendar
year substantially all of its ordinary income for such year and
substantially all of its capital gain net income for the one-year
73
<PAGE>
period ending October 31 (or later if the Fund is permitted so to
elect and so elects), plus any retained amount from the prior
year, the Fund will be subject to a 4% excise tax on the
undistributed amounts. A dividend paid to shareholders by a Fund
in January of a year generally is deemed to have been paid by the
Fund on December 31 of the preceding year, if the dividend was
declared and payable to shareholders of record on a date in
October, November or December of that preceding year. The Funds
intend generally to make distributions sufficient to avoid
imposition of the 4% excise tax.
The information set forth in the Funds' 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, but only to the extent so designated by
the Fund. The amount of such dividends and distributions that
may be designated by the Fund as 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 dividends-
received deduction shall also be disallowed with respect to a
dividend unless the corporate shareholder held its shares on the
ex-dividend date and for at least 45 more days during the 90-day
period surrounding the ex-dividend date.
Pursuant to the Taxpayer Relief Act of 1997, two
different tax rates apply to net capital gains (that is, the
excess of net gains from capital assets held for more than one
year ("long-term capital assets") over net losses from capital
assets held for not more than one year ("short-term capital
assets")). One rate (generally 28%) applies to net gains on
capital assets held for more than one year but not more than 18
months ("mid-term gains") and a second, preferred rate (generally
20%) applies to the balance of such net capital gains ("adjusted
net capital gains"). Distributions of net capital gains will be
treated in the hands of shareholders as mid-term gains to the
extent designated by a Fund as deriving from net gains from
assets held for more than one year but not more than 18 months,
and the balance will be treated as adjusted net capital gains.
Distributions of mid-term gains and adjusted net capital gains
74
<PAGE>
will be taxable to shareholders as such, regardless of how long a
shareholder has held the shares in a Fund.
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
(even if received 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.
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 nature of the gain or loss on the
sale of stock depends upon 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 investing in a Fund.
75
<PAGE>
_____________________________________________________________
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
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 Series and
each class of shares thereof, certain expenses may be legally
chargeable against the assets of all Series 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.
76
<PAGE>
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, 1997:
Names and Addresses % of Class
Conservative Investors Fund - Class C
Alliance Plan Div/FTC
Howard E. Seufer IRA
Rollover Account
115 Park metta Extension
Waverly, WY 26184-9738 6.79%
Growth Investors Fund - Class C
Merrill Lynch
For the Sole Benefit of ITS/
Customers
Attn: Fund Administration
4800 Deer Lake Drive East 3rd Floor
Jacksonville, FL 32246-6486 8.54%
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,
77
<PAGE>
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
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.
78
<PAGE>
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
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 or she 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 or her 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 or she 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
or her 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, 1997, 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.
79
<PAGE>
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-,
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.
The average annual compounded total return for Class A
shares of the Conservative Investors and Growth Investors Funds
was 3.35% and 2.19%, respectively, for the one-year period ended
April 30, 1997. The average annual compounded total return for
Class A shares of the Conservative Investors and Growth Investors
Funds was 6.56% and 10.20%, respectively, for the period May 4,
1992 (commencement of distribution of Class A shares) through
April 30, 1997. The average annual compounded total return for
Class B shares of the Conservative Investors and Growth Investors
Funds was 3.10% and 2.25%, respectively, for the one year period
ended April 30, 1997. The average annual compounded total return
for Class B shares of the Conservative Investors and Growth
Investors Funds was 6.72% and 10.37%, respectively, for the
period May 4, 1992 (commencement of distribution of Class B
shares) through April 30, 1997. The average annual compounded
total return for Class C shares of the Conservative Investors and
Growth Investors Funds was 6.10% and 5.04% respectively, for the
one-year period ended April 30, 1997. The average annual
compounded total return for Class C shares of the Conservative
Investors and Growth Investors Funds was 5.18% and 8.64%,
respectively, for the period August 2, 1993 (commencement of
distribution of Class C shares) through April 30, 1997.
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.
80
<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.
81
<PAGE>
ALLIANCE GROWTH INVESTORS FUND AND ALLIANCE CONSERVATIVE INVESTORS FUND
ANNUAL REPORT
APRIL 30, 1997
ALLIANCE CAPITAL
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-68.6%
UNITED STATES INVESTMENTS-45.0%
CONSUMER NONCYCLICALS-11.5%
APPAREL & TEXTILE-0.5%
Reebok International, Ltd. 13,050 $ 499,163
BEVERAGES-0.9%
Coca-Cola Co. 14,000 890,750
BIOTECHNOLOGY-1.3%
Biogen, Inc. (a) 9,450 302,400
Centocor, Inc. (a) 25,323 712,209
GelTex Pharmaceuticals, Inc. (a) 12,400 204,600
Medimmune, Inc. (a) 2,900 37,700
------------
1,256,909
BROADCASTING-0.3%
Tele-Communications, Inc.-
Liberty Media Cl.A (a) 15,850 298,178
COSMETICS-0.5%
Gillette Co. 5,680 482,800
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-3.6%
Boston Scientific Corp. (a) 9,331 450,221
Compdent Corp. (a) 1,500 24,188
Jones Medical Industries, Inc. 1,700 59,925
Medtronic, Inc. 6,048 418,824
Merck & Co., Inc. 13,860 1,254,330
National Surgery Centers, Inc. (a) 1,800 54,000
Oxford Health Plans, Inc. (a) 3,500 230,562
PacifiCare Health Systems, Inc. Cl.B (a) 2,450 196,612
Pfizer, Inc. 7,250 696,000
Premier Research Worldwide, Ltd. (a) 800 7,700
Rotech Medical Corp. (a) 2,900 45,675
------------
3,438,037
ENTERTAINMENT & LEISURE-1.5%
Carnival Corp. Cl.A 4,900 180,688
Time Warner, Inc. 10,400 468,000
Walt Disney Co. 9,770 801,140
------------
1,449,828
FOOD-0.8%
Campbell Soup Co. 9,340 477,507
Nabisco Holdings Corp. Cl.A 6,365 244,257
United Natural Foods, Inc. (a) 3,200 49,600
------------
771,364
HOUSEHOLD PRODUCTS-0.7%
Colgate-Palmolive Co. 4,790 531,690
Silgan Holdings, Inc. (a) 4,100 108,650
------------
640,340
PRINTING & PUBLISHING-0.4%
New York Times Co. Cl.A 8,900 384,925
TOBACCO-0.9%
Philip Morris Cos., Inc. 20,400 803,250
MISCELLANEOUS-0.1%
Interim Services, Inc. (a) 1,200 46,500
------------
10,962,044
TECHNOLOGY-9.4%
AEROSPACE & DEFENSE-0.9%
Boeing Co. 2,100 207,113
General Dynamics Corp. 4,500 320,625
United Technologies Corp. 4,800 363,000
------------
890,738
11
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.3%
Sterling Commerce, Inc. (a) 1 $ 26
Tellabs, Inc. (a) 7,500 299,062
------------
299,088
COMPUTER HARDWARE-0.5%
COMPAQ Computer Corp. (a) 5,000 426,875
COMPUTER NETWORKING SOFTWARE-1.1%
Cisco Systems, Inc. (a) 15,650 809,888
Netscape Communications Corp. (a) 5,200 140,725
Network General Corp. (a) 1,600 22,000
------------
972,613
COMPUTER PERIPHERALS-0.4%
Seagate Technology, Inc. (a) 8,200 376,175
COMPUTER SERVICES-0.3%
First Data Corp. 9,200 317,400
COMPUTER SOFTWARE-1.6%
3D Labs, Inc., Ltd. (a) 1,700 39,950
HMT Technology Corp. (a) 2,900 31,900
Insight Enterprises, Inc. (a) 1,800 42,750
Microsoft Corp. (a) 4,200 510,300
Oracle Systems Corp. (a) 18,250 725,437
Spectrum Holobyte, Inc. (a) 2,200 13,475
Sterling Software, Inc. (a) 1,600 48,800
Systemsoft Corp. (a) 3,400 25,925
Universal Outdoor Holdings, Inc. (a) 1,700 46,325
------------
1,484,862
ELECTRICAL EQUIPMENT-1.0%
General Electric Co. 8,500 942,437
Harman International Industries, Inc. New 900 34,425
------------
976,862
ELECTRONICS-0.0%
General Instrument Corp. (a) 1 23
Kent Electronics Corp. (a) 1,500 37,500
------------
37,523
MEDICAL PRODUCTS-0.1%
Enterprise Systems, Inc. (a) 2,600 60,450
SEMI-CONDUCTORS & RELATED-2.5%
Altera Corp. (a) 15,522 769,309
Intel Corp. 8,831 1,352,247
National Semiconductor Corp. (a) 2,000 50,000
Teradyne, Inc. (a) 7,500 245,625
------------
2,417,181
TELECOMMUNICATIONS-0.7%
Frontier Corp. 6,500 103,188
Teleport Communications Group, Inc. Cl.A (a) 5,000 142,500
WorldCom, Inc. (a) 19,970 479,280
------------
724,968
------------
8,984,735
FINANCE-9.4%
BANKS-0.9%
Chase Manhattan Corp. 6,500 602,062
First Union Corp. 3,300 277,200
------------
879,262
12
ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
BROKERAGE & MONEY MANAGEMENT-1.3%
Hambrecht & Quist Group, Inc. (a) 2,800 $ 46,550
Merrill Lynch & Co., Inc. 12,460 1,186,815
------------
1,233,365
FINANCIAL SERVICES-2.0%
American Express Co. 10,300 678,512
Beneficial Corp. 6,000 384,000
Dean Witter, Discover & Co. 19,400 742,050
Firstplus Financial Group, Inc. (a) 2,100 46,463
------------
1,851,025
INSURANCE-2.8%
Loews Corp. 3,000 275,625
NAC Re Corp. 14,000 542,500
Penncorp Financial Group, Inc. 10,300 354,063
TIG Holdings, Inc. 14,000 388,500
Travelers Group, Inc. 19,380 1,073,167
------------
2,633,855
MUTUAL FUND-0.1%
Morgan Stanley Asia Pacific Fund 13,334 130,007
REAL ESTATE-0.2%
American General Hospitality Corp. 1,300 32,012
Innkeepers USA Trust 4,300 60,200
JP Realty, Inc. 2,000 50,750
Macerich Co. 1,900 49,400
------------
192,362
MISCELLANEOUS-2.1%
MBNA Corp. 27,150 895,950
MGIC Investment Corp. 8,000 650,000
PMI Group, Inc. 9,600 490,800
------------
2,036,750
------------
8,956,626
ENERGY-5.4%
DOMESTIC PRODUCTS-0.7%
Apache Corp. 11,500 391,000
Brown (Tom), Inc. (a) 7,500 136,875
Murphy Oil Corp. 4,000 174,000
------------
701,875
INTERNATIONAL-0.7%
Texaco, Inc. 6,100 643,550
OIL & GAS SERVICES-3.6%
BJ Services Co. (a) 14,250 671,531
Costilla Energy, Inc. (a) 5,700 68,400
Halliburton Co. 4,500 317,813
KCS Energy, Inc. 2,400 78,000
Nabors Industries, Inc. (a) 26,000 487,500
Noble Drilling Corp. (a) 17,300 300,588
Parker Drilling Co. (a) 12,500 96,875
Rowan Cos, Inc. (a) 4,900 88,200
Schlumberger, Ltd. 3,500 387,625
Transocean Offshore, Inc. 14,500 879,062
------------
3,375,594
UTILITY / ELECTRIC-0.3%
FPL Group, Inc. 6,400 285,600
MISCELLANEOUS-0.1%
Superior Services, Inc. (a) 3,500 77,000
Ultramar Diamond
Shamrock 1,640 52,685
------------
129,685
------------
5,136,304
BASIC INDUSTRIES-3.1%
CONTAINERS-0.3%
Aptargroup, Inc. 200 8,000
Crown Cork & Seal Co., Inc. 4,800 262,800
------------
270,800
13
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
ENVIRONMENTAL CONTROL-1.4%
United States Filter Corp. (a) 2,400 $ 72,900
United Waste Systems, Inc. (a) 2,500 84,375
USA Waste Services, Inc. (a) 14,900 487,975
WMX Technologies, Inc. 24,000 705,000
------------
1,350,250
MACHINERY-0.8%
Allied-Signal, Inc. 8,600 621,350
Comverse Technology, Inc. (a) 3,900 153,075
------------
774,425
MINING & METALS-0.6%
Century Aluminum Co. 4,000 66,000
Gibraltar Steel Corp. (a) 2,900 71,050
Kaiser Aluminum Corp. (a) 29,800 320,350
Olympic Steel, Inc. (a) 800 12,450
Reynolds Metals Co. 400 27,150
Steel Dynamics, Inc. (a) 3,000 58,500
------------
555,500
------------
2,950,975
CONSUMER CYCLICALS-2.8%
AIRLINES-0.3%
Northwest Airlines Corp. Cl.A (a) 6,500 253,500
RAILROAD TRANSPORTATION-0.9%
Genesee & Wyoming, Inc. Cl.A (a) 2,400 68,100
Hub Group, Inc. Cl.A (a) 1,400 37,100
Union Pacific Corp. 11,200 714,000
------------
819,200
RESTAURANTS & LODGING-0.8%
Host Marriott Corp. (a) 21,700 377,038
La Quinta Inns, Inc. 15,550 340,156
------------
717,194
RETAIL -FOOD & DRUGS-0.1%
Rite Aid Corp. 3,000 138,000
RETAIL-GENERAL-0.6%
Circuit City Stores, Inc. (a) 9,450 141,750
Dayton Hudson Corp. 9,700 436,500
Ugly Duckling Corp. (a) 3,000 42,375
------------
620,625
TRANSPORTATION & SHIPPING-0.0%
Knightsbridge Tankers, Ltd. 2,200 50,050
MISCELLANEOUS-0.1%
Equity Corp. International (a) 2,700 58,050
------------
2,656,619
CONSUMER MANUFACTURING-1.6%
APPLIANCES-1.0%
Sunbeam Corp., Inc. 29,200 927,100
AUTO & RELATED-0.6%
Federal Mogul Corp. 9,600 265,200
Republic Waste Industries, Inc. (a) 11,500 285,344
------------
550,544
------------
1,477,644
BASIC MATERIALS-1.4%
CHEMICALS-1.0%
Crompton & Knowles Corp. 6,600 143,550
Cytec Industries, Inc. (a) 6,600 248,325
Freeport McMoran, Inc. 8,000 234,000
Monsanto Co. 5,000 213,750
Polymer Group, Inc. (a) 3,200 40,800
------------
880,425
14
ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION-0.4%
Martin Marietta Materials, Inc. 14,600 $ 397,850
------------
1,278,275
MULTI INDUSTRY-0.4%
Corestaff, Inc. (a) 2,800 48,650
Petco Animal Supplies, Inc. (a) 3,100 66,263
U.S. Industries, Inc. (a) 7,300 263,712
------------
378,625
Total United States Investments
(cost $35,380,038) 42,781,847
FOREIGN INVESTMENTS-23.6%
AUSTRALIA-0.3%
Coca Cola Amatil Ltd. 6,042 69,071
Mayne Nickless, Ltd. 5,000 30,999
Qantas Airways, Ltd. 7,000 14,548
WMC, Ltd. 9,281 55,007
Woolworths Ltd. 47,434 139,827
------------
309,452
BELGIUM-0.2%
Delhaize-Le Lion, S.A. 1,150 57,741
Kredietbank, N.V. 300 116,853
------------
174,594
CANADA-0.4%
Cognos, Inc (a) 2,000 50,750
Gulf Canada Resources, Ltd. (a) 29,200 237,250
Philip Environmental, Inc (a) 5,500 86,625
------------
374,625
CHINA-0.1%
Guangshen Railway Ltd. (ADR) (a) 2,000 47,500
DENMARK-0.1%
Den Danske Bank 1,200 103,783
FINLAND-1.1%
Huhtamaki Group 1,510 $ 65,477
Nokia AB OY Corp. pfd. 1,180 73,608
Nokia Corp. Cl.A (ADR) 9,750 630,094
Orion-Yhtmae OY Cl.B 3,010 113,271
Rauma OY 107 2,202
Rautaruukki OY 6,382 55,961
UPM-Kymmene Corp. 2,800 64,072
Valmet Corp. 4,100 69,300
------------
1,073,985
FRANCE-1.9%
Bouygues 1,015 95,126
Cie Bancaire 384 50,661
Generale des Eaux 1,165 162,280
GTM Entrepose, S.A. 815 49,083
Legris Ind., S.A. 1,620 75,497
Michelin 1,740 97,218
Promodes 110 37,110
SEITA 4,000 142,414
SGS-Thomson Microelectronics N.V., Ltd. (a) 650 50,116
Societe Centrale des Assurances
Generales de France 4,890 159,104
Societe Des Immeubles 567 35,750
Societe Francaise d'Invetissements
Immobiliers et de Gestion 500 38,636
Societe Generale 490 54,906
Societe Nacionale Elf Aquitaine 2,670 258,926
Technip, S.A. 950 100,428
Total, S.A. Cl.B 3,594 298,038
Unibail, S.A. 760 73,571
Usinor Sacilor 4,200 63,470
------------
1,842,334
15
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
GERMANY-1.5%
Bayer A.G. 5,270 $ 209,668
Continental A.G. 7,900 173,802
Henkel KGaA pfd. 2,150 116,699
Hornbach Holding A.G. pfd. 1,180 75,632
KSB A.G.-Vorzug pfd. 300 59,072
Merck KG 1,200 47,604
Preussag A.G. 280 71,868
Schmalbach Lubeca A.G. 1,180 258,921
Suedzucker A.G. 142 67,523
Veba A.G. 5,110 263,201
Volkswagen A.G. 120 76,291
------------
1,420,281
HONG KONG-0.3%
Asia Satellite Telephone 2,000 5,073
Citic Pacific, Ltd. 10,000 54,089
Dao Heng Bank Group, Ltd. 4,000 19,002
First Pacific Co., Ltd. 33,208 39,653
Hong Kong & China Gas Co., Ltd. 17,280 27,438
Hysan Development Co., Ltd. 6,000 16,575
New World Development Co., Ltd. 4,000 23,081
Swire Pacific, Ltd. Cl.A 5,000 38,566
Television Broadcasts of Hong Kong, Ltd. 14,000 57,471
Varitronix International, Ltd. 1,000 1,394
Wharf Holdings 7,000 26,477
------------
308,819
INDIA-0.2%
Bajaj Auto, Ltd. (GDR) (b) 2,200 70,950
Industrial Credit & Investment Corp. of
India, Ltd. GDR (b) 2,000 19,800
State Bank of India (GDR) (b) 2,100 50,610
Videsh Sanchar Nigam, Ltd. (a)(b) 1,300 25,669
------------
167,029
INDONESIA-0.1%
Pt Indosat 32,000 88,230
Telekomunikasi Indiana Cl.B 27,000 39,167
------------
127,397
IRELAND-0.3%
Allied Irish Banks 18,000 128,251
Saville Systems Ireland Plc (ADR) (a) 1,200 49,350
Smurfit (Jefferson) Group Plc 23,000 57,003
------------
234,604
ITALY-0.6%
Ente Nazionale Idrocarburi 20,200 102,524
IMI LNV 11,200 95,406
Industrie Natuzzi S.p.A. (ADR) 1,900 42,275
Montedison S.p.A 86,000 56,306
Parmalat Finanziaria S.p.A. 25,160 36,590
Telecom Italia 73,400 193,127
------------
526,228
JAPAN-7.4%
77th Bank 14,000 114,704
Advantest 200 11,108
Amano Corp. 1,000 9,375
Canon, Inc. 10,000 237,129
Credit Saison Co., Ltd. 9,000 173,002
Dai Nippon Printing Co., Ltd. 5,000 90,204
Daiichi Pharmaceutical Co. 9,000 144,641
Daikin Industries, Ltd. 17,000 133,525
Daito Trust Construction Co., Ltd. 16,700 168,401
16
ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
DDI Corp. 41 $ 272,289
East Japan Railway Co. 21 90,826
Fuji Photo Film, Co. 4,000 152,834
Fujitec Co., Ltd. 13,000 132,115
Furukawa Co., Ltd. 26,000 84,595
Hirose Electric Co. 4,000 218,695
Hitachi Chemical 12,000 81,301
Honda Motor Co. 5,000 155,198
Hoya Corp. 5,000 229,251
Ishikawajima-Harima Heavy Industries 20,000 74,526
Japan Tobacco, Inc. 26 165,707
Kamigumi Co., Ltd. 5,000 24,737
Kokuyo 8,000 173,947
Kuraray Co., Ltd. 13,000 114,704
Long-Term Credit Bank of Japan 28,000 75,220
Makita Corp. 11,000 150,786
Matsushita Electric Works 5,000 50,813
Mitsubishi Heavy Industries, Ltd. 16,000 105,629
National House Industrial Co. 5,000 59,085
NGK Insulators 12,000 105,881
NGK Spark Plug Co. 9,000 90,046
Nintendo Corp., Ltd. 1,200 87,730
Nisshin Steel Co., Ltd. 34,000 84,374
Onward Kashiyama Co., Ltd. 9,000 115,571
Pioneer Electronic Corp. 8,000 143,065
Rohm Co. 5,000 387,600
Sankyo Co. 6,000 160,712
Santen Pharmaceutical Co. 2,000 35,924
Sekisui Chemical Co., Ltd. 9,000 86,501
Seven-Eleven Japan Co., Ltd. 4,000 253,673
Shimano Industrial Co. 5,000 84,295
Shiseido Co., Ltd. 8,000 114,704
Sumitomo Electric Industries 5,000 67,751
Sumitomo Rubber Industries 17,000 111,159
Taisho Pharmaceutical Co. 8,000 197,897
Takeda Chemical Industries 4,000 92,331
Takuma Co., Ltd. 8,000 86,974
TDK Corp. 4,000 288,337
Toagosei Co., Ltd. 39,000 145,019
Toda Corp. 29,000 155,355
Tokyo Steel Mfg. 3,000 32,142
Toyoda Automatic Loom Works 8,000 143,696
Toyota Motor Corp. 9,000 260,921
Yamaguchi Bank 8,000 106,511
Yamanouchi Pharmaceutical Co., Ltd. 7,000 149,447
------------
7,081,963
KOREA-0.1%
Korea Electric Power Corp. (ADR) 2,000 34,000
SK Telecom Co., Ltd. (ADR) 6,180 58,710
------------
92,710
LUXEMBOURG-0.1%
Millicom International Cellular, S.A. (a) 1,500 68,250
MALAYSIA-0.2%
AMMB Holdings Berhad 6,000 39,908
Malakoff Berhad 7,000 27,880
Malayan Bank Berhad 4,000 39,828
Resorts World Berhad 16,000 58,945
------------
166,561
NETHERLANDS-1.3%
AKZO Nobel N.V. 1,870 240,913
Fortis Amev N.V. 6,760 255,022
Hunter Douglas N.V. 1,600 130,575
17
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Internationale Nederlanden Groep N.V. 6,210 $ 243,836
Koninklijke Hoogovens N.V. 2,400 109,634
Koninklijke KNP BT 3,400 67,012
Stork N.V. 1,100 47,370
Vendex International N.V. 2,020 95,904
------------
1,190,266
NEW ZEALAND-0.1%
Fletcher Challenge, Ltd. 12,196 16,825
Lion Nathan, Ltd. 15,000 36,083
Telecom Corp. of New Zealand, Ltd. 12,000 53,823
------------
106,731
NORWAY-0.3%
Bergesen D.Y. AS Cl.A 6,500 134,177
Den Norske Bank 19,000 68,570
Orkla ASA 1,100 92,217
------------
294,964
PHILIPPINES-0.0%
Manila Electric Co. Cl.B 3,900 24,255
Philippine Commercial International Bank 1,000 12,325
------------
36,580
RUSSIA-0.1%
Tatneft (ADR) (a)(b) 600 44,970
SINGAPORE-0.3%
Development Bank of Singapore 1,000 11,883
Overseas Union Banking Corp., Ltd. 8,400 55,129
Overseas- Chinese Banking Corp., Ltd. 6,600 77,057
Singapore Airlines, Ltd. 1,000 8,843
Singapore Press Holdings, Ltd. 5,000 92,573
------------
245,485
SPAIN-0.7%
Banco Bilbao Vizcaya 2,400 161,527
Banco Santander, S.A. 1,200 90,284
Repsol, S.A. 1,980 83,016
Tabacalera, S.A. Series A 2,320 116,472
Telefonica de Espana 7,200 184,426
------------
635,725
SWEDEN-0.3%
AB Astra Series A 4,100 167,769
Sparbanken Sverige AB Cl.A 4,220 75,312
------------
243,081
SWITZERLAND-1.1%
Baloise Holdings, Ltd. 51 107,598
Ciba-Geigy A.G. 2,113 182,044
Holderbank Financiere Glarus A.G. 145 112,825
Nestle, S.A. 93 112,930
Novartis A.G. (ADR) 233 306,957
Schindler Holding A.G.
Chf100 Regd 40 47,487
Participating Certificate 42 50,858
SMH A.G. Neuenburg 420 55,559
Zurich Versicherungsgesellschaft 286 93,904
------------
1,070,162
THAILAND-0.1%
Bangkok Bank Public Co., Ltd. 2,000 18,528
Thai Farmers Bank Co. 10,000 60,484
warrants, expiring 9/15/02 250 182
------------
79,194
UNITED KINGDOM-4.7%
Anglian Water Plc 16,400 181,543
BAA Plc 12,600 104,353
Barclays Plc 3,630 67,481
Bass Plc 10,900 140,622
BG Plc 24,000 69,238
Boots Co. 9,500 106,856
18
ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
BPB Plc 13,200 $ 71,028
British Aerospace 6,370 135,350
British Petroleum Co. Plc 12,980 148,944
British Telecommunications Plc 23,800 174,353
Cable & Wireless 14,100 108,578
Carlton Communications Plc 17,500 143,517
Compass Group Plc 18,200 199,404
Doncasters Plc (ADR) (a) 3,200 72,000
Energy Group (a) 5,622 44,648
General Accident 5,500 78,132
Granada Group Plc 11,000 158,849
Holliday Chemical Holdings Plc 20,600 50,415
Kingfisher Plc 9,800 106,100
Ladbroke Group Plc 57,200 213,225
PowerGen Plc 13,800 144,486
Royal & Sun Alliance Insurance Group Plc 11,150 87,827
Rugby Group Plc 67,750 122,982
Scottish & Newcastle Plc 13,000 140,746
Scottish Power 18,500 112,139
Shell Transportation and Trading Co. 5,190 91,771
Siebe Plc 8,930 132,141
Smithkline Beecham Plc 4,000 322,500
TI Group Plc 14,390 123,376
Tomkins Plc 53,900 232,373
Unilever Plc 2,290 60,164
United Assurance Group Plc 7,790 62,118
United News Media Plc 12,220 149,334
Vodafone Group Plc 24,820 111,026
Whitbread 12,000 149,757
------------
4,417,376
Total Foreign Investments
(cost $21,099,822) 22,484,649
Total Common Stocks & Other Investments
(cost $56,479,860) 65,266,496
------------
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCIES-17.3%
Federal Home Loan Bank
7.00%, 9/01/11 $ 987 $ 979,529
Federal National MortgageAssn.
6.50%, 1/01/11 97 94,737
6.50%, 5/01/11 1,883 1,829,638
7.00%, 5/01/26 1,055 1,023,960
Government National Mortgage Assn.
7.50%, 1/15/27 848 840,544
8.00%, 1/15/27 1,976 2,002,220
U.S. Treasury Bond
6.625%, 2/15/27 2,045 1,962,239
U.S. Treasury Notes
5.75%, 8/15/03 935 892,925
6.125%, 8/31/98 3,750 3,751,162
6.375%, 5/15/99 2,000 2,002,820
6.50%, 8/15/05 845 832,460
6.875%, 5/15/06 300 302,532
Total U.S. Government & Agencies
(cost $16,567,105) 16,514,766
YANKEE BONDS-1.4%
Deutsche Bank Financial, Inc.
6.70%, 12/13/06 650 624,201
Ras Laffan Liquefied Natural Gas
8.294%, 3/15/14 (b) 650 660,780
Total Yankee Bonds
(cost $1,298,046) 1,284,981
CORPORATE DEBT OBLIGATIONS-1.3%
FINANCIAL-1.3%
Dime Capital Trust I Ser. A
9.33%, 5/06/27 600 600,750
19
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
Ford Motor Credit Co.
6.125%, 1/09/06 $ 650 $ 599,638
Sumitomo Bank International
.75%, 5/31/01 (c) JPY 9,000 74,403
Total Corporate Debt Obligations
(cost $1,275,746) 1,274,791
SHORT-TERM DEBT SECURITIES-10.4%
Student Loan Marketing Assn.
5.28%, 5/01/97
(amortized cost $9,900,000) $9,900 $ 9,900,000
TOTAL INVESTMENTS -99.0%
(cost $85,520,757) 94,241,034
Other assets less liabilities-1.0% 954,171
NET ASSETS-100% $95,195,205
(a) Non-income producing security.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1997,
these securities amounted to $872,779 or 0.9% of net assets.
(c) Japanese holding.
Glossary of Terms:
ADR - American depository receipt
GDR - Global depository receipt
See notes to financial statements.
20
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-29.4%
UNITED STATES INVESTMENTS-21.7%
CONSUMER NONCYCLICALS-6.4%
APPAREL & TEXTILE-0.3%
Reebok International, Ltd. 3,984 $ 152,388
BEVERAGES-0.6%
Coca-Cola Co. 4,200 267,225
BIOTECHNOLOGY-0.6%
Biogen, Inc. (a) 2,764 88,448
Centocor, Inc. (a) 3,691 103,809
GelTex Pharmaceuticals, Inc. (a) 3,000 49,500
------------
241,757
COSMETICS-0.3%
Gillette Co. 1,765 150,025
DRUGS, HOSPITAL SUPPLIES &
MEDICAL SERVICES-2.2%
Boston Scientific Corp. (a) 2,835 136,789
Medtronic, Inc. 1,579 109,346
Merck & Co., Inc. 3,200 289,600
Oxford Health Plans, Inc. (a) 1,500 98,812
PacifiCare Health Systems, Inc. Cl.B (a) 1,200 96,300
Pfizer, Inc. 2,300 220,800
------------
951,647
ENTERTAINMENT & LEISURE-0.7%
Carnival Corp. Cl.A 1,400 51,625
Time Warner, Inc. 1,500 67,500
Walt Disney Co. 2,433 199,506
------------
318,631
FOOD-0.5%
Campbell Soup Co. 3,080 157,465
Nabisco Holdings Corp. Cl.A 1,450 55,644
------------
213,109
HOUSEHOLD PRODUCTS-0.4%
Colgate-Palmolive Co. 1,585 175,935
PRINTING & PUBLISHING-0.2%
New York Times Co. Cl.A 2,300 99,475
TOBACCO-0.6%
Philip Morris Cos., Inc. 6,150 242,156
------------
2,812,348
TECHNOLOGY-4.9%
AEROSPACE & DEFENSE-0.5%
Boeing Co. 500 49,312
General Dynamics Corp. 1,000 71,250
United Technologies Corp. 1,400 105,875
------------
226,437
COMMUNICATIONS EQUIPMENT-0.2%
Tellabs, Inc. (a) 1,700 67,788
COMPUTER HARDWARE-0.3%
COMPAQ Computer Corp. (a) 1,550 132,331
COMPUTER NETWORKING SOFTWARE-0.5%
Cisco Systems, Inc. (a) 3,550 183,712
Netscape Communications Corp. (a) 1,550 41,947
------------
225,659
COMPUTER PERIPHERALS-0.1%
Seagate Technology, Inc. (a) 1,200 55,050
21
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMPUTER SERVICES-0.2%
First Data Corp. 2,800 $ 96,600
COMPUTER SOFTWARE-0.7%
Microsoft Corp. (a) 1,200 145,800
Oracle Systems Corp. (a) 4,150 164,963
------------
310,763
ELECTRICAL EQUIPMENT-0.6%
General Electric Co. 2,300 255,012
SEMI-CONDUCTORS & RELATED-1.3%
Altera Corp. (a) 4,453 220,702
Intel Corp. 2,080 318,500
National Semiconductor Corp. (a) 1,000 25,000
Teradyne, Inc. (a) 500 16,375
------------
580,577
TELECOMMUNICATIONS-0.5%
Tele-Communications, Inc.-
Liberty Media Cl.A (a) 4,850 91,241
Teleport Communications
Group, Inc. Cl.A (a) 1,500 42,750
WorldCom, Inc. (a) 3,825 91,800
------------
225,791
------------
2,176,008
FINANCE-3.8%
BANKS-0.4%
Chase Manhattan Corp. 1,100 101,888
First Union Corp. 1,000 84,000
------------
185,888
BROKERAGE & MONEY MANAGEMENT-0.4%
Merrill Lynch & Co., Inc. 1,700 161,925
FINANCIAL SERVICES-1.0%
American Express Co. 3,200 210,800
Dean Witter, Discover & Co. 5,700 218,025
------------
428,825
INSURANCE-1.0%
Penncorp Financial Group, Inc. 3,000 103,125
Travelers Group, Inc. 6,106 338,120
------------
441,245
MISCELLANEOUS-1.0%
MBNA Corp. 8,250 272,250
MGIC Investment Corp. 1,000 81,250
PMI Group, Inc. 1,700 86,912
------------
440,412
------------
1,658,295
ENERGY-2.3%
DOMESTIC PRODUCTS-0.3%
Apache Corp. 2,500 85,000
Brown (Tom), Inc. (a) 1,000 18,250
Murphy Oil Corp. 600 26,100
------------
129,350
INTERNATIONAL-0.4%
Texaco, Inc. 1,800 189,900
OIL & GAS SERVICES-1.4%
BJ Services Co. (a) 3,600 169,650
Halliburton Co. 1,000 70,625
Nabors Industries, Inc. (a) 5,600 105,000
Noble Drilling Corp. (a) 2,200 38,225
Parker Drilling Co. (a) 2,000 15,500
Transocean Offshore, Inc. 3,200 194,000
------------
593,000
UTILITY / ELECTRIC-0.2%
FPL Group, Inc. 2,200 98,175
------------
1,010,425
22
ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
CONSUMER CYCLICALS-1.4%
AIRLINES-0.2%
Northwest Airlines Corp. Cl.A (a) 2,100 $ 81,900
RAILROAD TRANSPORTATION-0.4%
Union Pacific Corp. 3,200 204,000
RESTAURANTS & LODGING-0.4%
Host Marriott Corp. (a) 3,600 62,550
La Quinta Inns, Inc. 4,850 106,094
------------
168,644
RETAIL-GENERAL-0.4%
Circuit City Stores, Inc. (a) 2,300 34,500
Dayton Hudson Corp. 3,200 144,000
------------
178,500
------------
633,044
BASIC INDUSTRIES-1.4%
CONTAINERS-0.2%
Crown Cork & Seal Co., Inc. 1,300 71,175
ENVIRONMENTAL CONTROL-0.6%
USA Waste Services, Inc. (a) 4,300 140,825
WMX Technologies, Inc. 4,100 120,437
------------
261,262
MACHINERY-0.4%
Allied-Signal, Inc. 2,800 202,300
MINING & METALS-0.2%
Kaiser Aluminum Corp. (a) 8,450 90,837
Reynolds Metals Co. 100 6,788
------------
97,625
------------
632,362
CONSUMER MANUFACTURING-0.9%
APPLIANCES-0.6%
Sunbeam Corp., Inc. 8,300 263,525
AUTO & RELATED-0.3%
Federal Mogul Corp. 2,200 60,775
Republic Waste Industries, Inc. (a) 3,150 78,159
------------
138,934
------------
402,459
MULTI INDUSTRY-0.4%
U.S. Industries, Inc. (a) 5,300 191,463
BASIC MATERIALS-0.2%
CHEMICALS-0.2%
Cytec Industries, Inc. (a) 500 18,813
Freeport McMoran, Inc. 1,500 43,875
------------
62,688
Total United States Investments
(cost $7,844,022) 9,579,092
FOREIGN INVESTMENTS-7.7%
AUSTRALIA-0.0%
Woolworths Ltd. 8,173 24,093
BELGIUM-0.1%
Delhaize-Le Lion S.A. 170 8,536
Kredietbank, N.V. 40 15,580
------------
24,116
CANADA-0.2%
Gulf Canada Resources, Ltd. (a) 8,600 69,875
DENMARK-0.0%
Den Danske Bank 200 17,297
FINLAND-0.1%
Huhtamaki Group 400 17,345
Orion-Yhtymae OY Cl.B 500 18,816
Rautaruukki OY 1,045 9,163
Valmet Corp. 600 10,141
------------
55,465
23
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
FRANCE-0.6%
Bouygues 20 $ 1,875
Generale des Eaux 247 34,406
GTM Entrepose, S.A. 250 15,056
Michelin 250 13,968
Promodes 20 6,747
SEITA 600 21,362
Societe Centrale des Assurances
Generales de France 700 22,776
Societe Generale 110 12,326
Societe Nacionale Elf Aquitaine 450 43,639
Technip, S.A. 150 15,857
Total, S.A. Cl.B 582 48,263
Usinor Sacilor 1,200 18,134
------------
254,409
GERMANY-0.5%
Adidas A.G. 70 7,296
Bayer A.G. 780 31,032
Continental A.G. 1,200 26,400
Henkel KGaA, pfd. 250 13,570
Hornbach Holding A.G., pfd. 220 14,101
Merck KG 350 13,884
Preussag A.G. 40 10,267
Schmalbach Lubeca A.G. 230 50,468
Veba A.G. 700 36,055
Volkswagen A.G. 30 19,073
------------
222,146
HONG KONG-0.2%
Asia Satellite Telephone 3,000 7,610
Dao Heng Bank Group, Ltd. 7,000 33,254
Hong Kong and China Gas Co., Ltd. 2,160 3,429
Swire Pacific, Ltd., Cl.A 5,000 38,566
Varitronix International, Ltd. 12,000 16,730
------------
99,589
INDIA-0.1%
Bajaj Auto, Ltd. (GDR) (b) 500 $ 16,125
Videsh Sanchar Nigam, Ltd. (a)(b) 500 9,873
------------
25,998
INDONESIA-0.1%
PT Indosat (ADR) 800 22,000
Ramayana Lestari (a) 1,500 3,642
------------
25,642
IRELAND-0.1%
Allied Irish Banks 6,000 42,750
Smurfit (Jefferson) Group Plc. 3,400 8,427
------------
51,177
ITALY-0.2%
IMI LNV 2,000 17,037
Montedison S.p.A. 22,000 14,404
Parmalat Finanziaria S.p.A. 3,790 5,511
Telecom Italia 12,000 31,574
------------
68,526
JAPAN-2.3%
77th Bank 1,000 8,193
Canon, Inc. 5,000 118,565
Credit Saison Co., Ltd. 1,000 19,223
Daiichi Pharmaceutical Co. 1,000 16,071
Daikin Industries, Ltd. 1,000 7,854
Daito Trust Construction Co., Ltd. 1,000 10,084
DDI Corp. 2 13,282
Ezaki Glico Co. 3,300 25,998
Fuji Photo Film, Co. 1,000 38,209
Fujitec Co., Ltd. 2,000 20,325
Furukawa Co., Ltd. 1,000 3,254
Hirose Electric Co. 1,000 54,674
Hitachi Chemical 1,000 6,775
Honda Motor Co. 1,000 31,040
Hoya Corp. 1,000 45,850
24
ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
Ishikawajima-Harima Heavy Industries 1,000 $ 3,726
Japan Tobacco, Inc. 2 12,747
Kokuyo 1,000 21,743
Kuraray Co., Ltd. 1,000 8,823
Long-Term Credit Bank of Japan 2,000 5,373
Makita Corp. 2,000 27,416
Matsushita Electric Works 2,000 20,325
Mitsubishi Heavy Industries, Ltd. 1,000 6,602
National House Industrial Co. 1,000 11,817
NGK Insulators 1,000 8,823
NGK Spark Plug Co. 1,000 10,005
Onward Kashiyama Co., Ltd. 1,000 12,841
Pioneer Electronic Corp. 1,000 17,883
Rohm Co. 1,000 77,520
Sankyo Co. 1,000 26,785
Sekisui Chemical Co., Ltd. 1,000 9,611
Seven Eleven Japan Co., Ltd. 1,000 63,418
Shimano Industrial, Co. 1,000 16,859
Shiseido Co., Ltd. 2,000 28,676
Sumitomo Electric Industries 2,000 27,101
Sumitomo Rubber Industries 1,000 6,539
Taisho Pharmaceutical Co. 1,000 24,737
Takuma Co., Ltd. 1,000 10,872
TDK Corp. 1,000 72,084
Toagosei Co., Ltd. 2,000 7,437
Toda Corp. 2,000 10,714
Toyoda Automatic Loom Works 1,000 17,962
Toyota Motor Corp. 1,000 28,991
Yamaguchi Bank 1,000 13,314
------------
1,030,141
KOREA-0.1%
SK Telecom Co., Ltd. (ADR) 4,635 44,032
MALAYSIA-0.1%
Berjaya Sports Toto Berhad 7,000 33,455
Resorts World Berhad 9,000 33,157
------------
66,612
NETHERLANDS-0.4%
AKZO Nobel N.V. 300 38,649
Fortis Amev N.V. 1,000 37,725
Hunter Douglas N.V. 200 16,322
Internationale Nederlanden Groep N.V. 1,075 42,210
Koninklijke Hoogovens N.V. 400 18,272
Koninklijke KNP BT 500 9,855
Stork N.V. 200 8,613
Vendex International N.V. 300 14,243
------------
185,889
NEW ZEALAND-0.1%
Telecom Corp. of New Zealand, Ltd. 8,000 35,882
NORWAY-0.1%
Bergesen D.Y. AS Cl.A 950 19,610
Den Norske Bank 4,000 14,436
Orkla ASA 160 13,414
------------
47,460
RUSSIA-0.0%
Tatneft (ADR) (a)(b) 100 7,495
SINGAPORE-0.1%
Overseas-Chinese Banking Corp., Ltd. 2,200 25,686
25
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
SPAIN-0.2%
Banco Bilbao Vizcaya 350 $ 23,556
Banco Santander, S.A. 200 15,048
Tabacalera, S.A. Series A 350 17,571
Telefonica de Espana 1,100 28,176
------------
84,351
SWEDEN-0.1%
AB Astra Series A 600 24,551
Sparbanken Sverige AB Cl.A 900 16,062
------------
40,613
SWITZERLAND-0.5%
Baloise Holdings, Ltd. 20 42,195
Ciba-Geigy A.G. 308 26,536
Holderbank Fianciere Glarus A.G. 20 15,562
Nestle, S.A. 30 36,429
Novartis A.G. (ADR) 38 50,062
Schindler Holding A.G. 20 23,743
Zurich Versicherungsgesellschaft 60 19,700
------------
214,227
THAILAND-0.0%
Bangkok Bank Public Co., Ltd. 2,000 18,528
UNITED KINGDOM-1.5%
Anglian Water Plc 2,800 30,995
BAA Plc 10,000 82,820
Bass Plc 1,500 19,352
BG Plc 3,500 10,097
Boots Co. 1,500 16,872
British Aerospace 1,000 21,248
British Petroleum Co. Plc 1,800 20,655
British Telecommunications Plc 3,500 25,640
Cable & Wireless 2,000 15,401
Carlton Communications Plc 2,500 20,502
Compass Group Plc 2,900 31,773
Energy Group (a) 1,000 7,942
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
General Accident 800 $ 11,365
Granada Group Plc 2,000 28,882
Kingfisher Plc 1,500 16,240
Ladbroke Group Plc 5,000 18,639
PowerGen Plc 1,800 18,846
Royal & Sun Alliance Insurance Group Plc 2,000 15,754
Rugby Group Plc 11,840 21,492
Scottish & Newcastle Plc 2,000 21,653
Scottish Power 5,000 30,308
Siebe Plc 1,300 19,237
Tesco Plc 8,000 46,418
Tomkins Plc 8,000 34,489
United Assurance Group
Plc 1,300 10,366
Convertible deferred 8,400 545
United News Media Plc 1,000 12,220
Vodafone Group Plc 3,500 15,656
Whitbread 2,000 24,960
------------
650,367
Total Foreign Investments
(cost $3,261,126) 3,389,616
Total Common Stocks & Other Investments
(cost $11,105,148) 12,968,708
U.S. GOVERNMENT & AGENCIES-54.0%
Federal Home Loan Bank
7.00%, 9/01/11 $ 1,551 1,539,260
Federal National Mortgage Assn.
6.50%, 6/01/11 3,809 3,702,402
7.00%, 5/01/26 1,582 1,535,941
Government National Mortgage Assn.
8.00%, 1/15/27 3,001 3,041,347
U.S. Treasury Bond
6.625%, 2/15/27 3,585 3,439,915
26
ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
PRINCIPAL
AMOUNT
(000) U.S. $ VALUE
- -------------------------------------------------------------------------
U.S. Treasury Notes
5.75%, 8/15/03 $ 1,000 $ 955,000
6.375%, 5/15/99 3,000 3,004,230
6.875%, 5/15/06 1,450 1,462,238
7.875%, 4/15/98 5,000 5,086,700
Total U.S. Government & Agencies
(cost $23,839,922) 23,767,033
YANKEEBONDS-6.2%
Deutsche Bank Financial, Inc.
6.70%, 12/13/06 900 864,279
Quebec Province Canada
7.125%, 2/09/24 (c) 950 872,109
St. George Bank, Ltd.
7.15%, 10/15/05 (b) 1,000 982,080
Total Yankee Bonds
(cost $2,752,625) 2,718,468
CORPORATE DEBT OBLIGATIONS-5.6%
FINANCIAL-3.4%
Premier Auto Trust
7.15%, 2/04/99 1,500 1,507,500
TRANSPORTATION-2.2%
Erac USA Finance Co.
6.95%, 3/01/04 (b) 1,000 980,260
Total Corporate Debt Obligations
(cost $2,494,703) 2,487,760
SHORT-TERM DEBT SECURITIES-4.1%
Student Loan Marketing Assn.
5.28%, 5/01/97
(amortized cost $1,800,000) 1,800 1,800,000
TOTAL INVESTMENTS -99.3%
(cost $41,992,398) 43,741,969
Other assets less liabilities-0.7% 304,795
NET ASSETS-100% $44,046,764
(a) Non-income producing security.
(b) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At April 30, 1997,
these securities amounted to $1,995,833 or 4.5% of net assets.
(c) Country of origin--Canada.
Glossary of Terms:
ADR - American depository receipt
GDR - Global depository receipt
See notes to financial statements.
27
STATEMENTS OF ASSETS AND LIABILITIES ALLIANCE GROWTH INVESTORS AND
APRIL 30, 1997 CONSERVATIVE INVESTORS FUNDS
_______________________________________________________________________________
GROWTH CONSERVATIVE
INVESTORS FUND INVESTORS FUND
-------------- --------------
ASSETS
Investments in securities, at value(cost
$85,520,757 and $41,992,398, respectively) $94,241,034 $43,741,969
Cash, at value (cost $315,662 and
$105,434, respectively) 315,602 106,060
Receivable for investment securities
and foreign currency sold 1,276,775 199,651
Interest and dividends receivable 318,469 347,356
Receivable for shares of beneficial
interest sold 211,823 57,677
Total assets 96,363,703 44,452,713
LIABILITIES
Payable for investment securities and
foreign currency purchased 684,178 51,065
Payable for shares of beneficial
interest redeemed 230,137 185,516
Distribution fee payable 61,476 29,402
Advisory fee payable 57,702 11,049
Accrued expenses 135,005 128,917
Total liabilities 1,168,498 405,949
NET ASSETS $95,195,205 $44,046,764
COMPOSITION OF NET ASSETS
Shares of beneficial interest, at par $ 73 $ 39
Additional paid-in capital 86,248,857 41,518,186
Undistributed net investment income 379,445 216,263
Accumulated net realized gain (loss) on
investments and foreign currency transactions (148,332) 564,735
Net unrealized appreciation of
investments and foreign currency
denominated assets and liabilities 8,715,162 1,747,541
$95,195,205 $44,046,764
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($27,453,411 / 2,091,931 and $11,859,586 /
1,048,877 shares of beneficial interest
issued and outstanding, respectively) $13.12 $11.31
Sales charge--4.25% of public offering price .58 .50
Maximum offering price $13.70 $11.81
CLASS B SHARES
Net asset value and offering price per share
($61,708,552 / 4,706,967 and $28,037,476 /
2,440,961 shares of beneficial interest
issued and outstanding, respectively) $13.11 $11.49
CLASS C SHARES
Net asset value, and offering price per share
($6,033,242 / 459,830 and $4,149,702 /
361,129 shares of beneficial interest issued
and outstanding, respectively) $13.12 $11.49
See notes to financial statements.
28
STATEMENTS OF OPERATIONS ALLIANCE GROWTH INVESTORS AND
YEAR ENDED APRIL 30, 1997 CONSERVATIVE INVESTORS FUNDS
_______________________________________________________________________________
GROWTH CONSERVATIVE
INVESTORS FUND INVESTORS FUND
-------------- --------------
INVESTMENT INCOME
Interest $ 1,739,186 $ 2,251,317
Dividends (net of foreign tax withheld
of $55,187 and $12,966, respectively) 846,715 204,980
Total income 2,585,901 2,456,297
EXPENSES
Advisory fee 723,109 363,977
Distribution fee - Class A 87,204 39,343
Distribution fee - Class B 613,255 304,539
Distribution fee - Class C 60,207 49,620
Custodian 237,190 137,206
Transfer agency 187,510 90,432
Audit and legal 66,873 67,596
Printing 64,688 30,725
Registration 63,140 47,364
Trustees' fees 30,000 30,000
Amortization of organization expenses 8,520 8,520
Miscellaneous 14,014 9,617
Total expenses 2,155,710 1,178,939
Less: expenses waived and assumed by
adviser (See Note B) (167,543) (245,071)
Less: expense offset arrangement (See Note B) (13,706) (6,533)
Net expenses 1,974,461 927,335
Net investment income 611,440 1,528,962
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
Net realized gain on investments transactions 3,043,266 608,550
Net realized loss on foreign currency
transactions (58,057) (14,568)
Net change in unrealized appreciation
of investments 2,367,604 1,321,365
Net change in unrealized appreciation
(depreciation) of foreign currency
denominated assets and liabilities (5,822) 41
Net gain on investments 5,346,991 1,915,388
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 5,958,431 $ 3,444,350
See notes to financial statements.
29
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
APR. 30,1997 APR. 30,1996 APR. 30,1997 APR. 30,1996
----------- ----------- ----------- -----------
INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS
Net investment income $ 611,440 $ 1,154,487 $ 1,528,962 $ 2,033,580
Net realized gain
on investments and
foreign currency
transactions 2,985,209 13,079,485 593,982 4,671,618
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency
denominated assets
and liabilities 2,361,782 2,657,978 1,321,406 (793,910)
Net increase in net
assets from
operations 5,958,431 16,891,950 3,444,350 5,911,288
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (345,352) (510,038) (516,046) (740,336)
Class B (444,447) (687,510) (967,390) (1,250,244)
Class C (43,458) (64,858) (154,474) (194,637)
Net realized gain
on investments
Class A (3,066,309) (1,147,583) (278,463) -0-
Class B (7,140,766) (2,234,313) (644,643) -0-
Class C (698,222) (210,790) (100,968) -0-
TRANSACTIONS IN SHARES
OF BENEFICIAL INTEREST
Net increase
(decrease) 4,473,662 14,701,805 (8,201,003) (3,326,752)
Total increase
(decrease) (1,306,461) 26,738,663 (7,418,637) 399,319
NET ASSETS
Beginning of year 96,501,666 69,763,003 51,465,401 51,066,082
End of year
(including
undistributed net
investment income
of $435,992,
$657,809, $230,831
and $339,779,
respectively) $95,195,205 $96,501,666 $44,046,764 $51,465,401
See notes to financial statements.
30
NOTES TO FINANCIAL STATEMENTS ALLIANCE GROWTH INVESTORS AND
APRIL 30, 1997 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.
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% for purchases not exceeding
$1,000,000. 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 of 1%. Class B shares are currently 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 B shares purchased on or after August 2, 1993
and held for a period ending eight years after the end of the calendar month of
purchase will convert to Class A shares. Class C shares purchased on or after
July 1, 1996 are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. 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 such 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 loss on foreign currency transactions for Growth Investors and
Conservative Investors Funds represents net foreign exchange gains and losses
from holdings of foreign currencies, foreign currency contracts, currency gains
or losses realized between the trade and settlement dates on investment
transactions, and the difference between the amounts of dividends and foreign
taxes recorded on each of 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 April 30,
1997 exchange rates are reflected as a component of unrealized appreciation of
investments and foreign currency denominated assets and liabilities.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $50,000 for each Fund have been deferred
and were amortized on a straight-line basis through April, 1997.
4. TAXES
It is each 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 any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discounts and amortizes premiums as adjustments
to interest income.
31
ALLIANCE GROWTH INVESTORS AND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) CONSERVATIVE INVESTORS FUNDS
_______________________________________________________________________________
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.
7. INCOME AND EXPENSES
All income earned and expenses incurred by the 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 Fund's
Class B and Class C shares bear higher distribution and in the case of Class B
higher 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.
8. RECLASSIFICATION OF COMPONENTS OF NET ASSETS
As of April 30, 1997, the funds reclassified certain components of net assets.
On the Growth Investors Fund the reclassification resulted in a credit to
accumulated undistributed net realized loss and additional paid in capital of
$54,501 and $2,046 respectively, and a debit to accumulated net investment
income of $56,547. On the Conservative Investors Fund, the reclassification
resulted in a credit to accumulated net realized gains and a debit to
accumulated net investment income of $14,568. These reclassifications were the
result of permanent book and tax differences. Net assets on the Funds were not
affected by these changes.
NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of an investment advisory agreement, the Funds pay Alliance
Capital Management L.P. (the "Adviser") an advisory fee at an annual rate of
.75% of each Fund's average daily net assets. Such fee is accrued daily and
paid monthly. The Adviser has agreed 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 of both funds. Effective December 12, 1996, the Adviser has
discontinued the advisory fee waiver on the Growth Investors Fund. Prior to
August 2, 1993, the annual rate for Class B shares was 2.15%. For the year
ended April 30, 1997, such reimbursement amounted to $167,543 and $245,071 for
the Growth Investors and Conservative Investors Funds, respectively.
The Funds have a Transfer Agency 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 to $130,318 and $55,108 for the Growth Investors Fund and
Conservative Investors Fund, respectively, for the year ended April 30, 1997.
In addition, for the year ended April 30, 1997, fund expenses were reduced by
$13,706 and $6,533 for the Growth Investors Fund and the Conservative Investors
Fund, respectively, under expense offset arrangements with Alliance Fund
Services. Transfer Agency fees reported in the statement of operation exclude
these credits.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of each Fund's shares. The Distributor received
front-end sales charges of $5,562 from the sale of Class A shares and $73,418
and $2,115 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the year ended
April 30, 1997 for the Growth Investors Fund. The Distributor also received
front-end sales charges of $2,911 from the sale of Class A shares and $55,085
and $2,494 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B and Class C shares, respectively, for the year ended
April 30, 1997 for the Conservative Investors Fund.
Brokerage commissions paid on investment transactions for the year ended April
30, 1997 amounted to $280,483 and $52,669 for the Growth Investors and
Conservative Investors Funds, respectively, of which $50 and $123,
respectively, was paid to Donaldson, Lufkin & Jenrette Securities Corp.
("DLJ"), an affiliate of the Adviser.
32
ALLIANCE GROWTH INVESTORS AND
CONSERVATIVE INVESTORS FUNDS
_______________________________________________________________________________
Accrued expenses includes amounts owed to two of the Trustees under a deferred
compensation plan of $30,782 and $30,305 for the Growth Investors and
Conservative Investors Funds, respectively.
NOTE C: DISTRIBUTION PLANS
The Funds have adopted a Plan for each class of shares of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (each a "Plan" and
collectively the "Plans"). Under the Plans, 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 the Class A shares and 1% of the average daily net
assets attributable to Class B and Class C shares. The Trustees currently limit
payments under the Class A plan to .30% of each Fund's average daily net assets
attributable to Class A shares. The Plans provide that the Distributor will use
such payments in their entirety for distribution assistance and promotional
activities.
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
the Distributor under the Plans is to compensate the Distributor for its
distribution services with respect to the sale of each Fund's shares. Since the
Distributor's compensation is not directly tied to its expenses, the amount of
compensation received by it under the Plan 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 "compensation" Plans.
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 the Distributor with respect to the relevant class and
(ii) the Funds would not be obligated to pay the Distributor for any amounts
expended by the Distributor not previously recovered by the Distributor from
distribution services fees in respect of shares of such class or, in the case
of Class B shares, recovered through deferred sales charges.
The Plans 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
and U.S. government securities) for the Growth Investors Fund aggregated
$84,090,302 and $95,181,559, respectively, for the year ended April 30, 1997.
There were purchases of $35,222,404 and sales of $31,796,729 of U.S. government
and government agency obligations for the year ended April 30, 1997. At April
30, 1997, the cost of securities for federal income tax purposes for the Growth
Investors Fund was $85,651,184. Accordingly gross unrealized appreciation of
investments was $10,933,505 and gross unrealized depreciation of investments
was $2,343,655 resulting in net unrealized appreciation of $8,589,850 excluding
foreign currency.
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) for the Conservative Investors Fund aggregated
$30,883,911 and $37,860,520, respectively, for the year ended April 30, 1997.
There were purchases of $47,476,977 and sales of $48,134,479 of U.S. government
and government agency obligations for the year ended April 30, 1997. At April
30, 1997, the cost of securities for federal income tax purposes for the
Conservative Investors Fund was $42,013,499. Accordingly gross unrealized
appreciation of investments was $2,272,398 and gross unrealized depreciation of
investments was $543,928 resulting in net unrealized appreciation of $1,728,470
excluding foreign currency.
The Alliance Growth Investors and Conservative Investors Funds incurred and
elected to defer post October currency losses of $55,508 and $14,097,
respectively, and capital losses of $117,597 and zero, respectively, for the
year ended April 30, 1997. To the extent that any post October loss is used to
offset future capital gains, it is probable that these gains will not be
distributed to shareholders.
The Growth Investors and Conservative Investors Funds enter into forward
exchange currency contracts in order to hedge exposure to changes in foreign
currency exchange rates on foreign portfolio holdings. A forward
33
ALLIANCE GROWTH INVESTORS AND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) CONSERVATIVE INVESTORS FUNDS
_______________________________________________________________________________
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 Funds. The Fund's custodian will place and maintain cash not available for
investment or other liquid high quality debt securities in a separate account
of the Fund having a value equal to the aggregate amount of the Fund's
commitments under forward exchange currency contracts entered into with respect
to position hedges. Risks may arise from the potential inability of a
counterparty to meet the terms of a contract and from unanticipated movements
in the value of a foreign currency relative to the U.S. dollar. At April 30,
1997, there were no outstanding forward exchange currency contracts for Growth
Investors and Conservative Investors Funds.
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,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 416,498 623,012 $ 5,723,360 $ 8,468,283
Shares issued in
reinvestment of
dividends and
distributions 255,265 118,202 3,305,692 1,591,818
Shares converted
from Class B 88,258 -0- 1,193,716 -0-
Shares redeemed (842,362) (404,354) (11,968,491) (5,500,086)
Net increase
(decrease) (82,341) 336,860 $ (1,745,723) $ 4,560,015
CLASS B
Shares sold 772,493 1,018,816 $ 10,626,034 $13,829,306
Shares issued in
reinvestment of
dividends and
distributions 564,549 208,357 7,322,203 2,814,302
Shares converted
to Class A (88,353) -0- (1,193,716) -0-
Shares redeemed (802,824) (550,350) (11,040,599) (7,476,785)
Net increase 445,865 676,823 $ 5,713,922 $ 9,166,823
CLASS C
Shares sold 187,433 186,320 $ 2,572,550 $ 2,552,601
Shares issued in
reinvestment of
dividends and
distributions 51,785 19,358 672,170 261,545
Shares redeemed (199,231) (136,951) (2,739,257) (1,839,179)
Net increase 39,987 68,727 $ 505,463 $ 974,967
34
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,
1997 1996 1997 1996
------------ ------------ -------------- --------------
CLASS A
Shares sold 155,230 246,346 $ 1,741,912 $ 2,737,109
Shares issued in
reinvestment of
dividends and
distributions 66,216 62,621 747,524 692,313
Shares converted
from Class B 41,333 -0- 468,493 -0-
Shares redeemed (484,981) (589,043) (5,464,450) (6,511,415)
Net decrease (222,202) (280,076) $(2,506,521) $(3,081,993)
CLASS B
Shares sold 378,962 518,473 $ 4,341,413 $ 5,839,933
Shares issued in
reinvestment of
dividends and
distributions 130,177 102,379 1,495,849 1,150,234
Shares converted
to Class A (40,723) -0- (468,493) -0-
Shares redeemed (856,038) (697,358) (9,795,661) (7,823,066)
Net decrease (387,622) (76,506) $(4,426,892) $ (832,899)
CLASS C
Shares sold 98,699 170,526 $ 1,120,987 $ 1,931,267
Shares issued in
reinvestment of
dividends and
distributions 20,142 16,002 231,457 179,841
Shares redeemed (228,588) (135,782) (2,620,034) (1,522,968)
Net increase(decrease) (109,747) 50,746 $(1,267,590) $ 588,140
35
FINANCIAL HIGHLIGHTS ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
MAY 4,
YEAR ENDED APRIL 30, 1992(A)
--------------------------------------------------- TO APRIL 30,
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.08 $12.08 $11.61 $11.35 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .16(c) .10 .25 .12 .20
Net realized and unrealized gain on
investments .76 2.75 .38 .39 1.43
Net increase in net asset value from
operations .92 2.85 .63 .51 1.63
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.19) (.26) (.15) (.11) (.16)
Distributions from net realized gains (1.69) (.59) (.01) (.14) (.12)
Total dividends and distributions (1.88) (.85) (.16) (.25) (.28)
Net asset value, end of period $13.12 $14.08 $12.08 $11.61 $11.35
TOTAL RETURN
Total investment return based on net
asset value (d) 6.69% 23.87% 5.57% 4.46% 16.32%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $27,453 $30,608 $22,189 $16,759 $3,503
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.55% 1.40% 1.40% 1.40% 1.40%(f)
Expenses, before waivers/reimbursements 1.73%(e) 1.65% 1.97% 2.33% 4.27%(f)
Net investment income 1.14% 2.02% 2.32% 1.67% 1.91%(f)
Portfolio turnover rate 133% 209% 134% 96% 114%
Average commission rate (g) $.0435 -- -- -- --
</TABLE>
See footnote summary on page 41.
36
ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
MAY 4,
YEAR ENDED APRIL 30, 1992(A)
--------------------------------------------------- TO APRIL 30,
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.08 $12.09 $11.65 $11.41 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .06(c) .06 .17 .07 .07
Net realized and unrealized gain on
investments .77 2.70 .38 .37 1.45
Net increase in net asset value from
operations .83 2.76 .55 .44 1.52
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.11) (.18) (.10) (.06) (.05)
Distributions from net realized gains (1.69) (.59) (.01) (.14) (.06)
Total dividends and distributions (1.80) (.77) (.11) (.20) (.11)
Net asset value, end of period $13.11 $14.08 $12.09 $11.65 $11.41
TOTAL RETURN
Total investment return based on net
asset value (d) 5.98% 23.06% 4.83% 3.84% 15.23%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $61,709 $59,978 $43,328 $30,871 $7,999
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.26% 2.10% 2.10% 2.11% 2.15%(f)
Expenses, before waivers/reimbursements 2.44%(e) 2.35% 2.67% 3.00% 4.48%(f)
Net investment income .42% 1.15% 1.62% .95% 1.07%(f)
Portfolio turnover rate 133% 209% 134% 96% 114%
Average commission rate (g) $.0435 -- -- -- --
</TABLE>
See footnote summary on page 41.
37
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE GROWTH INVESTORS FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
AUGUST 2,
YEAR ENDED APRIL 30, 1993(H)
-------------------------------------- TO APRIL 30,
1997 1996 1995 1994
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.09 $12.10 $11.65 $11.88
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .06(c) .06 .18 .08
Net realized and unrealized gain (loss)
on investments .77 2.70 .38 (.11)
Net increase (decrease) in net asset
value from operations .83 2.76 .56 (.03)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.11) (.18) (.10) (.06)
Distributions from net realized gains (1.69) (.59) (.01) (.14)
Total dividends and distributions (1.80) (.77) (.11) (.20)
Net asset value, end of period $13.12 $14.09 $12.10 $11.65
TOTAL RETURN
Total investment return based on net
asset value (d) 5.97% 23.04% 4.91% (.26)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $6,033 $5,915 $4,247 $3,280
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.26% 2.10% 2.10% 2.10%(f)
Expenses, before waivers/reimbursements 2.43%(e) 2.36% 2.66% 3.02%(f)
Net investment income .42% 1.15% 1.62% 1.04%(f)
Portfolio turnover rate 133% 209% 134% 96%
Average commission rate (g) $.0435 -- -- --
</TABLE>
See footnote summary on page 41.
38
ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
MAY 4,
YEAR ENDED APRIL 30, 1992(A)
--------------------------------------------------- TO APRIL 30,
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.14 $10.38 $10.37 $10.79 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .41(c) .51 .48 .31 .39
Net realized and unrealized gain (loss)
on investment .46 .80 (.02) (.26) .82
Net increase in net asset value
from operations .87 1.31 .46 .05 1.21
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.45) (.55) (.45) (.29) (.36)
Distributions from net realized gains (.25) -0- -0- (.18) (.06)
Total dividends and distributions (.70) (.55) (.45) (.47) (.42)
Net asset value, end of period $11.31 $11.14 $10.38 $10.37 $10.79
TOTAL RETURN
Total investment return based on net
asset value (d) 7.90% 12.69% 4.65% .35% 12.25%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $11,860 $14,161 $16,105 $15,595 $5,339
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 1.40% 1.40% 1.40% 1.40% 1.40%(f)
Expenses, before waivers/reimbursements 1.90%(e) 1.73% 1.83% 2.03% 3.45%(f)
Net investment income 3.66% 4.43% 4.66% 3.43% 3.92%(f)
Portfolio turnover rate 174% 267% 248% 133% 84%
Average commission rate (g) $.0428 -- -- -- --
</TABLE>
See footnote summary on page 41.
39
FINANCIAL HIGHLIGHTS (CONTINUED) ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
MAY 4,
YEAR ENDED APRIL 30, 1992(A)
--------------------------------------------------- TO APRIL 30,
1997 1996 1995 1994 1993
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.31 $10.51 $10.47 $10.88 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .34(c) .43 .46 .24 .24
Net realized and unrealized gain
(loss) on investments .46 .82 (.02) (.26) .89
Net increase (decrease) in net asset
value from operations .80 1.25 .44 (.02) 1.13
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.37) (.45) (.40) (.21) (.22)
Distributions from net realized gains (.25) -0- -0- (.18) (.03)
Total dividends and distributions (.62) (.45) (.40) (.39) (.25)
Net asset value, end of period $11.49 $11.31 $10.51 $10.47 $10.88
TOTAL RETURN
Total investment return based on
net asset value (d) 7.10% 11.95% 3.91% (.31)% 11.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $28,037 $31,979 $30,542 $29,697 $9,210
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10% 2.10% 2.10% 2.11% 2.15%(f)
Expenses, before waivers/reimbursements 2.61%(e) 2.44% 2.52% 2.73% 3.95%(f)
Net investment income 2.96% 3.72% 3.96% 2.72% 3.06%(f)
Portfolio turnover rate 174% 267% 248% 133% 84%
Average commission rate (g) $.0428 -- -- -- --
</TABLE>
See footnote summary on page 41.
40
ALLIANCE CONSERVATIVE INVESTORS FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH
PERIOD
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------------
AUGUST 2,
YEAR ENDED APRIL 30, 1993(H)
-------------------------------------- TO APRIL 30,
1997 1996 1995 1994
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.31 $10.52 $10.47 $11.12
INCOME FROM INVESTMENT OPERATIONS
Net investment income (b) .34(c) .41 .46 .18
Net realized and unrealized gain (loss)
on investments .46 .83 (.01) (.50)
Net increase (decrease) in net asset
value from operations .80 1.24 .45 (.32)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.37) (.45) (.40) (.15)
Distributions from net realized gains (.25) -0- -0- (.18)
Total dividends and distributions (.62) (.45) (.40) (.33)
Net asset value, end of period $11.49 $11.31 $10.52 $10.47
TOTAL RETURN
Total investment return based on
net asset value (d) 7.10% 11.84% 4.01% (2.98)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $4,150 $5,326 $4,419 $4,375
Ratios to average net assets of:
Expenses, net of waivers/reimbursements 2.10% 2.10% 2.10% 2.10%(f)
Expenses, before waivers/reimbursements 2.60%(e) 2.45% 2.52% 2.69%(f)
Net investment income 2.96% 3.71% 3.97% 2.94%(f)
Portfolio turnover rate 174% 267% 248% 133%
Average commission rate (g) $.0428 -- -- --
</TABLE>
(a) Commencement of operations.
(b) Net of fees waived and expenses reimbursed by Adviser and expense offset
arrangements with the transfer agent.
(c) Based on average shares outstanding.
(d) 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.
(e) For the year ended April 30, 1997, the Growth Investors Fund and the
Conservative Investors Fund benefited from an expense offset arrangement with
the transfer agent. Had such expense offsets not been in effect, the ratios of
expenses before waiver/reimbursements to average net assets would have been
1.74%, 2.45% and 2.45% for Class A, B, and C shares of the Growth Investors
Funds, respectively, and 1.91%, 2.62% and 2.61% for Class A, B and C shares of
the Conservative Investors Fund, respectively.
(f) Annualized.
(g) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission per share for trades on which
commissions are charged.
(h) 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.
41
ALLIANCE GROWTH INVESTORS AND
REPORT OF INDEPENDENT ACCOUNTANTS 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, 1997, 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, 1997 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 16, 1997
42
<PAGE>
APPENDIX
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.
B-- Bonds which are rated B generally lack
characteristics of the desirable investment. Assurance of
<PAGE>
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.
Descriptions of the bond ratings of Standard & Poor's
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
principal in accordance with the terms of the obligation. While
such debt will likely have some quality and protective
2
<PAGE>
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
<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 - filed herewith; Amendment to By-Laws
dated October 16, 1991 - filed herewith.
3. Not applicable.
4. 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).
5. Investment Advisory Agreement between the
Registrant and Alliance Capital Management L.P. -
filed herewith.
6(a). Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc.,
dated August 2, 1993, as amended through July 17,
1996 - (previously filed with Post Effective
Amendment No. 21 to the Registrant's Registration
Statement on September 1, 1996).
6(b). Form of Selected Dealers Agreement between Alliance
Fund Distributors, Inc. And selected dealers
offering shares of the Registrant - filed herewith.
C-1
<PAGE>
6(c). Form of Selected Agents Agreement between Alliance
Fund Distributors, Inc. and selected agents making
available shares of the Registrant - filed
herewith.
7. Not applicable.
8. Custodian Agreement between the Registrant and
State Street Bank and Trust Company dated July 25,
1988, as amended through July 17, 1996 -
(previously filed with Post Effective Amendment
No. 21 to the Registrant's Registration Statement
on September 1, 1996.)
9(a). Transfer Agent Agreement between the Registrant and
State Street Bank and Trust Company (previously
filed with Post-Effective Amendment No. 17 to the
Registrant's Registration Statement on August 30,
1995).
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 Registrant's
Registration Statement on June 29, 1989).
10. Opinion and Consent of Counsel (previously filed
with Post-Effective Amendment No. 20 to the
Registrant's Registration Statement on June 28,
1996).
11. Consent of Independent Accountants - filed
herewith.
12. Not applicable.
13. Investment Letter of The Equitable Life Assurance
Society of the United States - filed herewith.
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.)
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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 - filed herewith.
17. Financial Data Schedule - filed herewith.
18. Rule 18f-3 Plan (previously filed with Post-
Effective Amendment No. 19 to the Registrant's
Registration Statement on January 31, 1996).
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
As of August 15, 1997, 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, 1997)
(1) (2)
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
Class A shares of beneficial
interest of Alliance
Conservative Investors Fund 693
Class B shares of beneficial
interest of Alliance
Conservative Investors Fund 1,977
Class C shares of beneficial
interest of Alliance
Conservative Investors Fund 359
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Class A shares of beneficial
interest of Alliance Growth
Investors Fund 2,118
Class B shares of beneficial
interest of Alliance Growth
Investors Fund 5,445
Class C shares of beneficial
interest of Alliance Growth
Investors Fund 625
Class A shares of beneficial
interest of Alliance Growth
Fund 45,698
Class B shares of beneficial
interest of Alliance Growth
Fund 208,216
Class C shares of beneficial
interest of Alliance Growth
Fund 25,046
Advisor Class shares of beneficial
interest of Alliance Growth Fund 186
Class A shares of beneficial
interest of Alliance Strategic
Balanced Fund 1,576
Class B shares of beneficial
interest of Alliance Strategic
Balanced Fund 2,846
Class C shares of beneficial
interest of Alliance Strategic
Balanced Fund 380
Advisor Class shares of beneficial
interest of Alliance Strategic
Balanced Fund 2
Class A shares of beneficial
interest of Alliance Short-Term
U.S. Government Fund 231
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Class B shares of beneficial
interest of Alliance Short-Term
U.S. Government Fund 415
Class C shares of beneficial
interest of Alliance Short-Term
U.S. Government Fund 191
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 negligence or reckless disregard of the
duties involved in the conduct of his or her office."
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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 willful 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
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.
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"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 willful 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 willful 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 willful 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 willful 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
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
C-7
<PAGE>
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 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 Distribution Services Agreement between the
Registrant and Alliance Fund Distributors, Inc. provides
that the Registrant will indemnify, defend and hold
Alliance Fund Distributors, Inc., and any person who
controls it within the meaning of Section 15 of the
Investment Company Act of 1940, free and harmless from
and against any and all claims, demands, liabilities and
expenses which Alliance Fund Distributors, Inc. or any
controlling person may incur arising out of or based
C-8
<PAGE>
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. 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 by it is against public
policy as expressed in the Act and will be governed by
the final adjudication of such issue.
C-9
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF ADVISER
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the Prospectuses
and in the Statements of Additional Information constituting
Parts A and B, respectively, of this Registration Statement are
incorporated by reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the general
partner of Alliance Capital Management L.P., set forth in
Alliance Capital Management L.P.'s Form ADV filed with the
Securities and Exchange Commission on April 21, 1988 (File
No. 801-32361) and amended through the date hereof, is
incorporated by reference herein.
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 Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Global Strategic Income Trust, Inc.
Alliance Government Reserves
Alliance Greater China '97 Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance High Yield Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Limited Maturity Government Fund,
Inc.
Alliance Money Market Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
Alliance Municipal Income Fund II
Alliance Municipal Trust
Alliance New Europe Fund, Inc.
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<PAGE>
Alliance North American Government Income
Trust, Inc.
Alliance Premier Growth Fund, Inc.
Alliance Quasar Fund, Inc.
Alliance Real Estate Investment Fund, Inc.
Alliance/Regent Sector Opportunity Fund, Inc.
Alliance Short-Term Multi-Market Trust, Inc.
Alliance Technology Fund, Inc.
Alliance Utility Income Fund, Inc.
Alliance Variable Products Series Fund, Inc.
Alliance World Income Trust, Inc.
Alliance Worldwide Privatization Fund, Inc.
Fiduciary Management Associates
The Alliance Fund, Inc.
The Alliance Portfolios
(b) The following are the Directors and Officers of
Alliance Fund Distributors, Inc., the principal
place of business of which is 1345 Avenue of the
Americas, New York, New York, 10105. Except as
noted, such Directors and Officers hold no offices
with the Registrant.
Position and Positions
Offices and Offices
Name with Underwriter with Registrant
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Clerk
General Counsel
& Secretary
James S. Comforti Senior Vice President
James L. Cronin Senior Vice President
Daniel J. Dart Senior Vice President
Richard A. Davies Senior Vice President,
Managing Director
Byron M. Davis Senior Vice President
Anne S. Drennan Senior Vice President
& Treasurer
Mark J. Dunbar Senior Vice President
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<PAGE>
Bradley F. Hanson Senior Vice President
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President
and Chief Financial
Officer
Richard E. Khaleel Senior Vice President
Stephen R. Laut Senior Vice President
Daniel D. McGinley Senior Vice President
Ryne A. Nishimi Senior Vice President
Dusty W. Paschall Senior Vice President
Antonios G.Poleondakis Senior Vice President
Robert E. Powers Senior Vice President
Richard K. Saccullo Senior Vice President
Gregory K. Shannahan Senior Vice President
Joseph F. Sumanski Senior Vice President
Peter J. Szabo Senior Vice President
Nicholas K. Willett Senior Vice President
Richard A. Winge Senior Vice President
Jamie A. Atkinson Vice President
Warren W. Babcock III Vice President
Benji A. Baer Vice President
Kenneth F. Barkoff Vice President
Casimir F. Bolanowski Vice President
Beth Cahill Vice President
Timothy W. Call Vice President
Kevin T. Cannon Vice President
John R. Carl Vice President
C-12
<PAGE>
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
Richard W. Dabney Vice President
John F. Dolan Vice President
Sohaila S. Farsheed Vice President
Leon M. Fern Vice President
William C. Fisher Vice President
Gerard J. Friscia Vice President
and Controller
Andrew L. Gangolf Vice President and Assistant Clerk
Assistant General
Counsel
Mark D. Gersten Vice President Treasurer and
Chief Financial
Officer
Joseph W. Gibson Vice President
Charles M. Greenberg Vice President
Alan Halfenger Vice President
William B. Hanigan Vice President
Daniel M. Hazard Vice President
George R. Hrabovsky Vice President
Valerie J. Hugo Vice President
Scott Hutton Vice President
Thomas K. Intoccia Vice President
Larry P. Johns Vice President
Richard D. Keppler Vice President
Gwenn M. Kessler Vice President
Donna M. Lamback Vice President
C-13
<PAGE>
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
James P. Luisi Vice President
Christopher J.
MacDonald Vice President
Lori E. Master Vice President
Shawn P. McClain Vice President
Michael F. Mahoney Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Jeanette M. Nardella Vice President
Nicole M. Vice President
Nolan-Koester
John C. O'Connell Vice President
John J. O'Connor Vice President
Daniel J. Phillips Vice President
Robert T. Pigozzi Vice President
James J. Posch Vice President
Robert E. Powers Vice President
Domenick Pugliese Vice President and
Associate General
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Robert C. Shultz Vice President
Raymond S. Sclafani Vice President
C-14
<PAGE>
Richard J. Sidell Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
Joseph T. Tocyloski Vice President
Martha D. Volcker Vice President
Patricia E. Walsh Vice President
William C. White Vice President
Emilie D. Wrapp Vice President and
Special Counsel
Charles M. Barrett Assistant Vice President
Robert F. Brendli Assistant Vice President
Maria L. Carreras Assistant Vice President
John P. Chase Assistant Vice President
Russell R. Corby Assistant Vice President
John W. Cronin Assistant Vice President
Ralph A. DiMeglio Assistant Vice President
Faith C. Dunn Assistant Vice President
John C. Endahl Assistant Vice President
John E. English Assistant Vice President
Duff C. Ferguson Assistant Vice President
John Grambone Assistant Vice President
Brian S. Hanigan Assistant Vice President
James J. Hill Assistant Vice President
Edward W. Kelly Assistant Vice President
Michael Laino Assistant Vice President
Nicholas J. Lapi Assistant Vice President
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<PAGE>
Patrick Look Assistant Vice President
and Assistant Treasurer
Richard F. Meier Assistant Vice President
Catherine N. Peterson Assistant Vice President
Carol H. Rappa Assistant Vice President
Clara Sierra Assistant Vice President
Vincent T. Strangio Assistant Vice President
Wesley S. Williams Assistant Vice President
Christopher J. Zingaro Assistant Vice President
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
The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
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<PAGE>
********************
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 shareholders
individually but are binding only upon the assets and property of
the Trust.
C-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant 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 27th day of August, 1997.
THE ALLIANCE PORTFOLIOS
by /s/ John D. Carifa
_________________________
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of
l933, 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 August 27, 1997
___________________ and President
John D. Carifa
2) Principal Financial
and Accounting Officer
/s/ Mark D. Gersten Treasurer and August 27, 1997
___________________ Chief Financial
Mark D. Gersten Officer
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<PAGE>
All of the Trustees
Ruth Block
John D. Carifa
Richard W. Couper
William H. Foulk, Jr.
Brenton W. Harries
Donald J. Robinson
by /s/ Edmund P. Bergan, Jr. August 27, 1997
_________________________
(Attorney-in-fact)
Edmund P. Bergan, Jr.
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<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
3 By-laws
5 Investment Advisory Agreement
6(b) Selected Dealer Agreement
6(c) Selected Agent Agreement
11 Consent of Independent
Accountants
13 Investment Representation Letter
16 Schedule for Computations of
Performance Quotations
17 Financial Data Schedule
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00250184.AT9
<PAGE>
BYLAWS
OF
THE EQUITABLE FUNDS
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These Bylaws shall
be subject to the Agreement and Declaration of Trust, as from
time to time in effect (the "Declaration of Trust"), of The
Equitable Funds, the Massachusetts business trust established by
the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. A principal office of
the Trust shall be located in Boston, Massachusetts. The Trust
may have such other offices within or without Massachusetts as
the Trustees may determine or as they may authorize.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees may
be held without call or notice at such places and at such times
as the Trustees may from time to time determine, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may
be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Clerk or an
Assistant Clerk or by the officer or the Trustees calling the
meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of
a special meeting to send notice by mail at least forty-eight
hours or by telegram, telex or telecopy or other electronic
fascimile transmission method at least twenty-four hours before
the meeting addressed to the Trustee at his or her usual or last
known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any
Trustee if a written waiver of notice, executed by him or her
before the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him or her.
Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
<PAGE>
2.4 Quorum. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present,
and the meeting may be held as adjourned without further notice.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust
shall be a President, a Treasurer, a Clerk, and such other
officers, including a Chairman of the Trustees and a Controller,
if any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from
time to time may in their discretion appoint. The Chairman of
the Trustees, if one is elected, shall be a Trustee and may but
need not be a shareholder; and any other officer may but not need
be a Trustee or a shareholder. Any two or more offices may be
held by the same person.
3.2 Election. The President, the Treasurer, and the Clerk
shall be elected annually by the Trustees. Other officers, if
any, may be elected or appointed by the Trustees at such or any
other time. Vacancies in any office may be filled at any time.
3.3 Tenure. The Chairman of the Trustees, if one is
elected, the President, the Treasurer and the Clerk shall hold
office until their respective successors are chosen and
qualified, or in each case until he or she sooner dies, resigns,
is removed or becomes disqualified. Each other officer shall
hold office and each agent shall retain authority at the pleasure
of the Trustees.
3.4 Powers. Subject to the other provisions of these
Bylaws, each officer shall have, in addition to the duties and
powers herein and in the Declaration of Trust set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise
provide, the Chairman of the Trustees, or, if there is none or in
the absence of the Chairman, the President shall preside at all
meetings of the shareholders and of the Trustees. The President
shall be the chief executive officer.
3.6 Treasurer and Controller. The Treasurer shall be the
chief financial officer and, if no Controller is elected, chief
accounting officer of the Trust, and shall, subject to the
provisions of the Declaration of Trust and to any arrangement
2
<PAGE>
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be
in charge of the valuable papers and, if no Controller is
elected, the books of account and accounting records of the
Trust, and shall have such other duties and powers as may be
designated from time to time by the Trustees or by the President.
The Controller, if any, shall be the chief accounting officer
of the Trust and shall be in charge of its books of account and
accounting records. The Controller shall be responsible for
preparation of financial statements of the Trust and shall have
such other duties and powers as may be designated from time to
time by the Trustees or the President.
3.7 Clerk. the Clerk shall record all proceedings of the
shareholders and the Trustees in the books to be kept therefor,
which books or a copy thereof shall be kept at the principal
office of the Trust. In the absence of the Clerk from any
meeting of the shareholders or Trustees, an assistant clerk, or
if there be none or if he or she is absent, a temporary clerk
chosen at such meeting shall record the proceedings thereof in
the aforesaid books.
3.8 Resignations. Any officer may resign at any time by
written instrument signed by him or her and delivered to the
Chairman, the President or the Clerk or to a meeting of the
Trustees. Such resignation shall be effective upon receipt
unless specified to be effective at some other time. Except to
the extent expressly provided in a written agreement with the
Trust, no officer resigning and no officer removed shall have any
right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of
such removal.
ARTICLE 4
Committees
4.1 Quorum; Voting. A majority of the members of any
Committee of the Trustees shall constitute a quorum for the
transaction of business, and any action of such a Committee may
be taken at a meeting by a vote of a majority of the members
present (a quorum being present) or evidenced by one or more
writings signed by such a majority. Members of a Committee may
participate in a meeting of such Committee by means of a
conference telephone or other communications equipment by means
of which all persons participating in the meeting can hear each
other at the same time and participation by such means shall
constitute presence in person at a meeting.
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ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render
reports at the time and in the manner required by the Declaration
of Trust or any applicable law. Officers and Committees shall
render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
6.1 General. Except as from time to time otherwise
provided by the Trustees, the initial fiscal year of the Trust
shall end on such date as is determined in advance or in arrears
by the Treasurer, and subsequent fiscal years shall end on such
date in subsequent years.
ARTICLE 7
Seal
7.1 General. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts" together with the
name of the Trust and the year of its organization cut or
engraved thereon but, unless otherwise required by the Trustees,
the seal shall not be necessary to be replaced on, and its
absence shall not impair the validity of, any document,
instrument or other paper executed and delivered by or on behalf
of the Trust.
ARTICLE 8
Execution of Paper
8.1 General. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President or by the
Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Share Certificates
9.1 Share Certificates. No certificates certifying the
ownership of shares shall be issued except as the Trustee may
otherwise authorize. In the event that the Trustees authorize
the issuance of share certificates, subject to the provisions of
Section 9.3, each shareholder shall be entitled to a certificate
stating the number of shares and the series or class owned by him
or her, in such form as shall be prescribed from time to time by
the Trustees. Such certificates shall be signed by the President
or any Vice-President and by the Treasurer or any Assistant
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Treasurer. Such signatures may be facsimiles if the certificate
is signed by a transfer agent, or by a registrar, other than a
Trustee, officer or employee of the Trust. In case any officer
who has signed or whose facsimile signature has been placed on
such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the
same effect as if he or she were such officer at the time of its
issue.
In lieu of issuing certificates for shares, the Trustees or
the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of
such shares, who shall in either case be deemed, for all purposes
hereunder, to be the holders of certificates for such shares as
if they had accepted such certificates and shall be held to have
expressly assented and agreed to the terms hereof.
9.2 Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate
certificate may be issued in place thereof, upon such terms as
the Trustees may prescribe.
9.3 Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not effect
the ownership of shares in the Trust.
ARTICLE 10
Provisions Relating to the Conduct of the Trust's Business
10.1 Certain Definitions. When used herein the following
words shall have the following meanings: "Distributor" shall
mean any one or more corporations, firms or associations which
have distributor's or principal underwriter's contracts in effect
with the Trust providing that redeemable shares issued by the
Trust shall be offered and sold by such Distributor. "Manager"
shall mean any corporation, firm or association which may at the
time have an advisory or management contract with the Trust and
any corporation, firm or association which may at any time have a
sub-advisory contract relating to the Trust with any such
Manager.
10.2 Limitation on Holdings by the Trust of Certain
Securities and on Dealings with Officers or Trustees. The Trust
may not purchase or retain shares or securities issued by an
issuer if one or more of the holders of the shares or securities
issued by an issuer or one or more of the officers or directors
of such issuer is an officer or Trustee of the Trust or officer
or director of the Manager and if one or more of such officers,
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Trustees or directors owns beneficially more than 1/2 of 1% of
the shares or securities, or both, of such issuer and such
officers, Trustees and directors owning more than 1/2 or 1% of
such shares or securities together own beneficially more 5% of
such shares or securities. Each officer and Trustee of the Trust
shall keep the Treasurer of the Trust informed of the names of
all issuers shares or securities of which are held in the
portfolio of the Trust and in which such officer or Trustee owns
as much as 1/2 of 1% of the outstanding shares or securities.
The Trust will not lend any of its assets to the Distributor
or Manager or to any officer or director of the Distributor or
Manager or any officer or Trustee of the Trust, and shall not
permit any officer or Trustee or any officer or director of the
Distributor or Manager to deal for or on behalf of the Trust with
himself or herself as principal or agent, or with any
partnership, association or corporation in which he or she has a
financial interest; provided that the foregoing provisions shall
not prevent (a) officers and Trustees of the Trust or officers
and directors of the Distributor or Manager from buying, holding
or selling shares in the Trust or from being partners, officers
or directors of or otherwise financially interested in the
Distributor or the Manager; (b) purchases or sales of securities
or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company
Act of 1940 or any Rule or Regulation thereunder (together, the
"1940 Act"); (c) employment of legal counsel, registrar, transfer
agent, shareholder servicing agent, dividend disbursing agent or
custodian who is, or has a partner, shareholder, officer or
director who is, an officer or Trustee of the Trust or an officer
or director of the Distributor or Manager; (d) sharing
statistical, research, legal and management expenses and officer
hire and expenses with any other investment company in which an
officer or Trustee of the Trust or an officer or director of the
Distributor or Manager is an officer or director or otherwise
financially interested.
10.3 Limitation on Dealing in Securities of the Trust by
Certain Officers, Trustees, Distributor or Manager. Neither the
Distributor nor Manager, nor any officer or Trustee of the Trust
or officer or director of the Distributor or Manager shall take
long or short positions in securities issued by the Trust;
provided, however, that:
(a) the Distributor may purchase from the Trust and
otherwise deal in shares issued by the Trust pursuant to
the terms of its contract with the Trust;
(b) any officer or Trustee of the Trust or officer or
director of the Distributor or Manager or any trustee or
fiduciary for the benefit of any of them may at any
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time, or from time to time, purchase from the Trust or
from the Distributor shares issued by the Trust at the
price available to the public or to such officer,
Trustee, director, trustee or fiduciary, no such
purchase to be in contravention of any applicable state
or federal requirement; and
(c) the Distributor or the Manager may at any time, or from
time to time, purchase for investment shares issued by
the Trust.
10.4 Securities and Cash of the Trust to be held by Custodian
subject to certain Terms and Conditions.
(a) All securities and cash owned by this Trust shall be
held by or deposited with one or more banks or trust
companies having (according to its last published
report) not less than $5,000,000 aggregate capital,
surplus and undivided profits (any such bank or trust
company being hereby designated as "Custodian"),
provided such a Custodian can be found ready and willing
to act; subject to such rules, regulations and orders,
if any, as the Securities and Exchange Commission may
adopt, this Trust may, or may permit any Custodian to,
deposit all or any part of the securities owned by this
Trust in a system for the central handling of securities
pursuant to which all securities of any particular class
or series of any issue deposited within the system may
be transferred or pledged by bookkeeping entry, without
physical delivery. The Custodian may appoint, subject
to the approval of the Trustees, one or more
subcustodians.
(b) The Trust shall enter into a written contract with each
custodian regarding the powers, duties and compensation
of such Custodian with respect to the cash and
securities of the Trust held by such Custodian. Said
contract and all amendments thereto shall be approved by
the Trustees.
(c) The Trust shall upon the resignation or inability to
serve of any Custodian or upon change of any Custodian:
(i) in case of such resignation or inability to serve,
use its best efforts to obtain a successor
Custodian;
(ii) require that the cash and securities owned by the
Trust be delivered directly to the successor
Custodian; and
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(iii) in the event that no successor Custodian can be
found, submit to the shareholders, before
permitting delivery of the cash and securities
owned by the Trust otherwise than to a successor
Custodian, the question whether the Trust shall be
liquidated or shall function without a Custodian.
10.5 Requirements and Restrictions Regarding the Management
Contract. Every advisory or management contract entered into by
the Trust shall provide that in the event that the total expenses
of any series of shares of the Trust for any fiscal year should
exceed the limits imposed on investment company expenses imposed
by any statute or regulatory authority of any jurisdiction in
which shares of the Trust are offered for sale, the compensation
due the Manager for such fiscal year shall be reduced by the
amount of such excess by a reduction or refund thereof.
10.6 Reports to Shareholders; Distributions from Realized
Gains. The Trust shall send to each shareholder of record at
least semi-annually a statement of the condition of the Trust and
of the results of its operations, containing all information
required by applicable laws or regulations.
10.7 Determination of Net Asset Value Per Share. Net asset
value per share of each series or class of shares of the Trust
shall mean: (i) the value of all the assets of such series or
class of shares; (ii) less total liabilities of such series or
class of shares; (iii) divided by the number of shares of such
series or class of shares outstanding, in each case at the time
of each determination. The net asset value per share of each
series or class of shares shall be determined as of the normal
close of trading on the New York Stock Exchange on each day on
which such Exchange is open. As of any time other than the
normal close of trading on such Exchange, the Trustees may cause
the net asset value per share last determined to be determined
again in a similar manner or adjusted to reflect changes in
market values of securities in the portfolio, such adjustment to
be made on the basis of changes in selected security prices
determined by the Trustees to be relevant to the portfolio of
such series or class of shares or in averages or in other
standard and readily ascertainable market data, and the Trustees
may fix the time when such redetermined or adjusted net asset
value per share of each series or class of shares shall become
effective.
In valuing the portfolio investments of any series or class
of shares for determination of net asset value per share of such
series, securities for which market quotations are readily
available shall be valued at prices which, in the opinion of the
Trustees or the person designated by the Trustees to make the
determination, most nearly represent the market value of such
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securities, and other securities and assets shall be valued at
their fair value as determined by or pursuant to the direction of
the Trustees, which in the case of short-term debt obligations,
commercial paper and repurchase agreements may, but need not, be
on the basis of quoted yields for securities of comparable
maturity, quality and type, or on the basis of amortized cost.
Expenses and liabilities of the Trust shall be accrued each day.
Liabilities may include such reserves for taxes, estimated
accrued expenses and contingencies as the Trustees or their
designates may in their sole discretion deem fair and reasonable
under the circumstances. No accruals shall be made in respect of
taxes on unrealized appreciation of securities owned unless the
Trustees shall otherwise determine. Dividends payable by the
Trust shall be deducted as at the time of but immediately prior
to the determination of net asset value per share on the record
date therefor.
ARTICLE 11
Shareholders' Voting Powers and Meetings
11.1 Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Article
IV, Section 1 of the Declaration of Trust, provided, however,
that no meeting of Shareholders is required to be called for the
purpose of electing Trustees unless and until such time as less
than a majority of the Trustees have been elected by the
Shareholders, (ii) with respect to any Manager or Sub-Adviser as
provided in Article IV, Section 6 of the Declaration of Trust to
the extent required by the 1940 Act, (iii) with respect to any
termination of this Trust to the extent and as provided in
Article IX, Section 4 of the Declaration of Trust, (iv) with
respect to any amendment of the Declaration of Trust to the
extent and as provided in Article IX, Section 7 of the
Declaration of Trust, (v) to the same extent as the stockholders
of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought
or maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, and (vi) with respect to such
additional matters relating to the Trust as may be required by
law, the Declaration of Trust, these Bylaws or any registration
of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote. 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
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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 single class, the Trustees
may, in their sole discretion, submit such matters to the
Shareholders of any or all such series or classes, separately.
There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect
to shares held in the name of two or more persons shall be valid
if executed by anyone of them unless at or prior to exercise of
the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and
may take any action required by law, the Declaration of Trust or
these Bylaws to be taken by shareholders.
11.2 Voting Power and Meetings. Meetings of the
Shareholders of the Trust or of one or more series or classes of
shares may be called by the Trustees for the purpose of electing
Trustees as provided in Article IV, Section 1 of the Declaration
of Trust and for other purposes as may be prescribed by law, by
the Declaration of Trust or by these Bylaws. Meetings of the
Shareholders of the Trust or of one or more series or classes of
shares may also be called by the Trustees from time to time for
the purpose of taking action upon any other matter deemed by the
Trustees to be necessary or desirable. A meeting of Shareholders
may be held at any place designated by the Trustees. Written
notice of any meeting of Shareholders shall be given or caused to
be given by the Trustees by mailing such notice at least seven
days before such meeting, postage prepaid, stating the time and
place of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. Whenever
notice of a meeting is required to be given to a Shareholder
under the Declaration of Trust or these Bylaws, a written waiver
thereof, executed before or after the meeting by such Shareholder
or his attorney thereunto authorized and filed with the records
of the meeting, shall be deemed equivalent to such notice.
11.3 Quorum and Required Vote. Thirty percent (30%) of
Shares entitled to vote shall be a quorum for the transaction of
business at a Shareholders' meeting, except that where any
provision of law or of the Declaration of Trust or these Bylaws
permits or requires that holders of any series or class of shares
shall vote as a series or class, as the case may be, then thirty
percent (30%) of the aggregate number of Shares of that series or
that class entitled to vote shall be necessary to constitute a
quorum for the transaction of business by that series or class.
Any lesser number shall be sufficient for adjournments. Any
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adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is
required by any provision of law or the Declaration of Trust or
these Bylaws, a majority of the Shares voted shall decide any
questions and a plurality shall elect a Trustee, provided that
where any provision of law or Declaration of Trust or these
Bylaws permits or requires that the holders of any series or
class shall vote as a series or class, as the case may be, then a
majority of the Shares of that series or that class voted on the
matter (or a plurality with respect to the election of a Trustee)
shall decide that matter insofar as that series or class is
concerned.
11.4 Action by Written Consent. Any action taken by
shareholders may be taken without a meeting if a majority of
Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision
of law or the Declaration of Trust or these Bylaws) consent to
the action in writing and such written consents are filed with
the records of the meetings of Shareholders. Such consent shall
be treated for all purposes as a vote taken at a meeting of
Shareholders.
11.5 Record Dates. For the purpose of determining the
shareholders who are entitled to vote or act at any meeting or
any adjournment thereof, or who are entitled to receive payment
of any dividend or of any other distribution, the Trustees may
from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date
for the payment of any dividend or of any other distribution, as
the record date for determining the shareholders having the right
to notice of and to vote at such meeting and any adjournment
thereof or the right to receive such dividend or distribution,
and in such case only shareholders of record on such record date
shall have such right notwithstanding any transfer of shares on
the books of the Trust after the record date; or without fixing
such record date the Trustees may for any of such purposes close
the register or transfer books for all or any part of such
period.
11.6 Removal of Trustees. No natural person shall serve as
Trustee after the holders of record of not less than two-thirds
of the outstanding Shares (as defined in the Declaration of Trust
Declaration of Trust) have declared that such trustee be removed
from that office either by declaration in writing filed with the
Trust's custodian or by votes cast in person or by proxy at a
meeting called for the purpose. The Trustees shall promptly call
a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee when requested in writing so
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to do by the record holders of not less than 10 per centum of the
outstanding Shares.
Whenever 10 or more shareholders of record who have been such
for at least six months preceding the date of application, and
who hold in the aggregate Shares having a net asset value of at
least 21 per centum of the outstanding shares shall apply to the
Trustees in writing, stating that they wish to communicate with
other shareholders with a view to obtaining signatures a request
for a meeting pursuant to this Section and accompanied by a form
of the communication and request which they wish to transmit, the
Trustees shall within five business days after receipt of such
application either (a) afford to such applicants access to a list
of the names and addresses of all shareholders as recorded on the
books of the Trust; or (b) inform such applicants as to the
approximate number of shareholders of record, and the approximate
cost of mailing them the proposed communication and form of
request. If the trustees elect to follow the course specified in
clause (b), the Trustees, upon the written request of such
applicants, of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all shareholders of
record at their addresses as recorded on the books of the Trust,
unless within five business days after such tender the Trustees
shall mail to such applicants and file with the Securities and
Exchange Commission, together with a copy of the material
proposed to be mailed, a written statement signed by at least a
majority of the Trustees to the effect that in their opinion
either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein
not misleading, or would be in violation of applicable law, and
specifying the basis of such opinion. If the Securities and
Exchange Commission shall enter an order refusing to sustain any
of the objections specified in the written statement so filed, or
if, after the entry of an order sustaining one or more of such
objections so sustained have been met, and shall enter an order
so declaring, the trustees shall mail copies of such material to
all shareholders with reasonable promptness after the entry of
such order and the renewal of such tender.
ARTICLE 12
Amendments to the Bylaws
12.1 General. These Bylaws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at
any meeting of the Trustees, or by one or more writings signed by
such a majority.
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BYLAWS
of
THE EQUITABLE FUNDS
Amendment dated October 16, 1991
In accordance with the resolution adopted by the Board of
Trustees of The Equitable Funds (the "Trust") at a meeting held
on October 16, 1991, the Bylaws of the Trust are hereby amended
as follows:
1. The following sentence is added before the last
three sentences of Section 1 of Article 11:
The placing of a Shareholder's name on a proxy pursuant
to telephonic or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to
verify that such instructions have been authorized by
such Shareholder shall constitute election of such proxy
by or on behalf of such Shareholder.
2. The following new Section 10.8 is added to
Article 10:
10.8 Derivative Claims. No Shareholder shall have the
right to bring or maintain any court action, proceeding
or claim on behalf of the Trust or any series or class
thereof without first making demand on the Trustees
requesting the Trustees to bring or maintain such
action, proceeding or claim. Such demand shall be
excused only when the plaintiff makes a specific showing
that irreparable injury to the Trust or series or class
would otherwise result. Such demand shall be made to
the Clerk or the Trust at the Trust's principal office
and shall set forth in reasonable detail the nature of
the proposed court action, proceeding or claim and the
essential facts relied upon by the Shareholder to
support the allegations made in the demand. The
Trustees shall consider such demand within 45 days of
its receipt by the Trust. In their sole discretion, the
Trustees may submit the matter to a vote of Shareholders
of the Trust or series or class, as appropriate. Any
decision by the Trustees to bring, maintain or settle
(or not to bring, maintain or settle) such court action,
proceeding or claim, or to submit the matter to a vote
of Shareholders shall be made by the Trustees in their
business judgment and shall be binding upon the
Shareholders. Any decision by the Trustees to bring or
<PAGE>
maintain a court action, proceeding or suit on behalf of
the Trust or a series or class shall be subject to the
right of the Shareholders under Section of Article 11
of these Bylaws to vote on whether or not such court
action, proceeding or suit should or should not be
brought or maintained.
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00250184.AT6
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INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement executed as of July 22,
1993, between THE EQUITABLE FUNDS, a Massachusetts business trust
(the "Trust"), on behalf of each of its portfolio series listed on
Exhibit A hereto (each a "Fund") and ALLIANCE CAPITAL MANAGEMENT
L.P., a Delaware limited partnership ("Manager").
Witnesseth:
That in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO THE TRUST AND
FUNDS.
(a) Subject always to the control of the Trustees of the
Trust, the Manager will, at its expense, furnish continuously an
investment program for each Fund, will make investment decisions
on behalf of each Fund and will, subject to the provisions of
paragraph(c), place all orders for the purchase and sale of each
Fund's portfolio securities. Subject always to the control of the
Trustees of the Trust, the Manager will also manage, supervise and
conduct the other affairs and business of the Trust and the Funds,
and matters incidental thereto. In the performance of its duties,
the Manager will comply with the provisions of the Agreement and
Declaration of Trust and By-laws of the Trust and each Fund's
stated investment objectives, policies and restrictions and will
use its best efforts to safeguard and promote the welfare of the
Trust and the Funds and to comply with other policies which the
Trustees may from time to time determine.
(b) The Manager, at its expense, will furnish all
necessary office space and equipment, bookkeeping and clerical
services required for it to perform it duties hereunder and will
pay all salaries, fees and expenses of officers and Trustees of
the Trust who are affiliated with the Manager.
(c) In the selection of brokers, dealers, or futures
commissions merchants (collectively "brokers") and the placing of
orders for the purchase and sale of portfolio investments for each
Fund, the Manager shall seek to obtain the most favorable price
and execution available, except to the extent it may be permitted
to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain
for each Fund the most favorable price and execution available,
the Manager, bearing in mind each Fund's best interest at all
times, shall consider all factors it deems relevant, including, by
way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account
<PAGE>
market prices and trends, the reputation, experience and financial
stability of the broker involved and the quality of service
rendered by the broker in other transactions. Subject to such
policies as the Trustees may determine, the Manager shall not be
deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its
having caused any Fund to pay a broker that provides brokerage and
research services to the Manager an amount of commission for
effecting a portfolio investment transaction in excess of the
amount of commission another broker would have charged for
effecting that transaction, if the Manager determines in good
faith that such amount of commission was reasonable in relation to
the value of the brokerage and research services provided by such
broker, viewed in terms of either that particular transaction or
the Manager's overall responsibilities with respect to such Fund
and to other clients of the Manager as to which the Manager
exercises investment discretion. The Trust hereby agrees with the
Manager and with any Sub-Adviser selected by the Manager as
provided in Section 1(d) that any entity or person associated with
the Manager or such Sub-Adviser which is a member of a national
securities exchange is authorized to effect any transaction on
such exchange for the account of a Fund which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder, and the Trust hereby consents to the
retention of compensation for such transactions in accordance with
Rule 11a2-2(T)(a)(2)(iv).
(d) Subject to the provisions of the Agreement and
Declaration of Trust of the Trust and the Investment Company Act
of 1940, the Manager, at its expense may select and contract with
one or more investment advisers (the "Sub-Adviser") for any Fund
to perform some or all of the services for which it is responsible
pursuant to paragraph (a) of this Section 1 (and any related
facilities or services for which it is responsible under
paragraph (b) of this Section 1). The Manager will compensate any
Sub-Adviser of such Fund for its services to such Fund. The
Manager may terminate the services of any Sub-Adviser at any time
in its sole discretion, and shall at such time assume the
responsibilities of such Sub-Adviser unless and until a successor
Sub-Adviser is selected.
(e) The Manager shall not be obligated to pay any
expenses of or for the Trust or any Fund not expressly assumed by
the Manager pursuant to this Section 1 other than as provided in
Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Trust may be a shareholder,
director, officer or employee of, or be otherwise interested in,
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the Manager, and in any person controlling, controlled by or under
common control with the Manager, and that the Manager and any
person controlling, controlled by or under common control with the
Manager may have an interest in the Trust or in any Fund. It is
also understood that the Manager and persons controlling,
controlled by or under common control with the Manager have and
may have advisory, management service, distribution or other
contracts with other organizations and persons, and may have other
interests and businesses.
3. COMPENSATION TO BE PAID BY THE TRUST TO
THE MANAGER.
The Trust, on behalf of the Funds, will pay to the
Manager as compensation for the Manager's services rendered, for
the facilities furnished and for the expenses borne by the Manager
pursuant to Section 1, a fee, computed and paid monthly at the
following annual rates applicable to the average daily net asset
value of each Fund:*
Annual
Percentage
Fund Rate
The Equitable Balanced Fund,
The Equitable Growth Fund,
The Equitable Conservative
Investors Fund and The Equitable
Growth Investors Fund 0.75%
The Equitable Short-Term
U.S. Government Fund 0.55%
Such fee computed with respect to the net asset value of a Fund
shall be paid from the assets of such Fund. Such average daily
net asset value of each Fund shall be determined by taking an
average of all of the determinations of such net asset value
during such month at the close of business on each business day
during such month while this Contract is in effect. Such fee
shall be payable for each month within five (5) business days
after the end of such month.
In the event that expenses of any Fund for any fiscal
year (not including any distribution expenses paid by such Fund
____________________
* The names of the other Funds (and their annual percentage
rates) included in the form of current Investment Advisory
Agreement relating to the Growth Fund and the Balanced Fund
are not shown.
3
<PAGE>
pursuant to any distribution plan) should exceed the expense
limitation on investment company expenses enforced by any statute
or regulatory authority of any jurisdiction in which shares of
such Fund are qualified for offer and sale, the compensation due
the Manager for such fiscal year shall be reduced by the amount of
such excess by a reduction or refund thereof. In the event that
the expenses of any Fund exceed any expense limitation which the
Manager may, by written notice to the Trust, voluntarily declare
to be effective with respect to such Fund, subject to such terms
and conditions as the Manager may prescribe in such notice, the
compensation due the Manager shall be reduced, and, if necessary,
the Manager shall bear the expenses of such Fund to the extent
required by such expense limitation.
If the Manager shall serve for less than the whole of a
month, the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS
OF THIS CONTRACT.
This Contract shall automatically terminate, without the
payment of any penalty, in the event of its assignment; and this
Contract shall not be amended as to any Fund unless such amendment
is approved at a meeting by the affirmative vote of a majority of
the outstanding shares of such Fund, and by the vote, cast in
person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager or of any Sub-
Adviser of the Trust. Shareholders of a Fund not affected by any
such amendment shall have no right to vote with respect to such
amendment.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution,
and shall remain in full force and effect as to a particular Fund
continuously thereafter (unless terminated automatically as set
forth in Section 4) until terminated as follows:
(a) Either party hereto may at any time terminate this
Contract as to any Fund by not more than sixty days' written
notice delivered or mailed by registered mail, postage prepaid, to
the other party, or
(b) If (i) the Trustees of the Trust or the shareholders
by the affirmative vote of a majority of the outstanding shares of
such Fund, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager, by vote
cast in person at a meeting called for the purpose of voting on
such approval, do not specifically approve at least annually the
continuance of this Contract, then this Contract shall
4
<PAGE>
automatically terminate with respect to such Fund at the close of
business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Contract is submitted to the shareholders of
such Fund for their approval and such shareholders fail to approve
such continuance of this Contract as provided herein, the Manager
may continue to serve hereunder in a manner consistent with the
Investment Company Act of 1940 and the rules and regulations
thereunder.
Action by the Trust under (a) above may be taken either
(i) by vote of a majority of its Trustees or (ii) by the
affirmative vote of a majority of the outstanding shares of the
relevant Fund affected.
Termination of this Contract pursuant to this Section 5
shall be without the payment of any penalty.
6. CERTAIN INFORMATION.
(b) the Manager shall fail to be registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended from time to time, and under the laws of any jurisdiction
in which the Manager is required to be registered as an investment
adviser in order to perform its obligations under this Agreement,
(b) the Manager shall have been served or otherwise have notice of
any action, suit, proceeding, inquiry or investigation at law or
in equity, before or by any court, public board or body, involving
the affairs of the Trust or a Fund and (c) there shall be any
change in the "control" (as defined in the Investment Company Act
of 1940) of the Manager.
7. CERTAIN DEFINITIONS.
(b) of the holders of 67% or more of the shares of such
Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares
of the Fund entitled to vote at such meeting are present in person
or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at such meeting,
whichever is less.
For the purposes of this Contract, the terms "affiliated
person," "control," "interested person" and "assignment" shall
have their respective meanings defined in the Investment Company
Act of 1940 and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted by the Securities
and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940 and the rules
5
<PAGE>
and regulations thereunder; and the term "brokerage and research
services" shall have the meaning given in the Securities Exchange
Act of 1934 and the rules and regulations thereunder.
8. NONLIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of
its obligations and duties hereunder, the Manager shall not be
subject to any liability to the Trust, to any Fund or to any
shareholder of any Fund, for any act or omission in the course of,
or connected with, rendering services hereunder.
9. USE OF NAME.
(i) this Agreement shall remain in full force, (ii) the
Trust or any Fund, as the case may be, shall fully perform,
fulfill and comply with all provisions of this Agreement expressed
herein to be performed, fulfilled or complied with by it, and
(iii) Alliance Capital Management L.P. is the Manager of any Fund.
No such name shall be used by the Trust at any time or in any
place or for any purposes or under any conditions except as in
this section provided. The foregoing authorization by the Manager
to the Trust to use the name "Alliance" as part of a business or
name is not exclusive of the right of the Manager itself to use,
or to authorize others to use, the same; the Trust acknowledges
and agrees that as between the Manager and the Trust, the Manager
has the exclusive right so to use, or authorize others to use,
said name, and the Trust agrees to take such action as may
reasonably be requested by the Manager to give full effect to the
provisions of this section (including, without limitation,
consenting to such use of said name). Without limiting the
generality of the foregoing, the Trust agrees that, upon (i) any
termination of this Agreement by either party or (ii) the
violation of any of its provisions by the Trust or any Fund, as
the case may be, the Trust will, at the request of the Manager
made within six months after such termination or violation, use
its best efforts to change the name of the Trust and each Fund so
as to eliminate all reference, if any, to the name "Alliance" and
will not thereafter transact any business in a name containing the
name "Alliance" in any form or combination whatsoever, or
designate itself as the same entity as or successor to an entity
of such name, or otherwise use the name "Alliance" or any other
reference to the Manager. Such covenants on the part of the Trust
shall be binding upon it, its Trustees, officers, stockholders,
creditors and all other persons claiming under or through it.
6
<PAGE>
10. LIMITATION OF LIABILITY OF THE TRUSTEES
AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the
Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and
not individually and that the obligations of this instrument are
not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of each of the
respective Funds.
11. SEPARATE CONTRACTS.
The Trust, on behalf of each Fund, shall be deemed to
have entered into a wholly separate Contract relating exclusively
to each such Fund. Any amendment to or termination of this
Contract explicitly relating to one or more Funds shall have no
affect on, and shall not be considered to amend or terminate this
Contract with respect to, any other Fund.
IN WITNESS WHEREOF, THE EQUITABLE FUNDS and ALLIANCE
CAPITAL MANAGEMENT L.P. have each caused this instrument to be
signed in duplicate on its behalf by its duly authorized
representative, all as of the day and year first above written.
THE EQUITABLE FUNDS
/s/ Barbara J. Krumsiek
By: _____________________________
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation, its general partner
/s/ Robert H. Joseph
By: _____________________________
7
<PAGE>
Exhibit A**
The Equitable Growth Fund
The Equitable Balanced Fund
The Equitable Conservative Investors Fund
The Equitable Growth Investors Fund
The Equitable Short-Term U.S. Government Fund
____________________
** The names of the other Funds included in the form of
current Investment Advisory Agreement relating to the
Growth Fund and the Balanced Fund are not shown.
8
00250184.AT2
<PAGE>
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(800) 221-5672
(LOGO)
___________, 199
Selected Dealer Agreement
For Broker/Dealers
(other than Bank Subsidiaries)
Dear Sirs:
As the principal underwriter of shares of certain
registered investment companies presently or hereafter managed by
Alliance Capital Management L.P., shares of which companies are
distributed by us pursuant to our Distribution Services Agreements
with such companies (the "Funds"), we invite you to participate as
principal in the distribution of shares of any and all of the
Funds upon the following terms and conditions:
1. You are to offer and sell such shares only at the
public offering prices which shall be currently in effect, in
accordance with the terms of the then current prospectuses and
statements of additional information of the Funds. You agree to
act only as principal in such transactions and shall not have
authority to act as agent for the Funds, for us, or for any other
dealer in any respect. All orders are subject to acceptance by us
and become effective only upon confirmation by us.
2. On each purchase of shares by you from us, the total
sales charges and discount to selected dealer, if any, shall be as
stated in each Fund's then current prospectus.
Such sales charges and discount to selected dealers are
subject to reductions under a variety of circumstances as
described in each Fund's then current prospectus and statement of
additional information. To obtain these reductions, we must be
notified when the sale takes place which would qualify for the
reduced charge.
There is no sales charge or discount to selected dealers
on the reinvestment of dividends.
3. As a selected dealer, you are hereby authorized
(i) to place orders directly with the Funds for their shares to be
<PAGE>
resold by us to you subject to the applicable terms and conditions
governing the placement of orders by us set forth in the
Distribution Services Agreement between each Fund and us and
subject to the applicable compensation provisions set forth in
each Fund's then current prospectus and statement of additional
information and (ii) to tender shares directly to the Funds or
their agent for redemption subject to the applicable terms and
conditions set forth in the Distribution Services Agreement.
4. Repurchases of shares will be made at the net asset
value of such shares in accordance with the then current
prospectuses and statements of additional information of the
Funds.
5. You represent that you are a member of the National
Association of Securities Dealers, Inc. and that you agree to
abide by the Rules of Fair Practice of such Association.
6. This Agreement is in all respects subject to Rule 26
of the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. which shall control any provisions to the
contrary in this Agreement.
7. You agree:
(a) To purchase shares only from us or only from your
customers.
(b) To purchase shares from us only for the purpose of
covering purchase orders already received or for your own bona
fide investment.
(c) That you will not purchase any shares from your
customers at prices lower than the redemption or repurchase prices
then quoted by the Fund. You shall, however, be permitted to sell
shares for the account of their record owners to the Funds at the
repurchase prices currently established for such shares and may
charge the owner a fair commission for handing the transaction.
(d) That you will not withhold placing customers' orders
for shares so as to profit yourself as a result of such
withholding.
(e) That if any shares confirmed to you hereunder are
redeemed or repurchased by any of the Funds within seven business
days after such confirmation of your original order, you shall
forthwith refund to us the full discount allowed to you on such
sales. We shall notify you of such redemption or repurchase
within ten days from the date of delivery of the request therefor
or certificates to us or such Fund. Termination or cancellation
2
<PAGE>
of this Agreement shall not relieve you or us from the
requirements of this subparagraph.
8. We shall not accept from you any conditional orders
for shares. Delivery of certificates for shares purchased shall
be made by the Funds only against receipt of the purchase price,
subject to deduction for the discount reallowed to you and our
portion of the sales charge on such sales. If payment for the
shares purchased is not received within the time customary for
such payments, the sale may be cancelled forthwith without any
responsibility or liability on our part or on the part of the
Funds (in which case you will be responsible for any loss,
including loss of profit, suffered by the Funds resulting from
your failure to make payment as aforesaid), or, at our option, we
may sell the shares ordered back to the Funds (in which case we
may hold you responsible for any loss, including loss of profit
suffered by us resulting from your failure to make payment as
aforesaid).
9. You will not offer or sell any of the shares except
under circumstances that will result in compliance with the
applicable Federal and State securities laws and in connection
with sales and offers to sell shares you will furnish to each
person to whom any such sale or offer is made a copy of the
applicable then current prospectus. We shall be under no
liability to you except for lack of good faith and for obligations
expressly assumed by us herein. Nothing herein contained,
however, shall be deemed to be a condition, stipulation or
provision binding any persons acquiring any security to waive
compliance with any provision of the Securities Act of 1933, or of
the Rules and Regulations of the Securities and Exchange
Commission, or to relieve the parties hereto from any liability
arising under the Securities Act of 1933.
10. From time to time during the term of this Agreement
we may make payments to you pursuant to one or more of the
distribution plans adopted by certain of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") in
consideration, with respect to each such Fund, of your furnishing
distribution services hereunder and providing administrative,
accounting and other services, including personal service and/or
the maintenance of shareholder accounts. We have no obligation to
make any such payments and you waive any such payment until we
receive monies therefor from the Fund. Any such payments made
pursuant to this Section 10 shall be subject to the following
terms and conditions:
(a) Any such payments shall be in such amounts as we may
from time to time advise you in writing but in any event not in
excess of the amounts permitted by the plan in effect with respect
to each particular Fund. Any such payments shall be in addition
3
<PAGE>
to the selling concession, if any, allowed to you pursuant to this
Agreement. Such payments shall include a service fee in the
amount of .25 of 1% per annum of the average daily net assets of
certain Funds attributable to your clients. Any such service fee
shall be paid to you solely for personal service and/or the
maintenance of shareholder accounts.
(b) The provisions of this Section 10 relate to the plan
adopted by a particular Fund pursuant to Rule 12b-1. In
accordance with Rule 12b-1, any person authorized to direct the
disposition of monies paid or payable by a Fund pursuant to this
Section 10 shall provide the Fund's Board of Directors, and the
Directors shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such
expenditures were made.
(c) The provisions of this Section 10 applicable to each
Fund shall remain in effect for not more than a year and
thereafter for successive annual periods only so long as such
continuance is specifically approved at least annually in
conformity with Rule 12b-1 and the Act. The provisions of this
Section 10 shall automatically terminate with respect to a
particular Plan in the event of the assignment (as defined by the
Act) of this Agreement, in the event such Plan terminates or is
not continued or in the event this Agreement terminates or ceases
to remain in effect. In addition, the provisions of this
Section 10 may be terminated at any time, without penalty, by
either party with respect to any particular Plan on not more than
60 days' nor less than 30 days' written notice delivered or mailed
by registered mail, postage prepaid, to the other party.
11. No person is authorized to make any representations
concerning shares of the Funds except those contained in the
current prospectus, statement of additional information, and
printed information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply prospectuses and
statements of additional information, reasonable quantities of
reports to shareholders, supplemental sales literature, sales
bulletins, and additional information as issued. You agree to
distribute prospectuses and reports to shareholders of the Funds
to your customers in compliance with the applicable requirements,
except to the extent that we expressly undertake to do so on your
behalf. You agree not to use other advertising or sales material
relating to the Funds, unless approved in writing by us in advance
of such use. Any printed information furnished by us other than
the then current prospectus and statement of additional
information for each Fund, periodic reports and proxy solicitation
materials are our sole responsibility and not the responsibility
of the Funds, and you agree that the Funds shall have no liability
or responsibility to you in these respects unless expressly
assumed in connection therewith.
4
<PAGE>
12. In connection with your distribution of shares of a
Fund, you shall conform to such written compliance standards as we
have provided you in the past or may from time to time provide to
you in the future.
13. We, our affiliates and the Funds shall not be liable
for any loss, expense, damages, costs or other claim arising out
of any redemption or exchange pursuant to telephone instructions
from any person or our refusal to execute such instructions for
any reason.
14. Either party to this Agreement may cancel this
Agreement by giving written notice to the other. Such notice
shall be deemed to have been given on the date on which it was
either delivered personally to the other party or any officer or
member thereof, or was mailed postpaid or delivered to a telegraph
office for transmission to the other party at his or its address
as shown below. This Agreement may be amended by us at any time
and your placing of an order after the effective date of any such
amendment shall constitute your acceptance thereof.
15. This Agreement shall be construed in accordance with
the laws of the State of New York and shall be binding upon both
parties thereto when signed by us and accepted by you in the space
provided below.
Very truly yours,
ALLIANCE FUND DISTRIBUTORS, INC.
By:______________________________
(Authorized Signature)
Bank or Firm Name _______________________________________________
Address _________________________________________________________
City _____________________ State ____________ Zip Code __________
ACCEPTED BY (signature) _____________________ Title _____________
Name (print) ________________________________ Title _____________
Date _____________________ 199__ Phone # ________________________
5
<PAGE>
Please return two signed copies of this Agreement (one of
which will be signed above by us and thereafter returned to you)
in the accompanying return envelope to:
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105
6
00250184.AT5
<PAGE>
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
(800) 221-5672
(LOGO)
___________, 199
Selected Agent Agreement
For Depository Institutions and Their Subsidiaries
Dear Sirs:
As the principal underwriter of shares of certain
registered investment companies presently or hereafter managed by
Alliance Capital Management L.P., shares of which companies are
distributed by us pursuant to our Distribution Services Agreements
with such companies (the "Funds"), we invite you, acting as agent
for your customers, to make available to your customers shares of
any or all of the Funds upon the following terms and conditions:
1. The customers in question will be for all purposes
your customers. We shall execute transactions in shares of the
Funds for each of your customers only upon your authorization, it
being understood in all cases that (a) you are acting as the agent
for the customer; (b) each transaction is initiated solely upon
the order of the customer; (c) each transaction is for the account
of the customer and not for your account; (d) the transactions are
without recourse against you by the customer; (e) except as we
otherwise agree, each transaction is effected on a fully disclosed
basis; (f) as between you and the customer, the customer will have
full beneficial ownership of the shares; (g) you shall provide no
investment advice and exercise no investment discretion regarding
the purchase, sale, or redemption of the shares; and (h) you shall
make appropriate disclosure to your customers that any Fund's
shares are not endorsed by you, do not constitute your obligation
and are not entitled to federal deposit insurance.
2. You are to sell shares of the Funds only at the
public offering prices which shall be currently in effect, in
accordance with the terms of the then current prospectuses and
statements of additional information of the Funds. You agree to
act only as agent for your customers in such transactions and
shall not have authority to act as agent for the Funds or for us
in any respect. All orders are subject to acceptance by us and
become effective only upon confirmation by us.
<PAGE>
3. On each purchase of shares of a Fund authorized by
you, the total sales charge and commission, if any, shall be as
stated in the Fund's then current prospectus. Such sales charges
and commissions are subject to reductions under a variety of
circumstances as described in each Fund's then current prospectus
and statement of additional information. To obtain such a
reduction, you must provide us with such information as we may
request to establish that a particular transaction qualifies for
the reduction. There is no sales charge or commission to selected
agents on the reinvestment of dividends.
4. As a selected agent, you are hereby authorized (i)
to place orders directly with the Funds for their shares to be
resold by us through you subject to the applicable terms and
conditions governing the placement of orders by us set forth in
the Distribution Services Agreement between each Fund and us and
subject to the applicable compensation provisions set forth in
each Fund's then current prospectus and statement of additional
information, and (ii) to tender shares directly to the Funds or
their agent for redemption or repurchase subject to the applicable
terms and conditions set forth in the Distribution Services
Agreement.
5. Redemptions and repurchases of shares will be made
at the net asset value of such shares in accordance with the then
current prospectuses and statements of additional information of
the Funds.
6. You represent that you are either:
(a) a bank as defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), duly
authorized to engage in the transactions to be performed hereunder
and not required to register as a broker-dealer pursuant to the
1934 Act; or
(b) a bank (as so defined) or an affiliate of a bank, in
either case registered as a broker-dealer pursuant to the 1934 Act
and a member of the National Association of Securities Dealers,
Inc., and that you agree to abide by the rules and regulations of
the National Association of Securities Dealers, Inc.
7. You agree:
(a) to order shares of the Funds only from us and to act
as agent only for your customers;
(b) to order shares from us only for the purpose of
covering purchase orders already received;
2
<PAGE>
(c) that you will not purchase any shares from your
customers at prices lower than the redemption or repurchase prices
then quoted by the Funds, provided, however, that you shall be
permitted to sell shares for the accounts of their record owners
to the Funds at the repurchase prices currently established for
such shares and may charge the owner a fair commission for
handling the transaction;
(d) that you will not withhold placing customers' orders
for shares so as to profit yourself as a result of such
withholding; and
(e) that if any shares confirmed through you hereunder
are redeemed or repurchased by any of the Funds within seven
business days after such confirmation of your original order, you
shall forthwith refund to us the full commission reallowed to you
on such sales. We shall notify you of such redemption or
repurchase within ten days from the date of delivery of the
request therefor or certificates to us or such Fund. Termination
or cancellation of this Agreement shall not relieve you or us from
the requirements of this subparagraph.
8. We shall not accept from you any conditional orders
for shares. Delivery of certificates for shares purchased shall
be made by the Funds only against receipt of the purchase price,
subject to deduction for the commission reallowed to you and our
portion of the sales charge on such sale. If payment for the
shares purchased is not received within the time customary for
such payments, the sale may be cancelled forthwith without any
responsibility or liability on our part or on the part of the
Funds (in which case you will be responsible for any loss,
including loss of profit, suffered by the Funds resulting from
your failure to make payment as aforesaid).
9. You will not accept orders for shares of any of the
Funds except under circumstances that will result in compliance
with the applicable Federal and State securities laws and banking
laws, and in connection with sales of shares to your customers you
will furnish, unless we agree otherwise, to each customer who has
ordered shares a copy of the applicable then current prospectus.
We shall be under no liability to you except for lack of good
faith and for obligations expressly assumed by us herein. Nothing
herein contained, however, shall be deemed to be a condition,
stipulation or provision binding any persons acquiring any
security to waive compliance with any provision of the Securities
Act of 1933 or of the rules and regulations of the Securities and
Exchange Commission, or to relieve the parties hereto from any
liability arising under the Securities Act of 1933.
10. From time to time during the term of this Agreement
we may make payments to you pursuant to one or more of the
3
<PAGE>
distribution plans adopted by certain of the Funds pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act"),
to compensate you with respect to the shareholder accounts of your
customers in such Funds for providing administrative, accounting
and other services, including personal service and/or the
maintenance of such accounts. We have no obligation to make any
such payments and you waive any such payment until we receive
monies therefor from the fund. Any such payments made pursuant to
this Section 10 shall be subject to the following terms and
conditions:
(a) Any such payments shall be in such amounts as we may
from time to time advise you in writing but in any event not in
excess of the amounts permitted by the plan in effect with respect
to each particular Fund. Such payments shall include a service
fee in the amount of .25 of 1% per annum of the average daily net
assets of certain Funds attributable to your clients. Any such
service fee shall be paid to you solely for personal service
and/or the maintenance of shareholder accounts.
(b) The provisions of this Section 10 relate to the plan
adopted by a particular Fund pursuant to Rule 12b-1. In
accordance with Rule 12b-1, any person authorized to direct the
disposition of monies paid or payable by a Fund pursuant to this
Section 10 shall provide the Fund's Board of Directors, and the
Directors shall review, at lest quarterly, a written report of the
amounts so expended and the purposes for which such expenditures
were made.
(c) The provisions of this Section 10 applicable to each
Fund remain in effect for not more than a year and thereafter for
successive annual periods only so long as such continuance is
specifically approved at least annually in conformity with Rule
12b-1 and the Act. The provisions of this Section 10 shall
automatically terminate with respect to a particular Plan in the
event of the assignment (as defined by the Act) of this Agreement,
in the event such Plan terminates or is not continued or in the
event this Agreement terminates or ceases to remain in effect. In
addition, the provisions of this Section 10 may be terminated at
any time, without penalty, by either party with respect to any
particular Plan on not more than 60 days' nor less than 30 days'
written notice delivered or mailed by registered mail, postage
prepaid, to the other party.
11. No person is authorized to make any representation
concerning shares of the Funds except those contained in the
current prospectus, statement of additional information, and
printed information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply prospectuses and
statements of additional information, reasonable quantities of
reports to shareholders, supplemental sales literature, sales
4
<PAGE>
bulletins, and additional information as issued. You agree to
distribute prospectuses and reports to shareholders of the Funds
to your customers in compliance with applicable requirements,
except to the extent that we expressly undertake to do so on your
behalf. You agree not to use other advertising or sales material
relating to the Funds except in compliance with all laws and
regulations applicable to you and unless approved in writing by us
in advance of such use. Any printed information furnished by us
other than the then current prospectus and statement of additional
information for each Fund, periodic reports and proxy solicitation
materials are our sole responsibility and not the responsibility
of the Funds, and you agree that the Funds shall have no liability
or responsibility to you in these respects unless expressly
assumed in connection therewith.
12. In connection with your making shares of a Fund
available to your customers, you shall conform to such written
compliance standards as we have provided you in the past or may
from time to time provide to you in the future.
13. We, our affiliates and the Funds shall not be liable
for any loss, expense, damages, costs or other claim arising out
of any redemption or exchange pursuant to telephone instructions
from any person or our refusal to execute such instructions for
any reason.
14. Either party to this Agreement may cancel this
Agreement by giving written notice to the other. Such notice
shall be deemed to have been given as of the date on which it was
either delivered personally to the other party or any officer or
member thereof, or was mailed postpaid or delivered to a telegraph
office for transmission to the other party at his or its address
as shown below. This Agreement may be amended by us at any time
and your placing of an order after the effective date of any such
amendment shall constitute your acceptance thereof. If you are a
bank or an affiliate of a bank, this Agreement will automatically
terminate if you cease to be, or the bank of which you are an
affiliate ceases to be, a bank as defined in the 1934 Act.
5
<PAGE>
15. This Agreement shall be construed in accordance with
the laws of the State of New York and shall be binding upon both
parties hereto when signed by us and accepted by you in the space
provided below.
Very truly yours,
ALLIANCE FUND DISTRIBUTORS, INC.
By:______________________________
(Authorized Signature)
Bank or Firm Name _______________________________________________
Address _________________________________________________________
City _____________________ State ____________ Zip Code __________
ACCEPTED BY (signature) _____________________ Title _____________
Name (print) ________________________________ Title _____________
Date _____________________ 199__ Phone # ________________________
Please return two signed copies of this Agreement (one of
which will be signed by us and thereafter returned to you) in the
accompanying return envelope to:
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas, 38th Floor
New York, NY 10105
6
00250184.AT4
<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. 26 to the registration statement on Form N-1A
(the "Registration Statement") of our report dated June 16,
1997, 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.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
August 25, 1997
00250184.AU6
<PAGE>
FREDERIC W. JACOBY
Senior Vice President
THE EQUITABLE
October 19, 1987
The Equitable Funds
135 West 50th Street
New York, N.Y. 10020
Ladies and Gentlemen:
With respect to our purchase from you of 2,500 shares of
beneficial interest, $.00001 par value, of each of The Equitable
Growth Fund, The Equitable Balanced Fund, The Equitable
Government Securities Fund and The Equitable Tax Exempt Fund of
The Equitable Funds (the "Trust") for an aggregate price of
$100,000, we hereby advise you that we are purchasing such shares
with no present intention to dispose of them either through
resale to others or redemption by the Trust.
Very truly yours,
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ Frederic W. Jacoby
________________________
Frederic W. Jacoby
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
135 W. 50th St., 4th Floor, New York, NY 10020 (212) 7123-7910
00250184.AT8
<PAGE>
Exhibit 16
THE ALLIANCE PORTFOLIOS
COMPUTATION OF AVERAGE ANNUAL COMPOUNDED RETURN
ERV = P( 1 + T)n
Definitions:
P = Initial investment by shareholder
T = Average annual total return
ERV = Ending redeemable value of shareholder investment
n = Number of periods
Formula to solve for "T"
________________________
For year one ERV
T = ___ - 1
P
* For subsequent years ERV
T = ___ - 1
P
To solve for ERV:
1. Take an initial shareholder investment of $1,000 on 6/30/90 at
maximum offering price of $10.00. The result is 100 shares.
2. Assume that all dividends and distributions by the Fund are
reinvested on reinvest date for the creation of additional
shares (1.917 shares created).
____________________
* For subsequent years repeat steps 1 through 3 for the
required periods and apply to formula shown above.
<PAGE>
3. Add initial share balance to additional shares created due to
reinvestment and multiply by ending net asset value (7/31/90)
to obtain ending redeemable value (ERV).
(100+2.766=102.766 x $9.64 = $991)
(ERV)
991
T = _________ - 1
1,000.00
T = .991 - 1
T = (.009)
T = (0.9%)
T=Average annual total return
2
00250184.AT7
<PAGE>
[ARTICLE] 6
[CIK] 0000812015
[NAME] THE ALLIANCE PORTFOLIOS
[SERIES]
[NUMBER] 041
[NAME] GROWTH INVESTORS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1997
[PERIOD-START] MAY-01-1996
[PERIOD-END] APR-30-1997
[INVESTMENTS-AT-COST] 85,520,757
[INVESTMENTS-AT-VALUE] 94,241,034
[RECEIVABLES] 1,807,067
[ASSETS-OTHER] 315,602
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 96,363,703
[PAYABLE-FOR-SECURITIES] 684,178
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 484,320
[TOTAL-LIABILITIES] 1,168,498
[SENIOR-EQUITY] 73
[PAID-IN-CAPITAL-COMMON] 86,248,857
[SHARES-COMMON-STOCK] 2,091,931
[SHARES-COMMON-PRIOR] 2,174,272
[ACCUMULATED-NII-CURRENT] 379,445
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (148,332)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8,715,162
[NET-ASSETS] 95,195,205
[DIVIDEND-INCOME] 846,715
[INTEREST-INCOME] 1,739,186
[OTHER-INCOME] 0
[EXPENSES-NET] (1,974,461)
[NET-INVESTMENT-INCOME] 611,440
[REALIZED-GAINS-CURRENT] 2,985,209
[APPREC-INCREASE-CURRENT] 2,361,782
[NET-CHANGE-FROM-OPS] 5,958,431
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (345,352)
[DISTRIBUTIONS-OF-GAINS] (3,066,309)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 504,756
[NUMBER-OF-SHARES-REDEEMED] (842,362)
[SHARES-REINVESTED] 255,265
[NET-CHANGE-IN-ASSETS] (1,306,461)
<PAGE>
[ACCUMULATED-NII-PRIOR] 657,809
[ACCUMULATED-GAINS-PRIOR] 7,717,255
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 723,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,142,000
[AVERAGE-NET-ASSETS] 29,068,163
[PER-SHARE-NAV-BEGIN] 14.08
[PER-SHARE-NII] 0.16
[PER-SHARE-GAIN-APPREC] 0.76
[PER-SHARE-DIVIDEND] (0.19)
[PER-SHARE-DISTRIBUTIONS] (1.69)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.12
[EXPENSE-RATIO] 1.55
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250184.AU2
<PAGE>
[ARTICLE] 6
[CIK] 0000812015
[NAME] THE ALLIANCE PORTFOLIOS
[SERIES]
[NUMBER] 042
[NAME] GROWTH INVESTORS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1997
[PERIOD-START] MAY-01-1996
[PERIOD-END] APR-30-1997
[INVESTMENTS-AT-COST] 85,520,757
[INVESTMENTS-AT-VALUE] 94,241,034
[RECEIVABLES] 1,807,067
[ASSETS-OTHER] 315,602
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 96,363,703
[PAYABLE-FOR-SECURITIES] 684,178
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 484,320
[TOTAL-LIABILITIES] 1,168,498
[SENIOR-EQUITY] 73
[PAID-IN-CAPITAL-COMMON] 86,248,857
[SHARES-COMMON-STOCK] 4,706,967
[SHARES-COMMON-PRIOR] 4,261,102
[ACCUMULATED-NII-CURRENT] 379,445
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (148,332)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8,715,162
[NET-ASSETS] 95,195,205
[DIVIDEND-INCOME] 846,715
[INTEREST-INCOME] 1,739,186
[OTHER-INCOME] 0
[EXPENSES-NET] (1,974,461)
[NET-INVESTMENT-INCOME] 611,440
[REALIZED-GAINS-CURRENT] 2,985,209
[APPREC-INCREASE-CURRENT] 2,361,782
[NET-CHANGE-FROM-OPS] 5,958,431
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (444,447)
[DISTRIBUTIONS-OF-GAINS] (7,140,766)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 722,493
[NUMBER-OF-SHARES-REDEEMED] (891,177)
[SHARES-REINVESTED] 564,549
[NET-CHANGE-IN-ASSETS] (1,306,461)
<PAGE>
[ACCUMULATED-NII-PRIOR] 657,809
[ACCUMULATED-GAINS-PRIOR] 7,717,255
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 723,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,142,000
[AVERAGE-NET-ASSETS] 61,325,491
[PER-SHARE-NAV-BEGIN] 14.08
[PER-SHARE-NII] 0.06
[PER-SHARE-GAIN-APPREC] 0.77
[PER-SHARE-DIVIDEND] (0.11)
[PER-SHARE-DISTRIBUTIONS] (1.69)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.11
[EXPENSE-RATIO] 2.26
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250184.AU7
<PAGE>
[ARTICLE] 6
[CIK] 0000812015
[NAME] THE ALLIANCE PORTFOLIOS
[SERIES]
[NUMBER] 043
[NAME] GROWTH INVESTORS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1997
[PERIOD-START] MAY-01-1996
[PERIOD-END] APR-30-1997
[INVESTMENTS-AT-COST] 85,520,757
[INVESTMENTS-AT-VALUE] 94,241,034
[RECEIVABLES] 1,807,067
[ASSETS-OTHER] 315,602
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 96,363,703
[PAYABLE-FOR-SECURITIES] 684,178
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 484,320
[TOTAL-LIABILITIES] 1,168,498
[SENIOR-EQUITY] 73
[PAID-IN-CAPITAL-COMMON] 86,248,857
[SHARES-COMMON-STOCK] 459,830
[SHARES-COMMON-PRIOR] 419,843
[ACCUMULATED-NII-CURRENT] 379,445
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (148,332)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8,715,162
[NET-ASSETS] 95,195,205
[DIVIDEND-INCOME] 846,715
[INTEREST-INCOME] 1,739,186
[OTHER-INCOME] 0
[EXPENSES-NET] (1,974,461)
[NET-INVESTMENT-INCOME] 611,440
[REALIZED-GAINS-CURRENT] 2,985,209
[APPREC-INCREASE-CURRENT] 2,361,782
[NET-CHANGE-FROM-OPS] 5,958,431
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (43,458)
[DISTRIBUTIONS-OF-GAINS] (698,222)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 187,433
[NUMBER-OF-SHARES-REDEEMED] (199,231)
[SHARES-REINVESTED] 51,785
[NET-CHANGE-IN-ASSETS] (1,306,461)
<PAGE>
[ACCUMULATED-NII-PRIOR] 657,809
[ACCUMULATED-GAINS-PRIOR] 7,717,255
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 723,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2,142,000
[AVERAGE-NET-ASSETS] 6,020,717
[PER-SHARE-NAV-BEGIN] 14.09
[PER-SHARE-NII] 0.06
[PER-SHARE-GAIN-APPREC] 0.77
[PER-SHARE-DIVIDEND] (0.11)
[PER-SHARE-DISTRIBUTIONS] (1.69)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.12
[EXPENSE-RATIO] 2.26
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250184.AU8
<PAGE>
[ARTICLE]6
[CIK]0000812015
[NAME]THE ALLIANCE PORTFOLIOS
[SERIES]
[NUMBER]051
[NAME]CONSERVATIVE INVESTORS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1997
[PERIOD-START] MAY-01-1996
[PERIOD-END] APR-30-1997
[INVESTMENTS-AT-COST] 41,992,398
[INVESTMENTS-AT-VALUE] 43,741,969
[RECEIVABLES] 604,684
[ASSETS-OTHER] 106,060
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 44,452,713
[PAYABLE-FOR-SECURITIES] 51,065
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 365,884
[TOTAL-LIABILITIES] 405,949
[SENIOR-EQUITY] 39
[PAID-IN-CAPITAL-COMMON] 41,518,186
[SHARES-COMMON-STOCK] 1,048,877
[SHARES-COMMON-PRIOR] 1,271,079
[ACCUMULATED-NII-CURRENT] 216,263
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 564,735
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,747,541
[NET-ASSETS] 44,046,764
[DIVIDEND-INCOME] 204,980
[INTEREST-INCOME] 2,251,317
[OTHER-INCOME] 0
[EXPENSES-NET] (927,335)
[NET-INVESTMENT-INCOME] 1,528,962
[REALIZED-GAINS-CURRENT] 593,982
[APPREC-INCREASE-CURRENT] 1,321,406
[NET-CHANGE-FROM-OPS] 3,444,350
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (516,046)
[DISTRIBUTIONS-OF-GAINS] (278,463)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 196,563
[NUMBER-OF-SHARES-REDEEMED] (484,981)
[SHARES-REINVESTED] 66,216
[NET-CHANGE-IN-ASSETS] (7,418,637)
<PAGE>
[ACCUMULATED-NII-PRIOR] 339,779
[ACCUMULATED-GAINS-PRIOR] 980,259
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 364,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,172,000
[AVERAGE-NET-ASSETS] 13,114,413
[PER-SHARE-NAV-BEGIN] 11.14
[PER-SHARE-NII] 0.41
[PER-SHARE-GAIN-APPREC] 0.46
[PER-SHARE-DIVIDEND] (0.45)
[PER-SHARE-DISTRIBUTIONS] (0.25)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.31
[EXPENSE-RATIO] 1.40
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250184.AU3
<PAGE>
[ARTICLE]6
[CIK]0000812015
[NAME]THE ALLIANCE PORTFOLIOS
[SERIES]
[NUMBER]052
[NAME]CONSERVATIVE INVESTORS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1997
[PERIOD-START] MAY-01-1996
[PERIOD-END] APR-30-1997
[INVESTMENTS-AT-COST] 41,992,398
[INVESTMENTS-AT-VALUE] 43,741,969
[RECEIVABLES] 604,684
[ASSETS-OTHER] 106,060
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 44,452,713
[PAYABLE-FOR-SECURITIES] 51,065
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 365,884
[TOTAL-LIABILITIES] 405,949
[SENIOR-EQUITY] 39
[PAID-IN-CAPITAL-COMMON] 41,518,186
[SHARES-COMMON-STOCK] 2,440,961
[SHARES-COMMON-PRIOR] 2,828,583
[ACCUMULATED-NII-CURRENT] 216,263
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 564,735
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,747,541
[NET-ASSETS] 44,046,764
[DIVIDEND-INCOME] 204,980
[INTEREST-INCOME] 2,251,317
[OTHER-INCOME] 0
[EXPENSES-NET] (927,335)
[NET-INVESTMENT-INCOME] 1,528,962
[REALIZED-GAINS-CURRENT] 593,982
[APPREC-INCREASE-CURRENT] 1,321,406
[NET-CHANGE-FROM-OPS] 3,444,350
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (967,390)
[DISTRIBUTIONS-OF-GAINS] (644,643)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 378,962
[NUMBER-OF-SHARES-REDEEMED] (896,761)
[SHARES-REINVESTED] 130,177
[NET-CHANGE-IN-ASSETS] (7,418,637)
<PAGE>
[ACCUMULATED-NII-PRIOR] 339,779
[ACCUMULATED-GAINS-PRIOR] 980,259
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 364,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,172,000
[AVERAGE-NET-ASSETS] 30,453,918
[PER-SHARE-NAV-BEGIN] 11.31
[PER-SHARE-NII] 0.34
[PER-SHARE-GAIN-APPREC] 0.46
[PER-SHARE-DIVIDEND] (0.37)
[PER-SHARE-DISTRIBUTIONS] (0.25)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.49
[EXPENSE-RATIO] 2.10
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250184.AU4
<PAGE>
[ARTICLE]6
[CIK]0000812015
[NAME]THE ALLIANCE PORTFOLIOS
[SERIES]
[NUMBER]053
[NAME]CONSERVATIVE INVESTORS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] APR-30-1997
[PERIOD-START] MAY-01-1996
[PERIOD-END] APR-30-1997
[INVESTMENTS-AT-COST] 41,992,398
[INVESTMENTS-AT-VALUE] 43,741,969
[RECEIVABLES] 604,684
[ASSETS-OTHER] 106,060
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 44,452,713
[PAYABLE-FOR-SECURITIES] 51,065
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 365,884
[TOTAL-LIABILITIES] 405,949
[SENIOR-EQUITY] 39
[PAID-IN-CAPITAL-COMMON] 41,518,186
[SHARES-COMMON-STOCK] 361,129
[SHARES-COMMON-PRIOR] 470,876
[ACCUMULATED-NII-CURRENT] 216,263
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 564,735
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,747,541
[NET-ASSETS] 44,046,764
[DIVIDEND-INCOME] 204,980
[INTEREST-INCOME] 2,251,317
[OTHER-INCOME] 0
[EXPENSES-NET] (927,335)
[NET-INVESTMENT-INCOME] 1,528,962
[REALIZED-GAINS-CURRENT] 593,982
[APPREC-INCREASE-CURRENT] 1,321,406
[NET-CHANGE-FROM-OPS] 3,444,350
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (154,474)
[DISTRIBUTIONS-OF-GAINS] (100,968)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 98,699
[NUMBER-OF-SHARES-REDEEMED] (228,588)
[SHARES-REINVESTED] 20,142
[NET-CHANGE-IN-ASSETS] (7,418,637)
<PAGE>
[ACCUMULATED-NII-PRIOR] 339,779
[ACCUMULATED-GAINS-PRIOR] 980,259
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 364,000
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,172,000
[AVERAGE-NET-ASSETS] 4,961,938
[PER-SHARE-NAV-BEGIN] 11.31
[PER-SHARE-NII] 0.34
[PER-SHARE-GAIN-APPREC] 0.46
[PER-SHARE-DIVIDEND] (0.37)
[PER-SHARE-DISTRIBUTIONS] (0.25)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.49
[EXPENSE-RATIO] 2.10
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250184.AU5
