<PAGE>
As filed with the Securities and Exchange
Commission on June 30, 1997
File Nos. 333-
811-5993
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No.
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 X
Alliance Global Environment Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including
Area Code: (212) 969-1000
_____________________________
EDMUND P. BERGAN, JR.
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Copies of communications to:
Thomas G. MacDonald
Seward & Kissel
One Battery Park Plaza
New York, New York 10004
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It is proposed that this filing will become effective (check
appropriate box)
____ immediately upon filing pursuant to paragraph (b)
____ on (date) pursuant to paragraph (b)
____ 60 days after filing pursuant to paragraph (a)(1)
____ on (date) pursuant to paragraph (a)(1)
____ 75 days after filing pursuant to paragraph (a)(2)
____ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
The purpose of this Registration Statement is to register the
shares of the Registrant under the Securities Act of 1933 and to
declare pursuant to Section 24(f) of the Investment Company Act
of 1940 and Rule 24f-2 thereunder that an indefinite number of
its securities is being registered by this Registration
Statement.
The Registrant hereby amends this Registrant Statement under the
Securities Act of 1933 on such date or dates as may be necessary
to delay its effective date until the Registrant shall file a
further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to
Section 8(a), may determine.
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CROSS REFERENCE SHEET
(as required by Rule 404(c))
Location in Prospectuses
N-1A Item No. (Caption)
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis The Funds at a Glance; Expense
Information
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description Description of the Fund;
of Registrant General Information
Item 5. Management of the Management of the Fund; General
Fund Information
Item 6. Capital Stock and Dividends, Distributions and
Other Securities Taxes; General Information
Item 7. Purchase of Securities Purchase and Sale of Shares;
Being Offered General Information
Item 8. Redemption or Purchase and Sale of Shares;
Repurchase General Information
Item 9. Pending Legal Not Applicable
Proceedings
Location in Statement of
Additional Information
PART B (Caption)
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Information Description of the Fund;
and History General Information
Item 13. Investment Objectives Description of the Fund
and Policies
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Item 14. Management of the Management of the Fund
Registrant
Item 15. Control Persons and Management of the Fund; General
Principal Holders of Information
Securities
Item 16. Investment Advisory and Management of the Fund,
Other Services Expenses of the Fund, General
Information
Item 17. Brokerage Allocation Brokerage and Portfolio
and Other Practices Transactions
Item 18. Capital Stock and Other General Information
Securities
Item 19. Purchase, Redemption Purchase of Shares; Redemption
and Pricing of and Repurchase of Shares;
Securities Being Offered Dividends, Distributions and
Taxes; Shareholder Services
Item 20. Tax Status Description of the Fund,
Dividends, Distributions and
Taxes
Item 21. Underwriters General Information
Item 22. Calculation of
Performance Data General Information
Item 23. Financial Statements Financial Statements; Report of
Independent Auditors
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ALLIANCE GLOBAL ENVIRONMENT FUND
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
[ ], 1997
Table of Contents Page
The Fund at a Glance....................................
Expense Information.....................................
Financial Highlights....................................
Glossary................................................
Description of the Fund.................................
Investment Objective.................................
Investment Policies..................................
Additional Investment Practices......................
Certain Fundamental Investment
Policies..........................................
Certain Risk Considerations .........................
Purchase and Sale of Shares.............................
Management of the Fund..................................
Dividends, Distributions and Taxes......................
General Information.....................................
Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
<PAGE>
Alliance Global Environment Fund, Inc. (the "Fund") seeks long-
term capital appreciation through investment in equity securities
of companies expected to benefit from advances or improvements in
products, processes or services intended to foster the protection
of the environment.
The Fund is an open-end, non-diversified, management investment
company. This Prospectus sets forth concisely the information
that a prospective investor should know about the Fund before
investing. A "Statement of Additional Information" for the Fund
dated [ ], 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 indicated address or call the
"For Literature" telephone number shown above.
The Fund offers three classes of shares through this Prospectus.
These shares 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 ("Class A shares"),
(ii) with a contingent deferred sales charge imposed on most
redemptions made within four years of purchase ("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
("Class C shares"). See "Purchase and Sale of Shares."
An investment in these securities is not a deposit or obligation
of, or guaranteed or endorsed by, any bank and is not federally
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other agency.
Investors are advised to read this Prospectus carefully and to
retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[Alliance Logo] (R)/SM These are registered marks used under
license from the owner, Alliance Capital Management L.P.
2
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The Fund At A Glance
The following summary is qualified in its entirety by the more
detailed information contained inside this Prospectus.
The Fund's Investment Adviser 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 $182
billion in assets under management as of March 31, 1997.
Alliance provides investment management services to employee
benefit plans for 31 of the FORTUNE 100 companies.
The Fund
Seeks . . . Long-term capital appreciation.
Invests principally in . . . A non-diversified portfolio of
equity securities of companies expected to benefit from advances
or improvements in products, processes or services intended to
foster the protection of the environment ("Eligible Companies").
A Word About Risk . . .
The price of shares of the Fund will fluctuate as the daily
prices of the individual stocks and other equity securities in
which it invests fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost. Because the
Fund will invest in foreign currency denominated securities,
these fluctuations may be magnified by changes in foreign
exchange rates. The Fund invests substantially all of its assets
in equity securities of Eligible Companies. As a consequence,
the Fund is subject to certain additional risks not typically
associated with funds that have more diversified portfolios and
that do not concentrate their investments in equity securities of
Eligible Companies. See "Certain Risk Considerations" below.
Investment in the Fund involves risks not associated with funds
that invest primarily in securities of U.S. issuers. While the
Fund invests principally in common stocks and other equity
securities, in order to achieve its investment objectives the
Fund may at times use certain types of investment derivatives,
such as options, futures, forwards and swaps. These involve
risks different from, and, in certain cases, greater than, the
risks presented by more traditional investments. These risks are
more fully discussed in this Prospectus.
3
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Getting Started . . .
Shares of the Fund are available through your financial
representative and most banks, insurance companies and brokerage
firms nationwide. Shares can be purchased for a minimum initial
investment of $250, and subsequent investments can be made for as
little as $50. For detailed information about purchasing and
selling shares, see "Purchase and Sale of Shares." In addition,
the Fund offers several time and money saving services to
investors. Be sure to ask your financial representative about:
AUTOMATIC DIVIDEND REINVESTMENT
AUTOMATIC INVESTMENT PROGRAM
RETIREMENT PLANS
SHAREHOLDER COMMUNICATIONS
DIVIDEND DIRECTION PLANS
AUTO EXCHANGE
SYSTEMATIC WITHDRAWALS
A CHOICE OF PURCHASE PLANS
TELEPHONE TRANSACTIONS
24-HOUR INFORMATION
ALLIANCE LOGO
(R)/SM These are registered marks used under license from the
owner, Alliance Capital Management L.P.
4
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________________________________________________________________
EXPENSE INFORMATION
________________________________________________________________
Shareholder Transaction Expenses are one of several factors to
consider when you invest in the Fund. The following table
summarizes your maximum transaction costs and annual expenses for
each class of shares. The Examples following the table show the
cumulative expenses attributable to a hypothetical $1,000
investment in each class for the periods specified.
Class A Shares Class B Shares Class C Shares
Maximum sales charge imposed
on purchases (as a percentage
of offering price)....... 4.25%(a) None None
Sales charge imposed on
dividend reinvestments... None None None
Deferred sales charge (as
a percentage of original
purchase price or
redemption proceeds,
whichever is lower)...... None(a) 4.0% during the 1% during the
first year, first year,
decreasing 1.0% 0% thereafter
annually to 0%
after the fourth
year(b)
Exchange fee............... None None None
____________________________________________________________
(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1% deferred
sales charge on redemption within one year of purchase. See "Purchase
and Sale of Shares--How to Buy Shares"--page __.
(b) Class B shares automatically convert to Class A shares after eight years.
See "Purchase and Sale of Shares--How to Buy Shares"--page __.
5
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Operating Expenses Class A Class B Class C
Management fees 1.10% 1.10% 1.10%
12b-1 fees .30% 1.00% 1.00%
Other expenses(a) [ ]% [ ]% [ ]%
Total fund operating expenses [ ]% [ ]% [ ]%
==== ==== ====
Examples Class A Class B+ Class B++ Class C+ Class C++
After 1 year $ $ $ $ $
After 3 years $ $ $ $ $
After 5 years $ $ $ $ $
After 10 years $ $ $ $ $
___________________________________________________________
+ Assumes redemption at end of period.
++ Assumes no redemption at end of period.
(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance, based on a fixed dollar amount
charged to the Fund for each shareholder account.
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Long-term
shareholders of the Fund may pay aggregate sales charges totaling
more than the economic equivalent of the maximum initial sales
charges permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. See "Management of the
Fund--Distribution Services Agreement." The Rule 12b-1 fee for
each class comprises a service fee not exceeding .25% of the
aggregate average daily net assets of the Fund attributable to
the class and an asset-based sales charge equal to the remaining
portion of the Rule 12b-1 fee. "Other Expenses" are based on
estimated amounts for the Fund's current fiscal year. The
Examples set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as
mandated by Securities and Exchange Commission regulations. THE
EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF PAST OR
FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN.
6
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________________________________________________________________
FINANCIAL HIGHLIGHTS
________________________________________________________________
The following table presents per share income and capital
changes for a share outstanding throughout each period indicated.
No Class B or Class C shares were outstanding during these
periods. The Fund operated as a closed-end investment company
prior to [ ], 1997, when it converted to an open-end
investment company and all shares of its common stock then
outstanding were reclassified as Class A shares. Except as
indicated below, the information in the table has been audited by
[ ], the independent auditors of the Fund. A
report of [ ] on the information with respect
to the Fund appears in the Fund's Statement of Additional
Information. The following information should be read in
conjunction with the financial statements and related notes which
are included in the Fund's Statement of Additional Information.
Further information about the Fund's performance is contained
in the Fund's annual report to shareholders, which may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown on the cover of this Prospectus.
7
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Six
Months June 1,
ended 1990*
April 30, to
1997 Year Ended October 31, October 31,
(unaudited) 1996 1995 1994 1993 1992 1991 1990
Net asset value, beginning
of year
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(loss)
Net realized and unrealized
gain (loss) on
investments and foreign
currency transactions
Net increase (decrease) in
net asset value from
operations
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income
Distributions for net
realized gain on
investments and foreign
currency transactions
Total dividends and
distributions
Net asset value, end of
year
Market value, end of year
TOTAL RETURN
Total investment return
based on:
Market value
Net asset value
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000's omitted)
Ratio of expenses to
average net assets
Ratio of net investment
income (loss) to average
net assets
Portfolio turnover rate
Average commission rate
_______________________
* Commencement of operations.
8
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9
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________________________________________________________________
GLOSSARY
________________________________________________________________
The following terms are frequently used in this Prospectus. Many
of these terms are explained in greater detail under "Description
of the Fund - Additional Investment Practices."
Eligible Companies are companies expected to benefit from
advances or improvements in products, processes or services
intended to foster the protection of the environment.
Environmental Companies are Eligible Companies that have a
principal business involving the sale of systems or services
intended to foster environmental protection, such as waste
treatment and disposal, remediation, air pollution control and
recycling.
Beneficiary Companies are Eligible Companies whose principal
businesses lie outside the environmental sector but nevertheless
anticipate environmental regulations or consumer preferences
through the development of new products, processes or services
that are intended to contribute to a cleaner and healthier
environment, such as companies that anticipate the demand for
plastic substitutes, aerosol substitutes, alternative fuels and
processes that generate less hazardous wastes.
Equity Securities are common stocks (but not preferred stocks),
rights or warrants to subscribe for or purchase common stocks,
and preferred stocks or debt securities that are convertible into
common stocks without the payment of any further consideration.
Rule 144A securities are securities that may be resold pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act").
U.S. Government securities are securities issued or guaranteed by
the United States Government, its agencies or instrumentalities.
Depositary receipts include American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs") and other types of
depositary receipts.
1940 Act is the Investment Company Act of 1940, as amended.
Commission is the U.S. Securities and Exchange Commission.
Code is the Internal Revenue Code of 1986, as amended.
10
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___________________________________________________________
DESCRIPTION OF THE FUND
___________________________________________________________
The Fund is a non-diversified management investment company.
Until [ ], 1997, the Fund operated as a closed-end
investment company, and its common stock (which then comprised a
single class) was listed on the New York Stock Exchange. The
Fund's investment objective is "fundamental" and cannot be
changed without a shareholder vote. Except as noted, the Fund's
investment policies are not fundamental and thus can be changed
without a shareholder vote. The Fund will not change these
policies without notifying its shareholders. There is no
guarantee that the Fund will achieve its investment objective.
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital
appreciation through investment in equity securities (i.e.,
common stocks (but not preferred stocks), rights or warrants to
subscribe for or purchase common stocks, and preferred stocks or
debt securities that are convertible into common stocks without
the payment of any further consideration) of Eligible Companies.
INVESTMENT POLICIES
The Fund will invest in two categories of Eligible
Companies--"Environmental Companies" and "Beneficiary Companies."
Environmental Companies are those that have a principal business
involving the sale of systems or services intended to foster
environmental protection, such as waste treatment and disposal,
remediation, air pollution control and recycling. Under normal
circumstances, the Fund will invest at least 65% of its total
assets in equity securities of Environmental Companies.
Beneficiary Companies are those whose principal businesses lie
outside the environmental sector but nevertheless anticipate
environmental regulations or consumer preferences through the
development of new products, processes or services that are
intended to contribute to a cleaner and healthier environment.
Examples of such companies could be companies that anticipate the
demand for plastic substitutes, aerosol substitutes, alternative
fuels and processes that generate less hazardous wastes. In this
regard, the Fund may invest in an issuer with a broadly-
diversified business, only a part of which provides such
products, processes or services, when Alliance believes that
these products, processes or services will yield a competitive
advantage that significantly enhances the issuer's growth
prospects. As a matter of fundamental policy, the Fund will,
under normal circumstances, invest substantially all of its total
assets in equity securities of Eligible Companies.
11
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A major premise of the Fund's investment approach is that
environmental concerns will be a significant source of future
growth opportunities, and that Environmental Companies will see
an increased demand for their systems and services.
Environmental Companies operate in the areas of pollution
control, clean energy, solid waste management, hazardous waste
treatment and disposal, pulp and paper recycling, waste-to-energy
alternatives, biodegradable cartons, packages, plastics and other
products, remedial projects and emergency cleanup efforts,
manufacture of environmental supplies and equipment, the
achievement of purer air, groundwater and foods and the
detection, evaluation and treatment of both existing and
potential environmental problems including, among others, air
pollution and acid rain.
The environmental services industry is generally positively
affected by increasing governmental action intended to foster
environmental protection. As environmental regulations are
developed and enforced, Environmental Companies providing the
means of compliance with such regulations are afforded
substantial opportunities for growth. Beneficiary Companies may
also derive an advantage to the extent that they have anticipated
environmental regulation and are therefore at a competitive
advantage.
In the view of Alliance, increasing public and political
awareness of environmental concerns and resultant environmental
regulations are long-term phenomena which are driven by an
emerging global consensus that environmental protection is a
vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other
economically developed countries will have increasing
opportunities for earnings growth resulting not only from an
increased demand for their existing products or services but also
from innovative responses to changing regulations and priorities
and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also
within many economically developing countries, such as those of
Eastern Europe and the Pacific Rim. These countries lag well
behind developed countries in the conservation and efficient use
of natural resources and in their implementation of policies
which protect the environment.
Alliance believes that global investing offers opportunities
for superior investment returns. The Fund intends to spread
investment risk among the capital markets of a number of
countries and will invest in equity securities of companies based
in at least three, and normally considerably more, such
countries. The percentage of the Fund's assets invested in
securities of companies in a particular country or denominated in
a particular currency will vary in accordance with Alliance's
12
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assessment of the appreciation potential of such securities and
the strength of that currency. As of [ ], 1997, [ ]%
of the Fund's net assets were invested in equity securities of
U.S. companies.
The Fund may also: (i) invest up to 20% of its total assets
in warrants to purchase equity securities to the extent
consistent with its investment objective; (ii) invest in
depositary receipts; (iii) purchase and write put and call
options on foreign currencies for hedging purposes; (iv) enter
into forward foreign currency transactions for hedging purposes;
(v) invest in currency futures and options on such futures for
hedging purposes; and (vi) make secured loans of its portfolio
securities not in excess of 30% of its total assets. For
additional information on the use, risks and costs of these
policies and practices see "Additional Investment Policies and
Practices". The Fund may borrow to the maximum extent permitted
under the 1940 Act in order to repurchase its shares or to meet
redemption requests. In addition, the Fund may borrow for
temporary purposes (including the purposes mentioned in the
preceding sentence) in an amount not exceeding 5% of the value of
the assets of the Fund. See "Certain Fundamental Investment
Policies."
ADDITIONAL INVESTMENT PRACTICES
The Fund may engage in the following investment practices to
the extent described above.
Rights and Warrants. Rights and warrants entitle the holder
to buy equity securities at a specific price for a specific
period of time. Rights are similar to warrants except that they
have a substantially shorter duration. Rights and warrants may
be considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with
the value of the underlying securities, however, although the
value of a right or warrant may decline because of a decrease in
the value of the underlying stock, the passage of time or a
change in perception as to the potential of the underlying stock,
or any combination thereof. If the market price of the
underlying stock is below the exercise price set forth in the
warrant on the expiration date, the warrant will expire
worthless. Moreover, a right or warrant ceases to have value if
it is not exercised prior to the expiration date.
Convertible Securities. Prior to conversion, convertible
preferred stocks and convertible debt securities have the same
general characteristics as non-convertible preferred stocks and
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non-convertible debt securities, which generally provide a stable
stream of income with generally higher yields than those of
common stocks of the same or similar issuers. The price of a
convertible security will normally vary with changes in the price
of the underlying common stock, although the higher yield tends
to make the price of the convertible security less volatile than
that of the underlying common stock. As with non-convertible
preferred stocks and debt securities, the market values of
convertible securities tend to decline as interest rates increase
and increase as interest rates decline. While convertible
securities generally offer lower dividend or interest yields than
non-convertible securities of similar quality, they enable
investors to benefit from increases in the market prices of the
underlying common stocks.
Depositary Receipts. Depositary receipts may not necessarily
be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of
the stock of unsponsored depositary receipts are not obligated to
disclose material information in the United States and,
therefore, there may not be a correlation between such
information and the market value of the depositary receipts.
ADRs are depositary receipts typically issued by a U.S. bank or
trust company that evidence ownership of underlying securities
issued by a foreign corporation. GDRs and other types of
depositary receipts are typically issued by foreign banks or
trust companies and evidence ownership of underlying securities
issued by either a foreign or a U.S. company. Generally,
depositary receipts in registered form are designed for use in
the U.S. securities markets and depositary receipts in bearer
form are designed for use in foreign securities markets. For
purposes of determining the country of issuance, the investments
of the Fund in depositary receipts are deemed to be investments
in the underlying securities.
Illiquid Securities. The Fund will not maintain more than
15% of its net assets in illiquid securities. Illiquid
securities include direct placements or other securities that are
subject to legal or contractual restrictions on resale or for
which there is no readily available market (e.g. when trading in
the security is suspended or, in the case of unlisted securities,
when market makers do not exist or will not entertain bids or
offers), and many individually negotiated currency swaps.
Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize their full value
upon sale. Alliance will monitor the illiquidity of such
securities with respect to the Fund under the supervision of the
Directors of the Fund. To the extent permitted by applicable
law, Rule 144A securities will not be treated as "illiquid" for
14
<PAGE>
purposes of the foregoing restriction so long as such securities
meet liquidity guidelines established by the Fund's Directors.
The Fund may not be able to readily sell securities for which
there is no ready market. To the extent that these securities
are foreign securities, there is no law in many of the countries
in which the Fund may invest similar to the Securities Act,
requiring an issuer to register the sale of securities with a
governmental agency or imposing legal restrictions on resales of
securities, either as to length of time the securities may be
held or manner of resale. However, there may be contractual
restrictions on resale of securities.
Futures Contracts and Options on Futures Contracts. A "sale"
of a futures contract means the acquisition of a contractual
obligation to deliver the foreign currency called for by the
contract at a specified price on a specified date. A "purchase"
of a futures contract means the incurring of an obligation to
acquire the securities, foreign currency called for by the
contract at a specified price on a specified date.
Options on futures contracts written or purchased by the Fund
will be traded on U.S. or foreign exchanges or over-the-counter.
These investment techniques will be used only to hedge against
anticipated future changes in exchange rates which otherwise
might either adversely affect the value of the Fund's portfolio
securities or adversely affect the prices of securities which the
Fund intends to purchase at a later date.
Options on Foreign Currencies. As in the case of other kinds
of options the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium
received, and the Fund could be required to purchase or sell
foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on a foreign
currency may constitute an effective hedge against fluctuations
in exchange rates although, in the event of rate movements
adverse to the Fund's position, it may forfeit the entire amount
of the premium plus related transaction costs. See the Statement
of Additional Information of the Fund for further discussion of
the use, risks and costs of options on foreign currencies.
Forward Foreign Currency Exchange Contracts. The Fund may
purchase or sell forward contracts so as to minimize the risk to
it from adverse changes in the relationship between the U.S.
dollar and other currencies. A forward contract is an obligation
to purchase or sell a specific currency for an agreed price at a
future date, and is individually negotiated and privately traded.
The Fund may enter into a forward contract, for example, when
it enters into a contract for the purchase or sale of a security
15
<PAGE>
denominated in a foreign currency in order to "lock in" the U.S.
Dollar price of the security ("transaction hedge"). The Fund may
not engage in transaction hedges with respect to the currency of
a particular country to an extent greater than the aggregate
amount of the Fund's transactions in that currency. When the
Fund believes that a foreign currency may suffer a substantial
decline against the U.S. dollar, it may enter into a forward sale
contract to sell an amount of that foreign currency approximating
the value of some or all of the Fund's portfolio securities
denominated in such foreign currency, or when the Fund believes
that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract
to buy that foreign currency for a fixed dollar amount ("position
hedge"). A Fund will not position hedge with respect to the
currency of a particular country to an extent greater than the
aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in that
particular foreign currency. Instead of entering into a position
hedge, the Fund may, in the alternative, enter into a forward
contract to sell a different foreign currency for a fixed U.S.
dollar amount where the Fund believes that the U.S. dollar value
of the currency to be sold pursuant to the forward contract will
fall whenever there is a decline in the U.S. dollar value of the
currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than
if it had not entered into such forward contracts.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Such
transactions also preclude the opportunity for gain if the value
of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it
anticipates.
Currency Swaps. Currency swaps involve the individually
negotiated exchange by the Fund with another party of a series of
payments in specified currencies. A currency swap may involve
the delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a
currency swap is subject to the risk that the other party to the
swap will default on its contractual delivery obligations. The
Fund will not enter into any currency swap unless the credit
quality of the unsecured senior debt or the claims-paying ability
of the other party thereto is rated in the highest rating
category of at least one nationally recognized rating
organization at the time of entering into the transaction. If
16
<PAGE>
there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements
related to the transactions.
Loans of Portfolio Securities. The risks in lending
portfolio securities, as with other extensions of credit, consist
of possible loss of rights in the collateral should the borrower
fail financially. In determining whether to lend securities to a
particular borrower, Alliance (subject to review by the Fund's
Directors) will consider all relevant facts and circumstances,
including the creditworthiness of the borrower. While securities
are on loan, the borrower will pay the Fund any income earned
thereon and the Fund may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an
agreed upon amount of income from a borrower who has delivered
equivalent collateral. The Fund will have the right to regain
record ownership of loaned securities to exercise beneficial
rights such as voting rights, subscription rights and rights to
dividends, interest or distributions. The Fund may pay
reasonable finders', administrative and custodial fees in
connection with a loan. The Fund will not lend portfolio
securities to any officer, director, employee or affiliate of the
Fund or Alliance.
General. The successful use of the foregoing investment
practices draws upon Alliance's special skills and experience
with respect to such instruments and usually depends on
Alliance's ability to forecast price movements or currency
exchange rate movements correctly. Should prices or exchange
rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the transactions or may realize losses and thus be in
a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on
futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and
adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation
between movements in the prices of such instruments and movements
in the prices of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.
The Fund's ability to dispose of its position in futures
contracts, options and forward contracts depends on the
availability of liquid markets in such instruments. Markets in
options and futures with respect to a number of types of
securities and currencies are relatively new and still
developing, and there is no public market for forward contracts.
It is impossible to predict the amount of trading interest that
may exist in various types of futures contracts, options and
forward contracts. If a secondary market does not exist with
respect to an option purchased or written by the Fund, it might
17
<PAGE>
not be possible to effect a closing transaction in the option
(i.e., dispose of the option) with the result that (i) an option
purchased by the Fund would have to be exercised in order for the
Fund to realize any profit and (ii) the Fund may not be able to
sell currencies covering an option written by the Fund until the
option expires or it delivers the underlying futures contract or
currency upon exercise. Therefore, no assurance can be given
that the Fund will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, the
Fund's ability to engage in options and futures transactions may
be limited by tax considerations. See "Dividends, Distributions
and Taxes" in the Statement of Additional Information of the
Fund.
Future Developments. The Fund may, following written notice
to its shareholders, take advantage of other investment practices
that are not currently contemplated for use by the Fund or are
not available but may yet be developed, to the extent such
investment practices are consistent with the Fund's investment
objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those
involved in the activities described above.
Defensive Position. For temporary defensive purposes, the
Fund may reduce its position in equity securities and increase
without limit its position in short-term, liquid, high-grade debt
securities, which may include U.S. Government securities, bank
deposits, money market instruments, short-term debt securities,
including notes and bonds, and short-term foreign-currency
denominated high-grade debt securities issued by foreign
governmental entities, companies and supranational organizations.
For a complete description of the types of securities the Fund
may invest in while in a temporary defensive position, please see
the Fund's Statement of Additional Information.
Portfolio Turnover. Alliance anticipates that the Fund's
annual rate of turnover generally will not exceed 100%. A 100%
annual turnover rate would occur if all of the securities in the
Fund's portfolio are replaced once in a period of one year. A
high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be
borne by the Fund and its shareholders. High portfolio turnover
also may result in the realization of substantial net short-term
capital gains. See "Dividends, Distributions and Taxes" in the
Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted certain fundamental investment policies
listed below, which may not be changed without the approval of
its shareholders. Additional investment restrictions with
18
<PAGE>
respect to the Fund are set forth in its Statement of Additional
Information.
The Fund may not: (i) purchase more than 10% of the
outstanding voting securities of any one issuer; (ii) invest more
than 15% of the value of its total assets in the securities of
any one issuer or 25% or more of the value of its total assets in
the same industry, except that the Fund will invest more than 25%
of its total assets in Environmental Companies, provided that
this restriction does not apply to U.S. Government securities,
but will apply to foreign government obligations unless the
Commission permits their exclusion; (iii) borrow money or issue
senior securities, except that the Fund may borrow (a) from a
bank if immediately after such borrowing there is asset coverage
of at least 300% as defined in the 1940 Act and (b) for temporary
purposes in an amount not exceeding 5% of the value of the total
assets of the Fund; (iv) pledge, hypothecate, mortgage or
otherwise encumber its assets, except (a) to secure permitted
borrowings and (b) in connection with initial and variation
margin deposits relating to futures contracts; (v) purchase a
security (unless the security is acquired pursuant to a plan of
reorganization or an offer of exchange) if, as a result, the Fund
would own any securities of an open-end investment company or
more than 3% of the total outstanding voting stock of any closed-
end investment company, or more than 5% of the value of the
Fund's total assets would be invested in securities of any
closed-end investment company or more than 10% of such value in
closed-end investment companies in the aggregate; (vi) make short
sales of securities or maintain a short position, unless at all
times when a short position is open it owns an equal amount of
such securities or securities convertible into or exchangeable
for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold
short ("short sales against the box"), and unless not more than
5% of the Fund's net assets (taken at market value) is held as
collateral for such sales at any onetime; or (vii) buy or write
(i.e., sell) put or call options, except (a) the Fund may buy
foreign currency options or write covered foreign currency
options and options on foreign currency futures and (b) the Fund
may purchase warrants.
CERTAIN RISK CONSIDERATIONS
Investment in the Fund involves the special risk consider-
ations described below.
Investing in Environmental Companies. Governmental
regulations or other action can inhibit an Environmental
Company's performance, and it may take years to translate
environmental legislation into sales and profits. Environmental
Companies generally face competition in fields often
19
<PAGE>
characterized by relatively short product cycles and competitive
pricing policies. Losses may result from large product
development or expansion costs, unprotected marketing or
distribution systems, erratic revenue flows and low profit
margins. Additional risks that Environmental Companies may face
include difficulty in financing the high cost of technological
development, uncertainties due to changing regulation or rapid
technological advances, potential liabilities associated with
hazardous components and operations, and difficulty in finding
experienced employees.
The Fund expects that a significant portion of its assets
will be invested in equity securities of smaller companies (i.e.,
companies whose total market capitalization is less than $500
million). Investment in smaller companies involves greater risk
than is customarily associated with the securities of more
established companies. Companies in the earlier stages of their
development often have products and management personnel which
have not been thoroughly tested by time or the marketplace; their
financial resources may not be as substantial as those of more
established companies. The securities of smaller companies may
have relatively limited marketability and may be subject to more
abrupt or erratic market movements than securities of larger
companies or broad market indices. The revenue flow of such
companies may be erratic and their results of operations may
fluctuate widely and may also contribute to stock price
volatility.
Foreign Investment. The securities markets of many foreign
countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited
number of companies representing a small number of industries.
Consequently, the Fund whose investment portfolio includes such
securities may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in
equity securities of United States companies. These markets may
be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States.
Securities registration, custody and settlements may in some
instances be subject to delays and legal and administrative
uncertainties. Certain foreign countries require governmental
approval prior to investments by foreign persons or limit
investment by foreign persons to only a specified percentage of
an issuer's outstanding securities or a specific class of
securities which may have less advantageous terms (including
price) than securities of the company available for purchase by
nationals. These restrictions or controls may at times limit or
preclude investment in certain securities and may increase the
costs and expenses of the Fund. In addition, the patriation of
investment income, capital or the proceeds of sales of securities
20
<PAGE>
from certain of the countries is controlled under regulations,
including in some cases the need for certain advance government
notification or authority, and if a deterioration occurs in a
country's balance of payments, the country could impose temporary
restrictions on foreign capital remittances.
The Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for
repatriation, as well as by the application to it of other
restrictions on investment. Investing in local markets may
require the Fund to adopt special procedures, which may involve
additional costs to the Fund. The liquidity of the Fund's
investments in any country in which any of these factors exists
could be affected and Alliance will monitor the effect of any
such factor or factors on the Fund's investments. Furthermore,
transaction costs including brokerage commissions for
transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the U.S.
Issuers of securities in foreign jurisdictions are generally
not subject to the same degree of regulation as are U.S. issuers
with respect to such matters as insider trading rules,
restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The
reporting, accounting and auditing standards of foreign countries
may differ, in some cases significantly, from U.S. standards in
important respects and less information may be available to
investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available
about certain non-U.S. issuers than is available about U.S.
issuers.
The economies of individual foreign countries may differ
favorably or unfavorably from the U.S. economy in such respects
as growth of gross domestic product or gross national product,
rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes, government regulation, political or social
instability or diplomatic developments could affect adversely the
economy of a foreign country or the Fund's investments in such
country. In the event of expropriation, nationalization or other
confiscation, the Fund could lose its entire investment in the
country involved. In addition, laws in foreign countries
governing business organizations, bankruptcy and insolvency may
provide less protection to security holders such as the Fund than
that provided by U.S. laws.
Currency Considerations. The Fund is permitted to invest
substantially all of its assets in securities denominated in
foreign currencies. A portion of the Fund's revenues
21
<PAGE>
corresponding to its foreign currency denominated investments
will be received in such currencies. Therefore, the dollar
equivalent of the Fund's net assets, income and distributions
could be adversely affected by reductions in the value of certain
foreign currencies relative to the U.S. dollar. The Fund may,
however, attempt to protect itself against adverse changes in the
values of foreign currencies by engaging in certain of the
investment practices listed above. While it has this ability,
there is no certainty as to whether and to what extent it will
engage in these practices. If the value of the foreign
currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making
of Fund distributions, the Fund may be required to liquidate
securities in order to make distributions if it has insufficient
cash in U.S. dollars to meet distribution requirements.
Similarly, if an exchange rate declines between the time the Fund
incurs expenses in U.S. dollars and the time cash expenses are
paid, the amount of the currency required to be converted into
U.S. dollars in order to pay expenses in U.S. dollars could be
greater than the equivalent amount of such expenses in the
currency at the time they were incurred.
U.S. and Foreign Taxes. Foreign taxes paid by the Fund may
be creditable or deductible by U.S. shareholders for U.S. income
tax purposes. No assurance can be given that applicable tax laws
and interpretations will not change in the future. Moreover,
non-U.S. investors may not be able to credit or deduct such
foreign taxes. Investors should review carefully the information
discussed under the heading "Dividends, Distributions and Taxes"
and should discuss with their tax advisers the specific tax
consequences of investing in the Fund.
Non-Diversified Status. The Fund is a "non-diversified"
investment company, which means it is not limited in the
proportion of its assets that may be invested in the securities
of a single issuer. However, the Fund intends to conduct its
operations so as to qualify to be taxed as a "regulated
investment company" for purposes of the Code, which will relieve
the Fund of any liability for federal income tax to the extent
its earnings are distributed to shareholders. See "Dividends,
Distributions and Taxes--U.S. Federal Income Taxes" in the Fund's
Statement of Additional Information. To so qualify, among other
requirements, the Fund will limit its investments so that, at the
close of each quarter of the taxable year, (i) not more than 25%
of the Fund's total assets will be invested in the securities of
a single issuer, and (ii) with respect to 50% of its total
assets, not more than 5% of its total assets will be invested in
the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer.
The Fund's investments in U.S. Government securities are not
subject to these limitations. Because the Fund, a non-
22
<PAGE>
diversified investment company, may invest in a smaller number of
individual issuers than a diversified investment company, an
investment in the Fund may, under certain circumstances, present
greater risk to an investor than an investment in a diversified
investment company.
Foreign government securities are not treated like U.S.
Government securities for purposes of the diversification tests
described in the preceding paragraph, but instead are subject to
these tests in the same manner as the securities of non-
governmental issuers.
________________________________________________________________
PURCHASE AND SALE OF SHARES
________________________________________________________________
HOW TO BUY SHARES
You can purchase shares of the Fund at a price based on
the next calculation of their net asset value after receipt of a
proper purchase order either through broker-dealers, banks or
other financial intermediaries, or directly through Alliance Fund
Distributors, Inc. ("AFD"), the Fund's principal underwriter.
The minimum initial investment in each Fund is $250. The minimum
for subsequent investments in each Fund is $50. Investments of
$25 or more are allowed under the automatic investment program of
each Fund. Share certificates are issued only upon request. See
the Subscription Application and Statement of Additional
Information for more information.
Existing shareholders may make subsequent purchases by
electronic funds transfer if they have completed the Telephone
Transactions section of the Subscription Application or the
Shareholder Options form obtained from Alliance Fund Services,
Inc. ("AFS"), the Fund's registrar, transfer agent and dividend
disbursing agent. Telephone purchase orders can be made by
calling (800) 221-5672 and may not exceed $500,000.
The Fund offers three classes of shares through this
Prospectus, Class A, Class B and Class C. The Fund may refuse
any order to purchase shares. In this regard, the Fund reserves
the right to restrict purchases of Fund shares (including through
exchanges) when they appear to evidence a pattern of frequent
purchases and sales made in response to short-term considerations
Class A Shares--Initial Sales Charge Alternative
You can purchase Class A shares at net asset value plus
an initial sales charge, as follows:
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<PAGE>
Initial Sales Charge
Commission to
as % of Dealer/Agent
Net Amount as % of as % of
Amount Purchased Invested Offering Price Offering Price
Less than $100,000 4.44% 4.25% 4.00%
$100,000 to less
than $250,000 3.36 3.25 3.00
$250,000 to less
than $500,000 2.30 2.25 2.00
$500,000 to less
than $1,000,000 1.78 1.75 1.50
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 accordance
with the Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain
Retirement Plans, Reinstatement Privilege and Sales at Net Asset
Value programs. Consult the Subscription Application and
Statement of Additional Information.
Class B Shares--Deferred Sales Charge Alternative
You can purchase Class B shares at net asset value without an
initial sales charge. However, you may pay a CDSC if you redeem
shares within four years after purchase. The amount of the CDSC
(expressed as a percentage of the lesser of the current net asset
value or original cost) will vary according to the number of
years from the purchase of Class B shares until the redemption of
those shares.
The amount of the CDSC for the Fund is as set forth below.
Year Since Purchase CDSC
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None
Class B shares are subject to higher distribution fees than
Class A shares for a period of eight years (after which they
convert to Class A shares). The higher fees mean a higher
24
<PAGE>
expense ratio, so Class B shares pay correspondingly lower
dividends and may have a lower net asset value than Class A
shares.
Class C Shares--Asset-Based Sales Charge Alternative
You can purchase Class C shares without any initial sales
charge. 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. The higher fees mean a higher expense ratio, so Class
C shares pay correspondingly lower dividends and may have a lower
net asset value than Class A shares.
Class C shares redeemed within one year of purchase will be
subject to a CDSC equal to 1% 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 the 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 Fund Values its Shares
The net asset value of each Class of shares of the Fund is
calculated by dividing the value of the Fund's net assets
allocable to that class by the outstanding shares of that class.
Shares are valued each day the New York Stock Exchange (the
"Exchange") is open as of the close of regular trading (currently
4:00 p.m. Eastern time). The securities in the Fund are valued
at their current market value determined on the basis of market
quotations or, if such quotations are not readily available, such
other methods as the Fund's Directors believe would accurately
reflect fair market value.
General
The decision as to which Class of shares is more beneficial
to you depends on the amount and intended length of your
investment. If you are making a large investment, thus
qualifying for a reduced sales charge, you might consider Class A
shares. If you are making a smaller investment, you might
25
<PAGE>
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
sales charge and, as long as the shares are held for one year or
more, no CDSC. Consult your financial agent. Dealers and agents
may receive different compensation for selling Class A, Class B
or Class C shares. There is no size limit on purchases of
Class A shares. The maximum purchase of Class B shares is
$250,000. The maximum purchase of Class C shares is $1,000,000.
The Fund offers a fourth class of shares, Advisor Class
shares, by means of separate prospectus. Advisor Class shares
may be purchased and held solely by (i) accounts established
under a fee-based program sponsored and maintained by a
registered broker-dealer or other financial intermediary and
approved by AFD, (ii) a self-directed defined contribution
employee benefit plan (e.g., a 401(k) plan) that has at least
1,000 participants or $25 million in assets and (iii) certain
other categories of investors described in the prospectus for the
Advisor Class, including investment advisory clients of, and
certain other persons associated with, Alliance and its
affiliates or the Fund.
Advisor Class shares are offered without any initial sales
charge or CDSC and without an ongoing distribution fee and are
expected, therefore, to have different performance than Class A,
Class B or Class C shares. You may obtain more information about
Advisor Class shares by contacting AFS at (800) 221-5672 or by
contacting your financial representative.
A transaction, service, administrative or other similar fee
may be charged by your broker-dealer, agent, financial
intermediary or other financial representative with respect to
the purchase, sale or exchange of Class A, Class B or Class C
shares made through such financial representative. Such
financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are
different from, or in addition to, those imposed by the Fund,
including requirements as to the minimum initial and subsequent
investment amounts.
In addition to the discount or commission paid to dealers or
agents, AFD from time to time pays additional cash or other
incentives to dealers or agents, including EQ Financial
Consultants, Inc., an affiliate of AFD, in connection with the
sale of shares of the Fund. Such additional amounts may be
utilized, in whole or in part, in some cases together with other
revenues of such dealers or agents, to provide additional
compensation to registered representatives who sell shares of the
Fund. On some occasions, such cash or other incentives will be
conditioned upon the sale of a specified minimum dollar amount of
26
<PAGE>
the shares of the Fund and/or other Alliance Mutual Funds during
a specific period of time. Such incentives may take the form of
payment for attendance at seminars, meals sporting events or
theater performances, or payment: for travel, lodging and
entertainment incurred in connection with travel by persons
associated with a dealer or agent and their immediate family
members to urban or resort locations within or outside the United
States. Such dealer or agent may elect to receive cash
incentives of equivalent amount in lieu of such payments.
HOW TO SELL SHARES
You may "redeem", i.e., sell your shares in the Fund to the
Fund on any day the Exchange is open, either directly or through
your financial intermediary. The price you will receive is the
net asset value (less, any applicable CDSC) next calculated after
the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for
shares recently purchased by check or electronic funds transfer,
the Fund will not send proceeds until it is reasonably satisfied
that the check or electronic funds transfer has been collected
(which may take up to 15 days).
Selling Shares Through Your Financial Representative
Your financial representative must receive your request
before 4:00 p.m. Eastern time, and your financial representative
must transmit your request to the Fund by 5:00 p.m. Eastern time,
for you to receive that days net asset value (less any applicable
CDSC). Your financial representative is responsible for
furnishing all necessary documentation to the Fund and may charge
you for this service.
Selling Shares Directly To The Fund
Send a signed letter of instruction or stock power form to
AFS along with certificates, if any, that represent the shares
you want to sell. For your protection, signatures must be
guaranteed by a bank, a member firm of a national stock exchange
or other eligible guarantor institution. Stock power forms are
available from your financial intermediary, AFS, and many
commercial banks. Additional documentation is required for the
sale of shares by corporations, intermediaries, fiduciaries and
surviving joint owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
(800) 221-5672
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<PAGE>
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 may be made only once
in any 30-day period. A shareholder who has completed the
Telephone Transactions section of the Subscription Application,
or the Shareholder Options form obtained from AFS, can elect to
have the proceeds of 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 Fund may suspend
redemptions or postpone payment for up to seven days or longer,
as permitted by federal securities law. The Fund reserves the
right to close an account that through redemption has remained
below $200 for 90 days. Shareholders will receive 60 days'
written notice to increase the account value before the account
is closed.
During drastic economic or market developments, you might
have difficulty reaching AFS by telephone, in which event you
should issue written instructions to AFS. AFS is not responsible
for the authenticity of telephonic requests to purchase, sell or
exchange shares. AFS will employ reasonable procedures to verify
that telephone requests are genuine, and could be liable for
losses resulting from unauthorized transactions if it failed to
do so. Dealers and agents may charge a commission for handling
telephonic requests. The telephone service may be suspended or
terminated at any time without notice.
SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more
information about these services or your account, call AFS's
toll-free number, (800) 221-5672. Some services are described in
the attached application. A shareholder manual explaining all
available services will be provided upon request. To request a
shareholder manual, call (800) 227-4618.
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<PAGE>
HOW TO EXCHANGE SHARES
You may exchange your shares of the Fund for shares of the
same class of other Alliance Mutual Funds (including 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 the 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, for the purposes of conversion to
Class A shares. After an exchange, your Class B shares will
automatically convert to Class A shares in accordance with the
conversion schedule applicable to the Class B shares of the
Alliance Mutual Fund you originally purchased for cash ("original
shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.
Please read carefully the Prospectus of the mutual fund into
which you are exchanging before submitting the request. Call AFS
at (800) 221-5672 to exchange uncertificated shares. An exchange
is a taxable capital transaction for federal tax purposes. The
exchange service may be changed, suspended, or terminated on 60
days' written notice.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
ADVISER
Alliance has been retained under an advisory agreement
(the "Advisory Agreement") to provide investment advice and, in
general, to conduct the management and investment program of the
Fund, subject to the general supervision and control of the
Directors of the Fund.
Alliance is a leading international investment manager
supervising client accounts with assets as of March 31, 1997 of
more than $182 billion (of which more than $66 billion
represented the assets of investment companies). Alliance's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. The 53 registered investment
companies managed by Alliance comprising more than 115 separate
investment portfolios currently have over one million
shareholders. As of March 31, 1997, Alliance provided investment
29
<PAGE>
management services to employee benefit plans for 31 of the
Fortune 100 companies.
Alliance Capital Management Corporation ("ACMC"), the
sole general partner of, and the owner of a 1% general
partnership interest in, Alliance, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States, which is a wholly-owned subsidiary of The
Equitable Companies Incorporated, a holding company controlled by
AXA-UAP, a French insurance holding company. Certain information
concerning the ownership and control of Equitable by AXA-UAP is
set forth in the Fund's Statement of Additional Information under
"Management of the Fund."
Under the Advisory Agreement, the Fund pays Alliance a
fee at the annual rate of 1.10% of the Fund's average daily net
assets up to $100 million, .95% of the next $100 million of the
Fund's average daily net assets, and .80% of the Fund's average
daily net assets over $200 million. The fee is accrued daily and
paid monthly.
The person primarily responsible for the day-to-day
management of the Fund's portfolio since August 1995 has been
Jeremy R. Kramer, a Vice President of ACMC, with which he has
been associated since 1993. Previously, he was a securities
analyst with Neuberger & Berman.
DISTRIBUTION SERVICES AGREEMENT
Rule 12b-1 adopted by the Commission under the 1940 Act
permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a duly adopted
plan. Effective [ ], 1997, the Fund adopted a "Rule
12b-1 plan" (the "Plan") and entered into a Distribution Services
Agreement (the "Agreement") with AFD. Pursuant to the Plan, the
Fund pays to AFD for distribution expenses a Rule 12b-1
distribution services fee, which may not exceed an annual rate of
.30% 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. The Plan provides that a
portion of the distribution services fee in an amount not to
exceed .25% of the aggregate average daily net assets of the Fund
attributable to each of Class A, Class B and Class C shares
constitutes a service fee used for personal service and/or the
maintenance of shareholder accounts.
The Plan provides that AFD will use the distribution
services fee received from the Fund in its entirety for payments
30
<PAGE>
(i) to compensate broker-dealers or other persons for providing
distribution assistance, (ii) to otherwise promote the sale of
shares of the Fund, and (iii) to compensate broker-dealers,
depository institutions and other financial intermediaries for
providing administrative, accounting and other services with
respect to the Fund's shareholders. In this regard, some
payments under the Plan 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 the Fund by their customers.
Distribution services fees received from the Fund with respect to
Class A shares will not be used to pay any interest expenses,
carrying charges or other financing costs or allocation of
overhead of AFD. Distribution services fees received from the
Fund with respect to Class B and Class C shares may be used for
these purposes. The Plan also provides that Alliance may use its
own resources to finance the distribution of the Fund's shares.
The Fund is not obligated under the Plan to pay any
distribution services fee in excess of the amounts set forth
above. With respect to Class A shares of the Fund, distribution
expenses accrued by AFD in one fiscal year may not be paid from
distribution services fees received from the Fund in subsequent
fiscal years. AFD's compensation with respect to Class B and
Class C shares under the Plan is directly tied to the expenses
incurred by AFD. Actual distribution expenses for such Class B
and Class C shares for any given year, however, will probably
exceed the distribution services fees payable under the Plan and
payments received from CDSCs. The excess will be carried forward
by AFD and reimbursed from distribution services fees payable
under the Plan and payments subsequently received through CDSCs,
so long as the Plan and the Agreement are in effect.
The Plan is in compliance with rules of the National
Association of Securities Dealers, Inc. which effectively limit
the annual asset-based sales charges and service fees that a
mutual fund may pay on a class of shares to .75% and .25%,
respectively, of the average annual net assets attributable to
that class. The rules also limit the aggregate of all front-end,
deferred and asset-based sales charges imposed with respect to a
class of shares by a mutual fund that also charges a service fee
to 6.25% of cumulative gross sales of shares of that class, plus
interest at the prime rate plus 1% per annum.
The Glass-Steagall Act and other applicable laws may
limit the ability of a bank or other depository institution to
become an underwriter or distributor of securities. However, in
the opinion of the Fund's management, based on the advice of
counsel, these laws do not prohibit such depository institutions
from providing services for investment companies such as the
31
<PAGE>
administrative, accounting and other services referred to in the
Agreement. 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.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
DIVIDENDS AND DISTRIBUTIONS
If you receive an income dividend or capital gains
distribution in cash you may, within 120 days following the date
of its payment, reinvest the dividend or distribution in
additional shares of 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.
Each income dividend and capital gains distribution, if
any, declared by the Fund on its outstanding shares will, at the
election of each shareholder, be paid in cash or in additional
shares of the Fund having an aggregate net asset value as of the
payment date of such dividend or distribution equal to the cash
amount of such income dividend or distribution. Election to
receive income dividends and distributions in cash or shares is
made at the time shares are initially purchased and may be
changed at any time prior to the record date for a particular
dividend or distribution. Cash dividends can be paid by check
or, if the shareholder so elects, electronically via the ACH
network. There is no sales or other charge in connection with
the reinvestment of dividends and capital gains distributions.
Dividends paid by the Fund, if any, with respect to Class A,
Class B and Class C shares will be calculated in the same manner
at the same time on the same day and will be in the same amount,
except that the higher distribution services fees applicable to
Class B and C shares and any incremental transfer agency costs
relating to Class B shares, will be borne exclusively by the
class to which they relate.
While it is the intention of the Fund to distribute to
its shareholders substantially all of each fiscal year's net
income and net realized capital gains, if any, the amount and
time of any such dividend or distribution must necessarily depend
upon the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate, and there can be
no assurance that the Fund will pay any dividends or realize any
capital gains.
32
<PAGE>
If you buy shares just before the Fund deducts a
distribution from its net asset value, you will pay the full
price for the shares and then receive a portion of the price back
as a taxable distribution.
FOREIGN INCOME TAXES
Investment income received by the Fund from sources
within foreign countries may be subject to foreign income taxes
withheld at the source. To the extent that the Fund is liable
for foreign income taxes withheld at the source, the Fund
intends, if possible, to operate so as to meet the requirements
of the Code to "pass through" to the Fund's shareholders credits
for foreign income taxes paid, but there can be no assurance that
the Fund will be able to do so.
U.S. FEDERAL INCOME TAXES
The Fund intends to qualify to be taxed as a "regulated
investment company" under the Code. To the extent that the Fund
distributes its taxable income and net capital gain to its
shareholders, qualification as a regulated investment company
relieves the Fund of federal income and excise taxes on that part
of its taxable income including net capital gains which it pays
out to its shareholders. Dividends out of net ordinary income
and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of
corporate shareholders, such dividends may be eligible for the
dividends-received deduction, except that the amount eligible for
the deduction is limited to the amount of qualifying dividends
received by the Fund. A corporation's dividends-received
deduction will be disallowed unless the corporation holds shares
in the Fund at least 46 days. Furthermore, the dividends-
received deduction will be disallowed to the extent a
corporation's investment in shares of the Fund is financed with
indebtedness.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders as capital gains distributions is taxable to the
shareholders as long-term capital gains, irrespective of the
length of time a shareholder may have held his or her stock.
Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.
Under the current federal tax law, the amount of an
income dividend or capital gains distribution declared by the
Fund during October, November or December of a year to
shareholders of record as of a specified date in such a month
that is paid during January of the following year is includable
33
<PAGE>
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 the Fund will have the effect of reducing the net
asset value of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder,
although in effect a return of capital to that particular
shareholder, would be taxable to him or her as described above.
If a shareholder held shares six months or less and during that
period received a distribution taxable to such shareholder as
long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term capital
loss to the extent of such distribution.
A dividend or capital gains distribution with respect to
shares of the Fund held by a tax-deferred or qualified plan, such
as an individual retirement account, 403(b)(7) retirement plan or
corporate pension or profit-sharing plan, will not be taxable to
the plan. Distributions from such plans will be taxable to
individual participants under applicable tax rules without regard
to the character of the income earned by the qualified plan.
Distributions by the Fund may be subject to state and
local taxes.
The Fund will be required to withhold 31% of any
payments made to a shareholder if the shareholder has not
provided a certified taxpayer identification number to the Fund,
or the Secretary of the Treasury notifies the Fund that a
shareholder has not reported all interest and dividend income
required to be shown on the shareholder's Federal income tax
return.
Under certain circumstances, if the Fund realizes losses
from fluctuations in currency exchange rates after paying a
dividend, all or a portion of the dividend may subsequently be
characterized as a return of capital. See "Dividends,
Distributions and Taxes" in the Statement of Additional
Information. Shareholders will be advised annually as to the
federal tax status of income dividends and capital gain and
return of capital distributions made by the Fund for the
preceding year. Distributions by the Fund may be subject to
state and local taxes. Shareholders are urged to consult their
tax advisers regarding their own tax situation.
34
<PAGE>
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
PORTFOLIO TRANSACTIONS
Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking
best price and execution, the Fund may consider sales of its
shares as a factor in the selection of dealers to enter into
portfolio transactions with the Fund.
ORGANIZATION
The Fund is a Maryland corporation organized on
February 20, 1990. It commenced operations, as a closed-end
management investment company, on June 1, 1990. Effective
[ ], 1997, the Fund converted to an open-end management
investment company and all shares of its common stock then
outstanding were reclassified as Class A shares. The Fund
commenced a continuous public offering of its Class A shares,
Class B shares, Class C shares and Advisor Class shares on
[ ], 1997. It is anticipated that annual shareholder
meetings will not be held; shareholder meetings will be held only
when required by federal or state law. Shareholders have
available certain procedures for the removal of Directors.
A shareholder in the Fund will be entitled to share pro
rata with other holders of the same class of shares in all
dividends and distributions arising from the Fund's assets and,
upon redeeming shares, will receive the then current net asset
value of the Fund represented by the redeemed shares less any
applicable CDSC or fee. The Fund is empowered to establish,
without shareholder approval, additional portfolios, which may
have different investment objectives, and additional classes of
shares. If an additional portfolio or class were established in
the Fund, each share of the portfolio or class would normally be
entitled to one vote for all purposes. Generally, shares of each
portfolio and class would vote as a single series or class on
matters, such as the election of Directors, that affect each
portfolio or class in substantially the same manner. Class A,
Class B, Class C and Advisor Class shares have identical voting,
dividend, liquidation and other rights, except that each class
bears its own transfer agency expenses, each of Class A, Class B
and Class C shares bears its own distribution expenses, Class B
shares convert to Class A shares after eight years and Advisor
Class shares convert to Class A shares under certain
circumstances. Each class of shares votes separately with
respect to the Fund's Rule 12b-1 distribution plan and other
matters for which separate class voting is appropriate under
35
<PAGE>
applicable law. Shares are freely transferable, are entitled to
dividends as determined by the Directors and, in liquidation of
the Fund, are entitled to receive the net assets of the Fund.
Certain additional matters relating to the Fund's organization
are discussed in its Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND
DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance,
located at 500 Plaza Drive, Secaucus, New Jersey 07094, acts as
the Fund's registrar, transfer agent and dividend-disbursing
agent for a fee based upon the number of shareholder accounts
maintained for the Fund. The transfer agency fee with respect to
the Class B shares will be higher than the transfer agency fee
with respect to the Class A shares or Class C shares.
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance,
located at 1345 Avenue of the Americas, New York, New York 10105,
is the principal underwriter of shares of the Fund.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return,
which is computed separately for Class A, Class B and Class C
shares. Such advertisements disclose the Fund's average annual
compounded total return for the periods prescribed by the
Commission. The Fund's total return for each such period is
computed by finding, through the use of a formula prescribed by
the Commission, the average annual compounded rate of return over
the period that would equate an assumed initial amount invested
to the value of the investment at the end of the period. For
purposes of computing total return, income, dividends and capital
gains distributions paid on shares of the Fund are assumed to
have been reinvested when paid and the maximum sales charges
applicable to purchases and redemptions of the Fund's shares are
assumed to have been paid. The Fund's advertisements may quote
performance rankings or ratings of the Fund by financial
publications or independent organizations such as Lipper
Analytical Services, Inc. and Morningstar, Inc. or compare the
Fund's 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 Fund with the Commission under the
Securities Act. Copies of the Registration Statement may be
36
<PAGE>
obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in
Washington, D.C.
37
00250070.AP5
<PAGE>
ALLIANCE GLOBAL ENVIRONMENT FUND
c/o Alliance Fund Services, Inc.
P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618
Prospectus and Application
[Advisor Class]
[ ], 1997
Table of Contents Page
The Fund at a Glance....................................
Expense Information.....................................
Glossary................................................
Description of the Fund.................................
Investment Objective.................................
Investment Policies..................................
Additional Investment Practices......................
Certain Fundamental Investment
Policies..........................................
Certain Risk Considerations .........................
Purchase and Sale of Shares.............................
Management of the Fund..................................
Dividends, Distributions and Taxes......................
Conversion Feature......................................
General Information.....................................
Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105
<PAGE>
Alliance Global Environment Fund, Inc. (the "Fund") seeks long-
term capital appreciation through investment in equity securities
of companies expected to benefit from advances or improvements in
products, processes or services intended to foster the protection
of the environment.
The Fund is an open-end, non-diversified, management investment
company. This Prospectus sets forth concisely the information
that a prospective investor should know about the Fund before
investing. A "Statement of Additional Information" for the Fund
dated [ ], 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 indicated address or call the
"For Literature" telephone number shown above.
This Prospectus offers the Advisor Class shares of the Fund,
which may be purchased at net asset value without any initial or
contingent deferred sales charges and without ongoing
distribution expenses. Advisor Class shares are offered solely
to (i) investors participating in fee-based programs meeting
certain standards established by Alliance Fund Distributors,
Inc., the Fund's principal underwriter, (ii) participants in
self-directed defined contribution employee benefit plans (e.g.,
401(k) plans) that meet certain minimum standards and
(iii) certain other categories of investors described in the
Prospectus, including investment advisory clients, of, and
certain persons associated with, Alliance Capital Management L.P.
and its affiliates or the Fund. See "Purchase and Sale of
Shares."
An investment in these securities is not a deposit or obligation
of, or guaranteed or endorsed by, any bank and is not federally
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other agency.
Investors are advised to read this Prospectus carefully and to
retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
[Alliance Logo] (R)/SM These are registered marks used under
license from the owner, Alliance Capital Management L.P.
2
<PAGE>
The Fund At A Glance
The following summary is qualified in its entirety by the more
detailed information contained inside this Prospectus.
The Fund's Investment Adviser 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 $182
billion in assets under management as of March 31, 1997.
Alliance provides investment management services to employee
benefit plans for 31 of the FORTUNE 100 companies.
The Fund
Seeks . . . Long-term capital appreciation.
Invests principally in . . . A non-diversified portfolio of
equity securities of companies expected to benefit from advances
or improvements in products, processes or services intended to
foster the protection of the environment ("Eligible Companies").
A Word About Risk . . .
The price of shares of the Fund will fluctuate as the daily
prices of the individual stocks and other equity securities in
which it invests fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost. Because the
Fund will invest in foreign currency denominated securities,
these fluctuations may be magnified by changes in foreign
exchange rates. The Fund invests substantially all of its assets
in equity securities of Eligible Companies. As a consequence,
the Fund is subject to certain additional risks not typically
associated with funds that have more diversified portfolios and
that do not concentrate their investments in equity securities of
Eligible Companies. See "Certain Risk Considerations" below.
Investment in the Fund involves risks not associated with funds
that invest primarily in securities of U.S. issuers. While the
Fund invests principally in common stocks and other equity
securities, in order to achieve its investment objectives the
Fund may at times use certain types of investment derivatives,
such as options, futures, forwards and swaps. These involve
risks different from, and, in certain cases, greater than, the
risks presented by more traditional investments. These risks are
more fully discussed in this Prospectus.
3
<PAGE>
Getting Started . . .
Shares of the Fund are available through your financial
representative. The Fund offers multiple classes of shares, of
which only the Advisor Class is offered by this Prospectus.
Advisor Class shares may be purchased at net asset value without
any initial or contingent deferred sales charges and are not
subject to ongoing distribution expenses. Advisor Class shares
may be purchased and held solely (i) through accounts established
under a fee-based program, sponsored and maintained by a
registered broker-dealer or other financial intermediary and
approved by Alliance Fund Distributors, Inc. ("AFD"), the Fund's
principal underwriter, (ii) through a self-directed defined
contribution employee benefit plan (e.g., a 401(k) plan) that has
at least 1,000 participants or $25 million in assets, (iii) by
investment advisory clients of, and certain other persons
associated with, Alliance and its affiliates or the Fund, and
(iv) through 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 AFD and clients of such registered investment
advisers or financial intermediaries whose accounts are linked to
the master account of such investment adviser or financial
intermediary on the books of such approved broker or agent. A
shareholder's Advisor Class shares will automatically convert to
Class A shares of the Fund under certain circumstances. See
"Conversion Feature--Conversion to Class A Shares." Generally, a
fee-based program must charge an asset-based or other similar fee
and must invest in the aggregate at least $250,000 in Advisor
Class shares of the Fund in order to be approved by AFD for
investment in Advisor Class shares. For more detailed
information about who may purchase and hold Advisor Class shares
see the Statement of Additional Information. Fee-based and other
programs through which Advisor Class shares may be purchased may
impose different requirements with respect to investment in
Advisor Class shares than described above. For detailed
information about purchasing and selling shares, see "Purchase
and Sale of Shares."
ALLIANCE LOGO
(R)/SM These are registered marks used under license from the
owner, Alliance Capital Management L.P.
4
<PAGE>
________________________________________________________________
EXPENSE INFORMATION
________________________________________________________________
Shareholder Transaction Expenses are one of several factors to
consider when you invest in the Fund. The following table
summarizes your maximum transaction costs from investing in the
Advisor Class shares of the Fund and annual expenses for Advisor
Class shares of the Fund. The Example following the table below
shows the cumulative expenses attributable to a hypothetical
$1,000 investment in Advisor Class shares for the periods
specified.
Maximum sales charge imposed on
purchases (as a percentage of
offering price None
Sales charge imposed on
dividend reinvestments None
Deferred sales charge None
Exchange fee None
________________________________________________________________
Operating Expenses
Management fees 1.10%
12b-1 fees None
Other expenses (a) [ ]
Total fund operating
expenses [ ]
=====
Example
After 1 year $[ ]
After 3 years $[ ]
After 5 years $[ ]
After 10 years $[ ]
________________________________________________________________
(a) These expenses include a transfer agency fee payable to
Alliance Fund Services, Inc., an affiliate of Alliance, based
on a fixed dollar amount charged to the Fund for each
shareholder's account.
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. The Example set forth
above assumes reinvestment of all dividends and distributions and
utilizes a 5% annual rate as mandated by Commission regulations.
"Other Expenses" are based on estimated amounts for the Fund's
5
<PAGE>
current fiscal year. THE EXAMPLE SHOULD NOT BE CONSIDERED
REPRESENTATIVE OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
6
<PAGE>
________________________________________________________________
GLOSSARY
________________________________________________________________
The following terms are frequently used in this Prospectus. Many
of these terms are explained in greater detail under "Description
of the Fund - Additional Investment Practices."
Eligible Companies are companies expected to benefit from
advances or improvements in products, processes or services
intended to foster the protection of the environment.
Environmental Companies are Eligible Companies that have a
principal business involving the sale of systems or services
intended to foster environmental protection, such as waste
treatment and disposal, remediation, air pollution control and
recycling.
Beneficiary Companies are Eligible Companies whose principal
businesses lie outside the environmental sector but nevertheless
anticipate environmental regulations or consumer preferences
through the development of new products, processes or services
that are intended to contribute to a cleaner and healthier
environment, such as companies that anticipate the demand for
plastic substitutes, aerosol substitutes, alternative fuels and
processes that generate less hazardous wastes.
Equity Securities are common stocks (but not preferred stocks),
rights or warrants to subscribe for or purchase common stocks,
and preferred stocks or debt securities that are convertible into
common stocks without the payment of any further consideration.
Rule 144A securities are securities that may be resold pursuant
to Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act").
U.S. Government securities are securities issued or guaranteed by
the United States Government, its agencies or instrumentalities.
Depositary receipts include American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs") and other types of
depositary receipts.
1940 Act is the Investment Company Act of 1940, as amended.
Commission is the U.S. Securities and Exchange Commission.
Code is the Internal Revenue Code of 1986, as amended.
7
<PAGE>
___________________________________________________________
DESCRIPTION OF THE FUND
___________________________________________________________
The Fund is a non-diversified management investment company.
Until [ ], 1997, the Fund operated as a closed-end
investment company, and its common stock (which then comprised a
single class) was listed on the New York Stock Exchange. The
Fund's investment objective is "fundamental" and cannot be
changed without a shareholder vote. Except as noted, the Fund's
investment policies are not fundamental and thus can be changed
without a shareholder vote. The Fund will not change these
policies without notifying its shareholders. There is no
guarantee that the Fund will achieve its investment objective.
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term capital
appreciation through investment in equity securities (i.e.,
common stocks (but not preferred stocks), rights or warrants to
subscribe for or purchase common stocks, and preferred stocks or
debt securities that are convertible into common stocks without
the payment of any further consideration) of Eligible Companies.
INVESTMENT POLICIES
The Fund will invest in two categories of Eligible
Companies--"Environmental Companies" and "Beneficiary Companies."
Environmental Companies are those that have a principal business
involving the sale of systems or services intended to foster
environmental protection, such as waste treatment and disposal,
remediation, air pollution control and recycling. Under normal
circumstances, the Fund will invest at least 65% of its total
assets in equity securities of Environmental Companies.
Beneficiary Companies are those whose principal businesses lie
outside the environmental sector but nevertheless anticipate
environmental regulations or consumer preferences through the
development of new products, processes or services that are
intended to contribute to a cleaner and healthier environment.
Examples of such companies could be companies that anticipate the
demand for plastic substitutes, aerosol substitutes, alternative
fuels and processes that generate less hazardous wastes. In this
regard, the Fund may invest in an issuer with a broadly-
diversified business, only a part of which provides such
products, processes or services, when Alliance believes that
these products, processes or services will yield a competitive
advantage that significantly enhances the issuer's growth
prospects. As a matter of fundamental policy, the Fund will,
under normal circumstances, invest substantially all of its total
assets in equity securities of Eligible Companies.
8
<PAGE>
A major premise of the Fund's investment approach is that
environmental concerns will be a significant source of future
growth opportunities, and that Environmental Companies will see
an increased demand for their systems and services.
Environmental Companies operate in the areas of pollution
control, clean energy, solid waste management, hazardous waste
treatment and disposal, pulp and paper recycling, waste-to-energy
alternatives, biodegradable cartons, packages, plastics and other
products, remedial projects and emergency cleanup efforts,
manufacture of environmental supplies and equipment, the
achievement of purer air, groundwater and foods and the
detection, evaluation and treatment of both existing and
potential environmental problems including, among others, air
pollution and acid rain.
The environmental services industry is generally positively
affected by increasing governmental action intended to foster
environmental protection. As environmental regulations are
developed and enforced, Environmental Companies providing the
means of compliance with such regulations are afforded
substantial opportunities for growth. Beneficiary Companies may
also derive an advantage to the extent that they have anticipated
environmental regulation and are therefore at a competitive
advantage.
In the view of Alliance, increasing public and political
awareness of environmental concerns and resultant environmental
regulations are long-term phenomena which are driven by an
emerging global consensus that environmental protection is a
vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other
economically developed countries will have increasing
opportunities for earnings growth resulting not only from an
increased demand for their existing products or services but also
from innovative responses to changing regulations and priorities
and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also
within many economically developing countries, such as those of
Eastern Europe and the Pacific Rim. These countries lag well
behind developed countries in the conservation and efficient use
of natural resources and in their implementation of policies
which protect the environment.
Alliance believes that global investing offers opportunities
for superior investment returns. The Fund intends to spread
investment risk among the capital markets of a number of
countries and will invest in equity securities of companies based
in at least three, and normally considerably more, such
countries. The percentage of the Fund's assets invested in
securities of companies in a particular country or denominated in
a particular currency will vary in accordance with Alliance's
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assessment of the appreciation potential of such securities and
the strength of that currency. As of [ ], 1997, [ ]%
of the Fund's net assets were invested in equity securities of
U.S. companies.
The Fund may also: (i) invest up to 20% of its total assets
in warrants to purchase equity securities to the extent
consistent with its investment objective; (ii) invest in
depositary receipts; (iii) purchase and write put and call
options on foreign currencies for hedging purposes; (iv) enter
into forward foreign currency transactions for hedging purposes;
(v) invest in currency futures and options on such futures for
hedging purposes; and (vi) make secured loans of its portfolio
securities not in excess of 30% of its total assets. For
additional information on the use, risks and costs of these
policies and practices see "Additional Investment Policies and
Practices". The Fund may borrow to the maximum extent permitted
under the 1940 Act in order to repurchase its shares or to meet
redemption requests. In addition, the Fund may borrow for
temporary purposes (including the purposes mentioned in the
preceding sentence) in an amount not exceeding 5% of the value of
the assets of the Fund. See "Certain Fundamental Investment
Policies."
ADDITIONAL INVESTMENT PRACTICES
The Fund may engage in the following investment practices to
the extent described above.
Rights and Warrants. Rights and warrants entitle the holder
to buy equity securities at a specific price for a specific
period of time. Rights are similar to warrants except that they
have a substantially shorter duration. Rights and warrants may
be considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with
the value of the underlying securities, however, although the
value of a right or warrant may decline because of a decrease in
the value of the underlying stock, the passage of time or a
change in perception as to the potential of the underlying stock,
or any combination thereof. If the market price of the
underlying stock is below the exercise price set forth in the
warrant on the expiration date, the warrant will expire
worthless. Moreover, a right or warrant ceases to have value if
it is not exercised prior to the expiration date.
Convertible Securities. Prior to conversion, convertible
preferred stocks and convertible debt securities have the same
general characteristics as non-convertible preferred stocks and
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<PAGE>
non-convertible debt securities, which generally provide a stable
stream of income with generally higher yields than those of
common stocks of the same or similar issuers. The price of a
convertible security will normally vary with changes in the price
of the underlying common stock, although the higher yield tends
to make the price of the convertible security less volatile than
that of the underlying common stock. As with non-convertible
preferred stocks and debt securities, the market values of
convertible securities tend to decline as interest rates increase
and increase as interest rates decline. While convertible
securities generally offer lower dividend or interest yields than
non-convertible securities of similar quality, they enable
investors to benefit from increases in the market prices of the
underlying common stocks.
Depositary Receipts. Depositary receipts may not necessarily
be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of
the stock of unsponsored depositary receipts are not obligated to
disclose material information in the United States and,
therefore, there may not be a correlation between such
information and the market value of the depositary receipts.
ADRs are depositary receipts typically issued by a U.S. bank or
trust company that evidence ownership of underlying securities
issued by a foreign corporation. GDRs and other types of
depositary receipts are typically issued by foreign banks or
trust companies and evidence ownership of underlying securities
issued by either a foreign or a U.S. company. Generally,
depositary receipts in registered form are designed for use in
the U.S. securities markets and depositary receipts in bearer
form are designed for use in foreign securities markets. For
purposes of determining the country of issuance, the investments
of the Fund in depositary receipts are deemed to be investments
in the underlying securities.
Illiquid Securities. The Fund will not maintain more than
15% of its net assets in illiquid securities. Illiquid
securities include direct placements or other securities that are
subject to legal or contractual restrictions on resale or for
which there is no readily available market (e.g. when trading in
the security is suspended or, in the case of unlisted securities,
when market makers do not exist or will not entertain bids or
offers), and many individually negotiated currency swaps.
Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize their full value
upon sale. Alliance will monitor the illiquidity of such
securities with respect to the Fund under the supervision of the
Directors of the Fund. To the extent permitted by applicable
law, Rule 144A securities will not be treated as "illiquid" for
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<PAGE>
purposes of the foregoing restriction so long as such securities
meet liquidity guidelines established by the Fund's Directors.
The Fund may not be able to readily sell securities for which
there is no ready market. To the extent that these securities
are foreign securities, there is no law in many of the countries
in which the Fund may invest similar to the Securities Act,
requiring an issuer to register the sale of securities with a
governmental agency or imposing legal restrictions on resales of
securities, either as to length of time the securities may be
held or manner of resale. However, there may be contractual
restrictions on resale of securities.
Futures Contracts and Options on Futures Contracts. A "sale"
of a futures contract means the acquisition of a contractual
obligation to deliver the foreign currency called for by the
contract at a specified price on a specified date. A "purchase"
of a futures contract means the incurring of an obligation to
acquire the securities, foreign currency called for by the
contract at a specified price on a specified date.
Options on futures contracts written or purchased by the Fund
will be traded on U.S. or foreign exchanges or over-the-counter.
These investment techniques will be used only to hedge against
anticipated future changes in exchange rates which otherwise
might either adversely affect the value of the Fund's portfolio
securities or adversely affect the prices of securities which the
Fund intends to purchase at a later date.
Options on Foreign Currencies. As in the case of other kinds
of options the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium
received, and the Fund could be required to purchase or sell
foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on a foreign
currency may constitute an effective hedge against fluctuations
in exchange rates although, in the event of rate movements
adverse to the Fund's position, it may forfeit the entire amount
of the premium plus related transaction costs. See the Statement
of Additional Information of the Fund for further discussion of
the use, risks and costs of options on foreign currencies.
Forward Foreign Currency Exchange Contracts. The Fund may
purchase or sell forward contracts so as to minimize the risk to
it from adverse changes in the relationship between the U.S.
dollar and other currencies. A forward contract is an obligation
to purchase or sell a specific currency for an agreed price at a
future date, and is individually negotiated and privately traded.
The Fund may enter into a forward contract, for example, when
it enters into a contract for the purchase or sale of a security
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<PAGE>
denominated in a foreign currency in order to "lock in" the U.S.
Dollar price of the security ("transaction hedge"). The Fund may
not engage in transaction hedges with respect to the currency of
a particular country to an extent greater than the aggregate
amount of the Fund's transactions in that currency. When the
Fund believes that a foreign currency may suffer a substantial
decline against the U.S. dollar, it may enter into a forward sale
contract to sell an amount of that foreign currency approximating
the value of some or all of the Fund's portfolio securities
denominated in such foreign currency, or when the Fund believes
that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract
to buy that foreign currency for a fixed dollar amount ("position
hedge"). A Fund will not position hedge with respect to the
currency of a particular country to an extent greater than the
aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in that
particular foreign currency. Instead of entering into a position
hedge, the Fund may, in the alternative, enter into a forward
contract to sell a different foreign currency for a fixed U.S.
dollar amount where the Fund believes that the U.S. dollar value
of the currency to be sold pursuant to the forward contract will
fall whenever there is a decline in the U.S. dollar value of the
currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than
if it had not entered into such forward contracts.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Such
transactions also preclude the opportunity for gain if the value
of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it
anticipates.
Currency Swaps. Currency swaps involve the individually
negotiated exchange by the Fund with another party of a series of
payments in specified currencies. A currency swap may involve
the delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a
currency swap is subject to the risk that the other party to the
swap will default on its contractual delivery obligations. The
Fund will not enter into any currency swap unless the credit
quality of the unsecured senior debt or the claims-paying ability
of the other party thereto is rated in the highest rating
category of at least one nationally recognized rating
organization at the time of entering into the transaction. If
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<PAGE>
there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements
related to the transactions.
Loans of Portfolio Securities. The risks in lending
portfolio securities, as with other extensions of credit, consist
of possible loss of rights in the collateral should the borrower
fail financially. In determining whether to lend securities to a
particular borrower, Alliance (subject to review by the Fund's
Directors) will consider all relevant facts and circumstances,
including the creditworthiness of the borrower. While securities
are on loan, the borrower will pay the Fund any income earned
thereon and the Fund may invest any cash collateral in portfolio
securities, thereby earning additional income, or receive an
agreed upon amount of income from a borrower who has delivered
equivalent collateral. The Fund will have the right to regain
record ownership of loaned securities to exercise beneficial
rights such as voting rights, subscription rights and rights to
dividends, interest or distributions. The Fund may pay
reasonable finders', administrative and custodial fees in
connection with a loan. The Fund will not lend portfolio
securities to any officer, director, employee or affiliate of the
Fund or Alliance.
General. The successful use of the foregoing investment
practices draws upon Alliance's special skills and experience
with respect to such instruments and usually depends on
Alliance's ability to forecast price movements or currency
exchange rate movements correctly. Should prices or exchange
rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the transactions or may realize losses and thus be in
a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on
futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and
adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation
between movements in the prices of such instruments and movements
in the prices of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.
The Fund's ability to dispose of its position in futures
contracts, options and forward contracts depends on the
availability of liquid markets in such instruments. Markets in
options and futures with respect to a number of types of
securities and currencies are relatively new and still
developing, and there is no public market for forward contracts.
It is impossible to predict the amount of trading interest that
may exist in various types of futures contracts, options and
forward contracts. If a secondary market does not exist with
respect to an option purchased or written by the Fund, it might
14
<PAGE>
not be possible to effect a closing transaction in the option
(i.e., dispose of the option) with the result that (i) an option
purchased by the Fund would have to be exercised in order for the
Fund to realize any profit and (ii) the Fund may not be able to
sell currencies covering an option written by the Fund until the
option expires or it delivers the underlying futures contract or
currency upon exercise. Therefore, no assurance can be given
that the Fund will be able to utilize these instruments
effectively for the purposes set forth above. Furthermore, the
Fund's ability to engage in options and futures transactions may
be limited by tax considerations. See "Dividends, Distributions
and Taxes" in the Statement of Additional Information of the
Fund.
Future Developments. The Fund may, following written notice
to its shareholders, take advantage of other investment practices
that are not currently contemplated for use by the Fund or are
not available but may yet be developed, to the extent such
investment practices are consistent with the Fund's investment
objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those
involved in the activities described above.
Defensive Position. For temporary defensive purposes, the
Fund may reduce its position in equity securities and increase
without limit its position in short-term, liquid, high-grade debt
securities, which may include U.S. Government securities, bank
deposits, money market instruments, short-term debt securities,
including notes and bonds, and short-term foreign-currency
denominated high-grade debt securities issued by foreign
governmental entities, companies and supranational organizations.
For a complete description of the types of securities the Fund
may invest in while in a temporary defensive position, please see
the Fund's Statement of Additional Information.
Portfolio Turnover. Alliance anticipates that the Fund's
annual rate of turnover generally will not exceed 100%. A 100%
annual turnover rate would occur if all of the securities in the
Fund's portfolio are replaced once in a period of one year. A
high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be
borne by the Fund and its shareholders. High portfolio turnover
also may result in the realization of substantial net short-term
capital gains. See "Dividends, Distributions and Taxes" in the
Fund's Statement of Additional Information.
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted certain fundamental investment policies
listed below, which may not be changed without the approval of
its shareholders. Additional investment restrictions with
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<PAGE>
respect to the Fund are set forth in its Statement of Additional
Information.
The Fund may not: (i) purchase more than 10% of the
outstanding voting securities of any one issuer; (ii) invest more
than 15% of the value of its total assets in the securities of
any one issuer or 25% or more of the value of its total assets in
the same industry, except that the Fund will invest more than 25%
of its total assets in Environmental Companies, provided that
this restriction does not apply to U.S. Government securities,
but will apply to foreign government obligations unless the
Commission permits their exclusion; (iii) borrow money or issue
senior securities, except that the Fund may borrow (a) from a
bank if immediately after such borrowing there is asset coverage
of at least 300% as defined in the 1940 Act and (b) for temporary
purposes in an amount not exceeding 5% of the value of the total
assets of the Fund; (iv) pledge, hypothecate, mortgage or
otherwise encumber its assets, except (a) to secure permitted
borrowings and (b) in connection with initial and variation
margin deposits relating to futures contracts; (v) purchase a
security (unless the security is acquired pursuant to a plan of
reorganization or an offer of exchange) if, as a result, the Fund
would own any securities of an open-end investment company or
more than 3% of the total outstanding voting stock of any closed-
end investment company, or more than 5% of the value of the
Fund's total assets would be invested in securities of any
closed-end investment company or more than 10% of such value in
closed-end investment companies in the aggregate; (vi) make short
sales of securities or maintain a short position, unless at all
times when a short position is open it owns an equal amount of
such securities or securities convertible into or exchangeable
for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold
short ("short sales against the box"), and unless not more than
5% of the Fund's net assets (taken at market value) is held as
collateral for such sales at any onetime; or (vii) buy or write
(i.e., sell) put or call options, except (a) the Fund may buy
foreign currency options or write covered foreign currency
options and options on foreign currency futures and (b) the Fund
may purchase warrants.
CERTAIN RISK CONSIDERATIONS
Investment in the Fund involves the special risk consider-
ations described below.
Investing in Environmental Companies. Governmental
regulations or other action can inhibit an Environmental
Company's performance, and it may take years to translate
environmental legislation into sales and profits. Environmental
Companies generally face competition in fields often
16
<PAGE>
characterized by relatively short product cycles and competitive
pricing policies. Losses may result from large product
development or expansion costs, unprotected marketing or
distribution systems, erratic revenue flows and low profit
margins. Additional risks that Environmental Companies may face
include difficulty in financing the high cost of technological
development, uncertainties due to changing regulation or rapid
technological advances, potential liabilities associated with
hazardous components and operations, and difficulty in finding
experienced employees.
The Fund expects that a significant portion of its assets
will be invested in equity securities of smaller companies (i.e.,
companies whose total market capitalization is less than $500
million). Investment in smaller companies involves greater risk
than is customarily associated with the securities of more
established companies. Companies in the earlier stages of their
development often have products and management personnel which
have not been thoroughly tested by time or the marketplace; their
financial resources may not be as substantial as those of more
established companies. The securities of smaller companies may
have relatively limited marketability and may be subject to more
abrupt or erratic market movements than securities of larger
companies or broad market indices. The revenue flow of such
companies may be erratic and their results of operations may
fluctuate widely and may also contribute to stock price
volatility.
Foreign Investment. The securities markets of many foreign
countries are relatively small, with the majority of market
capitalization and trading volume concentrated in a limited
number of companies representing a small number of industries.
Consequently, the Fund whose investment portfolio includes such
securities may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in
equity securities of United States companies. These markets may
be subject to greater influence by adverse events generally
affecting the market, and by large investors trading significant
blocks of securities, than is usual in the United States.
Securities registration, custody and settlements may in some
instances be subject to delays and legal and administrative
uncertainties. Certain foreign countries require governmental
approval prior to investments by foreign persons or limit
investment by foreign persons to only a specified percentage of
an issuer's outstanding securities or a specific class of
securities which may have less advantageous terms (including
price) than securities of the company available for purchase by
nationals. These restrictions or controls may at times limit or
preclude investment in certain securities and may increase the
costs and expenses of the Fund. In addition, the patriation of
investment income, capital or the proceeds of sales of securities
17
<PAGE>
from certain of the countries is controlled under regulations,
including in some cases the need for certain advance government
notification or authority, and if a deterioration occurs in a
country's balance of payments, the country could impose temporary
restrictions on foreign capital remittances.
The Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for
repatriation, as well as by the application to it of other
restrictions on investment. Investing in local markets may
require the Fund to adopt special procedures, which may involve
additional costs to the Fund. The liquidity of the Fund's
investments in any country in which any of these factors exists
could be affected and Alliance will monitor the effect of any
such factor or factors on the Fund's investments. Furthermore,
transaction costs including brokerage commissions for
transactions both on and off the securities exchanges in many
foreign countries are generally higher than in the U.S.
Issuers of securities in foreign jurisdictions are generally
not subject to the same degree of regulation as are U.S. issuers
with respect to such matters as insider trading rules,
restrictions on market manipulation, shareholder proxy
requirements and timely disclosure of information. The
reporting, accounting and auditing standards of foreign countries
may differ, in some cases significantly, from U.S. standards in
important respects and less information may be available to
investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available
about certain non-U.S. issuers than is available about U.S.
issuers.
The economies of individual foreign countries may differ
favorably or unfavorably from the U.S. economy in such respects
as growth of gross domestic product or gross national product,
rate of inflation, capital reinvestment, resource self-
sufficiency and balance of payments position. Nationalization,
expropriation or confiscatory taxation, currency blockage,
political changes, government regulation, political or social
instability or diplomatic developments could affect adversely the
economy of a foreign country or the Fund's investments in such
country. In the event of expropriation, nationalization or other
confiscation, the Fund could lose its entire investment in the
country involved. In addition, laws in foreign countries
governing business organizations, bankruptcy and insolvency may
provide less protection to security holders such as the Fund than
that provided by U.S. laws.
Currency Considerations. The Fund is permitted to invest
substantially all of its assets in securities denominated in
foreign currencies. A portion of the Fund's revenues
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<PAGE>
corresponding to its foreign currency denominated investments
will be received in such currencies. Therefore, the dollar
equivalent of the Fund's net assets, income and distributions
could be adversely affected by reductions in the value of certain
foreign currencies relative to the U.S. dollar. The Fund may,
however, attempt to protect itself against adverse changes in the
values of foreign currencies by engaging in certain of the
investment practices listed above. While it has this ability,
there is no certainty as to whether and to what extent it will
engage in these practices. If the value of the foreign
currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making
of Fund distributions, the Fund may be required to liquidate
securities in order to make distributions if it has insufficient
cash in U.S. dollars to meet distribution requirements.
Similarly, if an exchange rate declines between the time the Fund
incurs expenses in U.S. dollars and the time cash expenses are
paid, the amount of the currency required to be converted into
U.S. dollars in order to pay expenses in U.S. dollars could be
greater than the equivalent amount of such expenses in the
currency at the time they were incurred.
U.S. and Foreign Taxes. Foreign taxes paid by the Fund may
be creditable or deductible by U.S. shareholders for U.S. income
tax purposes. No assurance can be given that applicable tax laws
and interpretations will not change in the future. Moreover,
non-U.S. investors may not be able to credit or deduct such
foreign taxes. Investors should review carefully the information
discussed under the heading "Dividends, Distributions and Taxes"
and should discuss with their tax advisers the specific tax
consequences of investing in the Fund.
Non-Diversified Status. The Fund is a "non-diversified"
investment company, which means it is not limited in the
proportion of its assets that may be invested in the securities
of a single issuer. However, the Fund intends to conduct its
operations so as to qualify to be taxed as a "regulated
investment company" for purposes of the Code, which will relieve
the Fund of any liability for federal income tax to the extent
its earnings are distributed to shareholders. See "Dividends,
Distributions and Taxes--U.S. Federal Income Taxes" in the Fund's
Statement of Additional Information. To so qualify, among other
requirements, the Fund will limit its investments so that, at the
close of each quarter of the taxable year, (i) not more than 25%
of the Fund's total assets will be invested in the securities of
a single issuer, and (ii) with respect to 50% of its total
assets, not more than 5% of its total assets will be invested in
the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer.
The Fund's investments in U.S. Government securities are not
subject to these limitations. Because the Fund, a non-
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<PAGE>
diversified investment company, may invest in a smaller number of
individual issuers than a diversified investment company, an
investment in the Fund may, under certain circumstances, present
greater risk to an investor than an investment in a diversified
investment company.
Foreign government securities are not treated like U.S.
Government securities for purposes of the diversification tests
described in the preceding paragraph, but instead are subject to
these tests in the same manner as the securities of non-
governmental issuers.
________________________________________________________________
PURCHASE AND SALE OF SHARES
________________________________________________________________
HOW TO BUY SHARES
The Fund offers multiple classes of shares, of which only the
Advisor Class is offered by this Prospectus. Advisor Class
shares of the Fund may be purchased through your financial
representative at net asset value without any initial or
contingent deferred sales charges and are not subject to ongoing
distribution expenses. Advisor Class shares may be purchased and
held solely (i) through accounts established under a fee-based
program, sponsored and maintained by a registered broker-dealer
or other financial intermediary and approved by AFD, (ii) through
a self-directed defined contribution employee benefit plan (e.g.,
a 401(k) plan) that has at least 1,000 participants or
$25 million in assets, (iii) by investment advisory clients of,
and certain other persons associated with, Alliance and its
affiliates or the Fund, and (iv) through 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 AFD and
clients of such registered investment advisers or financial
intermediaries whose accounts are linked to the master account of
such investment adviser or financial intermediary on the books of
such approved broker or agent. For more detailed information
about who may purchase and hold Advisor Class shares see the
Statement of Additional Information. A shareholder's Advisor
Class shares will automatically convert to Class A shares of the
Fund under certain circumstances. For a more detailed
description of the conversion feature and Class A shares, see
"Conversion Feature."
Generally, a fee-based program must charge an asset-based or
other similar fee and must invest at least $250,000 in Advisor
Class shares of the Fund in order to be approved by AFD for
investment in Advisor Class shares. Share certificates are
20
<PAGE>
issued only upon request. See the Subscription Application and
Statement of Additional Information for more information.
The Fund may refuse any order to purchase Advisor Class
shares. In this regard, the Fund reserves the right to restrict
purchases of Advisor Class shares (including through exchanges)
when there appears to be evidence of a pattern of frequent
purchases and sales made in response to short-term fluctuations
in share price.
How The Fund Values its Shares
The net asset value of Advisor Class shares of the Fund is
calculated by dividing the value of the Fund's net assets
allocable to the Advisor Class by the outstanding shares of the
Advisor Class. Shares are valued each day the Exchange is open
as of the close of regular trading (currently 4:00 p.m. Eastern
time). The securities in the Fund are valued at their current
market value determined on the basis of market quotations or, if
such quotations are not readily available, such other methods as
the Fund's Directors believe would accurately reflect fair market
value.
HOW TO SELL SHARES
You may "redeem", i.e., sell your shares in the Fund to the
Fund on any day the Exchange is open, either directly or through
your financial intermediary. The price you will receive is the
net asset value (less, any applicable CDSC) next calculated after
the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for
shares recently purchased by check or electronic funds transfer,
the Fund will not send proceeds until it is reasonably satisfied
that the check or electronic funds transfer has been collected
(which may take up to 15 days). If you are in doubt about what
documents are required by your fee based program or employee
benefit plan, you should contact your financial representative.
Selling Shares Through Your Financial Representative
Your financial representative must receive your request
before 4:00 p.m. Eastern time, and your financial representative
must transmit your request to the Fund by 5:00 p.m. Eastern time,
for you to receive that days net asset value (less any applicable
CDSC). Your financial representative is responsible for
furnishing all necessary documentation to the Fund and may charge
you for this service.
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Selling Shares Directly To The Fund
Send a signed letter of instruction or stock power form to
AFS along with certificates, if any, that represent the shares
you want to sell. For your protection, signatures must be
guaranteed by a bank, a member firm of a national stock exchange
or other eligible guarantor institution. Stock power forms are
available from your financial intermediary, AFS, and many
commercial banks. Additional documentation is required for the
sale of shares by corporations, intermediaries, fiduciaries and
surviving joint owners. For details contact:
Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
(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 may be made only once
in any 30-day period. A shareholder who has completed the
Telephone Transactions section of the Subscription Application,
or the Shareholder Options form obtained from AFS, can elect to
have the proceeds of 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 Fund may suspend
redemptions or postpone payment for up to seven days or longer,
as permitted by federal securities law. The Fund reserves the
right to close an account that through redemption has remained
below $200 for 90 days. Shareholders will receive 60 days'
written notice to increase the account value before the account
is closed.
During drastic economic or market developments, you might
have difficulty reaching AFS by telephone, in which event you
should issue written instructions to AFS. AFS is not responsible
for the authenticity of telephonic requests to purchase, sell or
exchange shares. AFS will employ reasonable procedures to verify
22
<PAGE>
that telephone requests are genuine, and could be liable for
losses resulting from unauthorized transactions if it failed to
do so. Dealers and agents may charge a commission for handling
telephonic requests. The telephone service may be suspended or
terminated at any time without notice.
SHAREHOLDER SERVICES
AFS offers a variety of shareholder services. For more
information about these services or your account, call AFS's
toll-free number, (800) 221-5672.
HOW TO EXCHANGE SHARES
You may exchange your Advisor Class shares of the Fund for
Advisor Class shares of other Alliance Mutual Funds (including
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 the
Fund business day in order to receive that day's net asset value.
Please read carefully the Prospectus of the mutual fund into
which you are exchanging before submitting the request. Call AFS
at (800) 221-5672 to exchange uncertificated shares. An exchange
is a taxable capital transaction for federal tax purposes. The
exchange service may be changed, suspended, or terminated on 60
days' written notice.
GENERAL
If you are a Fund shareholder through an account established
under a fee-based program, your fee-based program may impose
requirements with respect to the purchase, sale or exchange of
Advisor Class shares of the Fund that are different from those
described in this Prospectus. A transaction, services,
administrative or other similar fee may be charged by your
broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Such financial intermediaries may also impose requirements with
respect to the purchase, sale or exchange of shares that are
different from, or in addition to, those imposed by the Fund,
including requirements as to the minimum initial and subsequent
investment amounts.
The Fund offers three classes of shares other than the
Advisor Class, which are Class A, Class B and Class C. All
classes of the shares of the Fund have a common investment
objective and investment portfolio. Class A shares are offered
23
<PAGE>
with an initial sales charge and pay a distribution services fee.
Class B shares have a contingent deferred sales charge (a "CDSC")
and also pay a distribution services fee. Class C shares have no
initial sales charge or CDSC as long as they are not redeemed
within one year of purchase, but pay a distribution services fee.
Because Advisor Class shares have no initial sales charge or CDSC
and pay no distribution services fee, Advisor Class shares are
expected to have different performance from Class A, Class B or
Class C shares. You may obtain more information about Class A,
Class B and Class C shares, which are not offered by this
Prospectus, by contacting AFS by telephone at (800) 221-5672 or
by contacting your financial representative.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
ADVISER
Alliance has been retained under an advisory agreement
(the "Advisory Agreement") to provide investment advice and, in
general, to conduct the management and investment program of the
Fund, subject to the general supervision and control of the
Directors of the Fund.
Alliance is a leading international investment manager
supervising client accounts with assets as of March 31, 1997 of
more than $182 billion (of which more than $66 billion
represented the assets of investment companies). Alliance's
clients are primarily major corporate employee benefit funds,
public employee retirement systems, investment companies,
foundations and endowment funds. The 53 registered investment
companies managed by Alliance comprising more than 115 separate
investment portfolios currently have over one million
shareholders. As of March 31, 1997, Alliance provided investment
management services to employee benefit plans for 31 of the
Fortune 100 companies.
Alliance Capital Management Corporation ("ACMC"), the
sole general partner of, and the owner of a 1% general
partnership interest in, Alliance, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States, which is a wholly-owned subsidiary of The
Equitable Companies Incorporated, a holding company controlled by
AXA-UAP, a French insurance holding company. Certain information
concerning the ownership and control of Equitable by AXA-UAP is
set forth in the Fund's Statement of Additional Information under
"Management of the Fund."
24
<PAGE>
Under the Advisory Agreement, the Fund pays Alliance a
fee at the annual rate of 1.10% of the Fund's average daily net
assets up to $100 million, .95% of the next $100 million of the
Fund's average daily net assets, and .80% of the Fund's average
daily net assets over $200 million. The fee is accrued daily and
paid monthly.
The person primarily responsible for the day-to-day
management of the Fund's portfolio since August 1995 has been
Jeremy R. Kramer, a Vice President of ACMC, with which he has
been associated since 1993. Previously, he was a securities
analyst with Neuberger & Berman.
DISTRIBUTION SERVICES AGREEMENT
The fund has entered into a Distribution Services
Agreement with AFD with respect to the Advisor Class shares. The
Glass-Steagal Act and other applicable laws may limit the ability
of a bank or other depository institution to become an
underwriter or distributor of securities. However, in the
opinion of the Fund's management, based on the advice of counsel,
these laws do not prohibit such depository institutions from
providing services for investment companies such as the
administrative, accounting and other services referred to in the
Agreement. 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.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
DIVIDENDS AND DISTRIBUTIONS
If you receive an income dividend or capital gains
distribution in cash you may, within 120 days following the date
of its payment, reinvest the dividend or distribution in
additional shares of 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.
Each income dividend and capital gains distribution, if
any, declared by the Fund on its outstanding shares will, at the
election of each shareholder, be paid in cash or in additional
shares of the Fund having an aggregate net asset value as of the
payment date of such dividend or distribution equal to the cash
amount of such income dividend or distribution. Election to
25
<PAGE>
receive income dividends and distributions in cash or shares is
made at the time shares are initially purchased and may be
changed at any time prior to the record date for a particular
dividend or distribution. Cash dividends can be paid by check
or, if the shareholder so elects, electronically via the ACH
network. There is no sales or other charge in connection with
the reinvestment of dividends and capital gains distributions.
While it is the intention of the Fund to distribute to
its shareholders substantially all of each fiscal year's net
income and net realized capital gains, if any, the amount and
time of any such dividend or distribution must necessarily depend
upon the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate, and there can be
no assurance that the Fund will pay any dividends or realize any
capital gains.
If you buy shares just before the Fund deducts a
distribution from its net asset value, you will pay the full
price for the shares and then receive a portion of the price back
as a taxable distribution.
FOREIGN INCOME TAXES
Investment income received by the Fund from sources
within foreign countries may be subject to foreign income taxes
withheld at the source. To the extent that the Fund is liable
for foreign income taxes withheld at the source, the Fund
intends, if possible, to operate so as to meet the requirements
of the Code to "pass through" to the Fund's shareholders credits
for foreign income taxes paid, but there can be no assurance that
the Fund will be able to do so.
U.S. FEDERAL INCOME TAXES
The Fund intends to qualify to be taxed as a "regulated
investment company" under the Code. To the extent that the Fund
distributes its taxable income and net capital gain to its
shareholders, qualification as a regulated investment company
relieves the Fund of federal income and excise taxes on that part
of its taxable income including net capital gains which it pays
out to its shareholders. Dividends out of net ordinary income
and distributions of net short-term capital gains are taxable to
the recipient shareholders as ordinary income. In the case of
corporate shareholders, such dividends may be eligible for the
dividends-received deduction, except that the amount eligible for
the deduction is limited to the amount of qualifying dividends
received by the Fund. A corporation's dividends-received
deduction will be disallowed unless the corporation holds shares
in the Fund at least 46 days. Furthermore, the dividends-
received deduction will be disallowed to the extent a
26
<PAGE>
corporation's investment in shares of the Fund is financed with
indebtedness.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders as capital gains distributions is taxable to the
shareholders as long-term capital gains, irrespective of the
length of time a shareholder may have held his or her stock.
Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.
Under the current federal tax law, the amount of an
income dividend or capital gains distribution declared by the
Fund during October, November or December of a year to
shareholders of record as of a specified date in such a month
that is paid during January of the following year is includable
in the prior year's taxable income of shareholders that are
calendar year taxpayers.
Any dividend or distribution received by a shareholder
on shares of the Fund will have the effect of reducing the net
asset value of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder,
although in effect a return of capital to that particular
shareholder, would be taxable to him or her as described above.
If a shareholder held shares six months or less and during that
period received a distribution taxable to such shareholder as
long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term capital
loss to the extent of such distribution.
A dividend or capital gains distribution with respect to
shares of the Fund held by a tax-deferred or qualified plan, such
as an individual retirement account, 403(b)(7) retirement plan or
corporate pension or profit-sharing plan, will not be taxable to
the plan. Distributions from such plans will be taxable to
individual participants under applicable tax rules without regard
to the character of the income earned by the qualified plan.
Distributions by the Fund may be subject to state and
local taxes.
The Fund will be required to withhold 31% of any
payments made to a shareholder if the shareholder has not
provided a certified taxpayer identification number to the Fund,
or the Secretary of the Treasury notifies the Fund that a
shareholder has not reported all interest and dividend income
required to be shown on the shareholder's Federal income tax
return.
27
<PAGE>
Under certain circumstances, if the Fund realizes losses
from fluctuations in currency exchange rates after paying a
dividend, all or a portion of the dividend may subsequently be
characterized as a return of capital. See "Dividends,
Distributions and Taxes" in the Statement of Additional
Information. Shareholders will be advised annually as to the
federal tax status of income dividends and capital gain and
return of capital distributions made by the Fund for the
preceding year. Distributions by the Fund may be subject to
state and local taxes. Shareholders are urged to consult their
tax advisers regarding their own tax situation.
________________________________________________________________
CONVERSION FEATURE
________________________________________________________________
CONVERSION TO CLASS A SHARES
Advisor Class shares may be held solely through the
fee-based program accounts, employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase and Sale of Shares--How to Buy
Shares," and by investment advisory clients of, and certain other
persons associated with, Alliance and its affiliates or the Fund.
If (i) a holder of Advisor Class shares ceases to participate in
the fee-based program or plan or to be associated with the
investment adviser or financial intermediary that satisfies the
requirements to purchase shares set forth under "Purchase and
Sale of Shares--How to Buy Shares" or (ii) the holder is
otherwise no longer eligible to purchase Advisor Class shares as
described in this Prospectus (each, a "Conversion Event"), then
all Advisor Class shares held by the shareholder will convert
automatically and without notice to the shareholder, other than
the notice contained in this Prospectus, to Class A shares of the
Fund during the calendar month following the month in which the
Fund is informed of the occurrence of the Conversion Event. The
failure of a shareholder or a fee-based program to satisfy the
minimum investment requirements to purchase Advisor Class shares
will not constitute a Conversion Event. The conversion would
occur on the basis of the relative net asset values of the two
classes and without the imposition of any sales load, fee or
other charge.
DESCRIPTION OF CLASS A SHARES
The following tables set forth maximum transaction
costs, annual expenses, per share income and capital charges for
Class A shares of the Fund. Class A shares are subject to a
distribution fee that may not exceed an annual rate of .30%. The
higher fees mean a higher expense ratio, so Class A shares pay
28
<PAGE>
correspondingly lower dividends and may have a lower net asset
value than Advisor Class shares.
Shareholder Transaction Expenses are one of several
factors to consider when you invest in the Fund. The following
table summarizes your maximum transaction costs from investing in
Class A shares of the Fund and annual expenses for Class A shares
of the Fund. The "Examples" following the table below show the
cumulative expenses attributable to a hypothetical $1,000
investment for the periods specified.
Class A Shares
Maximum sales charge imposed on purchases
(as a percentage of offering price)(a) None
(sales charge
waived)
Sales charge imposed on dividend
reinvestments None
Deferred sales charge (as a percentage of
original purchase price or redemption
proceeds, whichever is lower) None
Exchange Fee None
Operating Expenses
Management fees 1.10%
12b-1 fees .30%
Other expenses (b) [ ]%
Total fund operating expenses [ ]%
======
Examples
After 1 year $[ ]
After 3 years $[ ]
After 5 years $[ ]
After 10 years $[ ]
________________________________________________________________
(a) Advisor Class shares convert to Class A shares at asset value
and without the imposition of any sales charge and
accordingly the maximum sales charge of 4.25% on most
purchases of Class A shares for cash does not apply.
(b) These expenses include a transfer agency fee payable to
Alliance Fund Services, Inc., an affiliate of Alliance, based
on a fixed dollar amount charged to the Fund for each
shareholders's account.
The purpose of the foregoing table is to assist the investor in
understanding the various costs and expenses that investor in the
Fund will bear directly or indirectly. Long-term shareholders of
29
<PAGE>
Class A shares of the Fund may pay aggregate sales charges
totaling more than the economic equivalent of the maximum initial
sales charges totaling permitted by the Conduct Rules of the
National Association of Securities Dealers, Inc. The Rule 12b-1
fee for Class A comprises a service fee not exceeding .25% of the
aggregate average daily net assets of the Fund attributable to
Class A and an asset-based sales charge equal to the remaining
portion of the Rule 12b-1 fee. "Other Expenses" for Class A
shares are based on estimated amounts for the Fund's current
fiscal year. The Examples set forth above assumes reinvestment
of all dividends and distributions and utilizes a 5% annual rate
of return as mandated by Commission regulation. THE EXAMPLES
SHOULD NOT BE CONSIDERED REPRESENTATIVE OF PAST OR FUTURE
EXPENSES: ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Financial Highlights. The following table presents per
share income and capital changes for a share outstanding
throughout each period indicated. The Fund operated as a closed-
end investment company prior to [ ], 1997, when it
converted to an open-end investment company and all shares of its
common stock then outstanding were reclassified as Class A
shares. Except as indicated below, the information in the table
has been audited by [ ], the independent auditors
of the Fund. A report of [ ] on the information
with respect to the Fund appears in the Fund's Statement of
Additional Information. The following information should be read
in conjunction with the financial statements and related notes
which are included in the Fund's Statement of Additional
Information.
Further information about the Fund's performance is
contained in the Fund's annual report to shareholders, which may
be obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
shown on the cover of this Prospectus.
30
<PAGE>
Six
Months June 1,
ended 1990*
April 30, to
1997 Year Ended October 31, October 31,
(unaudited) 1996 1995 1994 1993 1992 1991 1990
Net asset value, beginning
of year
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(loss)
Net realized and unrealized
gain (loss) on
investments and foreign
currency transactions
Net increase (decrease) in
net asset value from
operations
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income
Distributions for net
realized gain on
investments and foreign
currency transactions
Total dividends and
distributions
Net asset value, end of
year
Market value, end of year
TOTAL RETURN
Total investment return
based on:
Market value
Net asset value
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000's omitted)
Ratio of expenses to
average net assets
Ratio of net investment
income (loss) to average
net assets
Portfolio turnover rate
Average commission rate
_______________________
* Commencement of operations.
31
<PAGE>
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
PORTFOLIO TRANSACTIONS
Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking
best price and execution, the Fund may consider sales of its
shares as a factor in the selection of dealers to enter into
portfolio transactions with the Fund.
ORGANIZATION
The Fund is a Maryland corporation organized on
February 20, 1990. It commenced operations, as a closed-end
management investment company, on June 1, 1990. Effective
[ ], 1997, the Fund converted to an open-end management
investment company and all shares of its common stock then
outstanding were reclassified as Class A shares. The Fund
commenced a continuous public offering of its Class A shares,
Class B shares, Class C shares and Advisor Class shares on
[ ], 1997. It is anticipated that annual shareholder
meetings will not be held; shareholder meetings will be held only
when required by federal or state law. Shareholders have
available certain procedures for the removal of Directors.
A shareholder in the Fund will be entitled to share pro
rata with other holders of the same class of shares in all
dividends and distributions arising from the Fund's assets and,
upon redeeming shares, will receive the then current net asset
value of the Fund represented by the redeemed shares less any
applicable CDSC or fee. The Fund is empowered to establish,
without shareholder approval, additional portfolios, which may
have different investment objectives, and additional classes of
shares. If an additional portfolio or class were established in
the Fund, each share of the portfolio or class would normally be
entitled to one vote for all purposes. Generally, shares of each
portfolio and class would vote as a single series or class on
matters, such as the election of Directors, that affect each
portfolio or class in substantially the same manner. Class A,
Class B, Class C and Advisor Class shares have identical voting,
dividend, liquidation and other rights, except that each class
bears its own transfer agency expenses, each of Class A, Class B
and Class C shares bears its own distribution expenses, Class B
shares convert to Class A shares after eight years and Advisor
Class shares convert to Class A shares under certain
circumstances. Each class of shares votes separately with
respect to the Fund's Rule 12b-1 distribution plan and other
matters for which separate class voting is appropriate under
32
<PAGE>
applicable law. Shares are freely transferable, are entitled to
dividends as determined by the Directors and, in liquidation of
the Fund, are entitled to receive the net assets of the Fund.
Certain additional matters relating to the Fund's organization
are discussed in its Statement of Additional Information.
REGISTRAR, TRANSFER AGENT AND
DIVIDEND-DISBURSING AGENT
AFS, an indirect wholly-owned subsidiary of Alliance,
located at 500 Plaza Drive, Secaucus, New Jersey 07094, acts as
the Fund's registrar, transfer agent and dividend-disbursing
agent for a fee based upon the number of shareholder accounts
maintained for the Fund.
PRINCIPAL UNDERWRITER
AFD, an indirect wholly-owned subsidiary of Alliance,
located at 1345 Avenue of the Americas, New York, New York 10105,
is the principal underwriter of shares of the Fund.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return,
which is computed separately for each class of shares, including
Advisor Class shares. Such advertisements disclose the Fund's
average annual compounded total return for the periods prescribed
by the Commission. The Fund's total return for each such period
is computed by finding, through the use of a formula prescribed
by the Commission, the average annual compounded rate of return
over the period that would equate an assumed initial amount
invested to the value of the investment at the end of the period.
For purposes of computing total return, income, dividends and
capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales
charges applicable to purchases and redemptions of the Fund's
shares are assumed to have been paid. The Fund's advertisements
may quote performance rankings or ratings of the Fund by
financial publications or independent organizations such as
Lipper Analytical Services, Inc. and Morningstar, Inc. or compare
the Fund's 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 Fund with the Commission under the
Securities Act. Copies of the Registration Statement may be
obtained at a reasonable charge from the Commission or may be
33
<PAGE>
examined, without charge, at the offices of the Commission in
Washington, D.C.
34
00250070.AP5
<PAGE>
ALLIANCE GLOBAL
ENVIRONMENT FUND, INC.
_________________________________________________________________
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
, 1997
_________________________________________________________________
This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for the Fund that offers the Class A, Class B and
Class C shares of the Fund dated , 1997 and the current
Prospectus for the Fund that offers the Advisor Class shares of
the Fund dated , 1997 (the "Advisor Class Prospectus" and,
together with the Prospectus that offers the Class A, Class B and
Class C shares of the Fund, the "Prospectuses"). Copies of the
Prospectuses may be obtained by contacting Alliance Fund
Services, Inc. at the address or the "For Literature" telephone
number shown above.
TABLE OF CONTENTS
Page
Description of the Fund...............................
Management of the Fund................................
Expenses of the Fund..................................
Purchase of Shares....................................
Redemption and Repurchase of Shares...................
Shareholder Services..................................
Net Asset Value.......................................
Dividends, Distributions and Taxes....................
Brokerage and Portfolio Transactions..................
General Information...................................
Report of Independent Auditors
and Financial Statement...............................
<PAGE>
(R): This registered service mark used under license from
the owner, Alliance Capital Management L.P.
<PAGE>
________________________________________________________________
DESCRIPTION OF THE FUND
________________________________________________________________
Alliance Global Environment Fund, Inc. (the "Fund") is a
non-diversified investment company. The Fund's investment
objective is "fundamental" and cannot be changed without a
shareholder vote. Except as noted, the Fund's investment
policies are not fundamental and thus can be changed without a
shareholder vote. The Fund will not change these policies
without notifying its shareholders. There is no guarantee that
the Fund will achieve its investment objective.
Investment Objective
The Fund's investment objective is long-term capital
appreciation through investment in equity securities (i.e.,
common stocks (but not preferred stocks), rights or warrants to
subscribe for or purchase common stocks, and preferred stocks or
debt securities that are convertible into common stocks without
the payment of any further consideration) of Eligible Companies.
Investment Policies
The Fund will invest in two categories of Eligible
Companies--"Environmental Companies" and "Beneficiary Companies."
Environmental Companies are those that have a principal business
involving the sale of systems or services intended to foster
environmental protection, such as waste treatment and disposal,
remediation, air pollution control and recycling. Under normal
circumstances, the Fund will invest at least 65% of its total
assets in equity securities of Environmental Companies.
Beneficiary Companies are those whose principal businesses lie
outside the environmental sector but nevertheless anticipate
environmental regulations or consumer preferences through the
development of new products, processes or services that are
intended to contribute to a cleaner and healthier environment.
Examples of such companies could be companies that anticipate the
demand for plastic substitutes, aerosol substitutes, alternative
fuels and processes that generate less hazardous wastes. In this
regard, the Fund may invest in an issuer with a broadly-
diversified business, only a part of which provides such
products, processes or services, when Alliance believes that
these products, processes or services will yield a competitive
advantage that significantly enhances the issuer's growth
prospects. As a matter of fundamental policy, the Fund will,
under normal circumstances, invest substantially all of its total
assets in equity securities of Eligible Companies.
2
<PAGE>
A major premise of the Fund's investment approach is
that environmental concerns will be a significant source of
future growth opportunities, and that Environmental Companies
will see an increased demand for their systems and services.
Environmental Companies operate in the areas of pollution
control, clean energy, solid waste management, hazardous waste
treatment and disposal, pulp and paper recycling, waste-to-energy
alternatives, biodegradable cartons, packages, plastics and other
products, remedial projects and emergency cleanup efforts,
manufacture of environmental supplies and equipment, the
achievement of purer air, groundwater and foods and the
detection, evaluation and treatment of both existing and
potential environmental problems including, among others, air
pollution and acid rain.
The environmental services industry is generally
positively affected by increasing governmental action intended to
foster environmental protection. As environmental regulations
are developed and enforced, Environmental Companies providing the
means of compliance with such regulations are afforded
substantial opportunities for growth. Beneficiary Companies may
also derive an advantage to the extent that they have anticipated
environmental regulation and are therefore at a competitive
advantage.
In the view of Alliance, increasing public and political
awareness of environmental concerns and resultant environmental
regulations are long-term phenomena which are driven by an
emerging global consensus that environmental protection is a
vital and increasingly immediate priority. Alliance believes
that Eligible Companies based in the United States and other
economically developed countries will have increasing
opportunities for earnings growth resulting not only from an
increased demand for their existing products or services but also
from innovative responses to changing regulations and priorities
and enforcement policies. Such opportunities will arise, in the
opinion of Alliance, not only within developed countries but also
within many economically developing countries, such as those of
Eastern Europe and the Pacific Rim. These countries lag well
behind developed countries in the conservation and efficient use
of natural resources and in their implementation of policies
which protect the environment.
Alliance believes that global investing offers
opportunities for superior investment returns. The Fund intends
to spread investment risk among the capital markets of a number
of countries and will invest in equity securities of companies
based in at least three, and normally considerably more, such
countries. The percentage of the Fund's assets invested in
securities of companies in a particular country or denominated in
a particular currency will vary in accordance with Alliance's
3
<PAGE>
assessment of the appreciation potential of such securities and
the strength of that currency. As of [ ], 1997, [ ]%
of the Fund's net assets were invested in equity securities of
U.S. companies.
The Fund may also: (i) invest up to 20% of its total
assets in warrants to purchase equity securities to the extent
consistent with its investment objective; (ii) invest in
depositary receipts; (iii) purchase and write put and call
options on foreign currencies for hedging purposes; (iv) enter
into forward foreign currency transactions for hedging purposes;
(v) invest in currency futures and options on such futures for
hedging purposes; and (vi) make secured loans of its portfolio
securities not in excess of 30% of its total assets. For
additional information on the use, risks and costs of these
policies and practices see "Additional Investment Policies and
Practices". The Fund may borrow to the maximum extent permitted
under the 1940 Act in order to repurchase its shares or to meet
redemption requests. In addition, the Fund may borrow for
temporary purposes (including the purposes mentioned in the
preceding sentence) in an amount not exceeding 5% of the value of
the assets of the Fund. See "Certain Fundamental Investment
Policies."
Existing laws in the United States and Europe already
mandate remedial efforts to deal with pollution. In addition,
the Adviser believes that there is an emerging political
consensus in the United States and Western Europe that additional
governmental action to control and prevent future pollution is
vital to the environment and the global economy. In the United
States, the Environmental Protection Agency (the "EPA") has the
duty of imposing and enforcing environmental standards on
American industry. The EPA has identified over 1,000 toxic waste
sites that require immediate attention. To date, Congress has
enacted at least 20 major pieces of environmental protection
legislation covering, among other things, solid waste, water
pollution, air pollution, and nuclear waste. A Congressional
study recently estimated that the cost of cleanup of chemically
contaminated sites may be near $500 billion over the next 50
years. In addition, many state legislatures are implementing
rigorous environmental statutes that, for instance, require state
approval before closing, terminating or transferring ownership of
industrial facilities. In the private sector, a growing number
of companies have elected representatives of environmental
interests to their boards of directors. In the opinion of the
Adviser, as federal, state and local legislation becomes more
stringent, many Environmental Companies, as well as Beneficiary
Companies involved in the development and manufacture of
environmentally safe products will be afforded additional
opportunities for growth.
4
<PAGE>
Existing European environmental laws are generally less
rigorous than those in the United States. Moreover, in many
industrial zones in Eastern Europe, air and water pollution have
reached unprecedented levels and, more generally, there has been
little application of the services and technologies marketed by
Environmental Companies. While there can be no assurance that
Eastern European governments will sustain environmentally
protective policies or that their weakened economies will prove
able to afford the cost of effective policies of this nature, the
Adviser believes that it is likely that over the long term many
Eligible Companies, especially those based in Western Europe,
will benefit from substantial additional demand for their goods
and services from Eastern Europe.
Environmental awareness is growing in Japan as well,
leading to new demands on the Japanese government to take steps
to protect the environment, both in Japan and abroad, through the
funding of environmental programs and the promotion of
environmentally sensitive technologies. Japanese industry, which
developed innovate anti-pollution technologies to effectively
purify contaminated gas and wastes emitted from automobiles and
factories, is now being provided with governmental incentives
(including research grants) to develop new technologies in other
areas. As a result of its participation in the United Nations
Environment Program, Japan has recently agreed to monitor the
transboundary movement of hazardous industrial wastes in Asia.
In addition, Japan has announced plans to establish regulations
under which industrial wastes produced in Japan can be properly
processed. The Japanese government also has pledged to increase
overseas development assistance for pollution control and other
environmental projects in developing countries. In the opinion
of the Adviser, the active role of the Japanese government in the
development of environmentally sensitive technologies and its
participation in global environmental projects will provide
significant additional growth opportunities for many
Environmental Companies and Beneficiary Companies.
In other areas of the world, environmental protection
issues are also moving to the forefront. In the Pacific Rim,
countries are now experiencing the side effects of their
industrialization. For example, Australia's rain forest has been
substantially destroyed (there are tentative plans to replant one
billion trees by the year 2000) and forest damage is also
extensive in Thailand, Indonesia and the Philippines. To date,
however, government regulation in this area has been slow to
develop as a result of enforcement problems, legislative delays
and the expenses associated with compliance. In Australia,
growing political awareness of environmental issues has begun to
affect the regulatory framework. Recent measures aimed at
addressing these concerns have included, among other things, a
national review of state pollution laws aimed at achieving
5
<PAGE>
uniform penalty and enforcement standards, tighter controls on
emissions affecting the ozone layer and investigations regarding
the greenhouse effect.
Additional Investment Policies and Practices
The Fund may engage in the following investment policies
and practices to the extent described above.
Illiquid Securities. Historically, illiquid securities
have included securities subject to contractual or legal
restrictions on resale because they have not been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), securities which are otherwise not readily marketable and
repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the
Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and
uncertainty in valuation. Limitations on resale may have an
adverse effect on the marketability of portfolio securities and a
mutual fund might be unable to dispose of restricted or other
illiquid securities promptly or at reasonable prices and might
thereby experience difficulty satisfying redemptions within seven
days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional
expense and delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional market
has developed for certain securities that are not registered
under the Securities Act, including repurchase agreements,
commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand
for repayment. The fact that there are contractual or legal
restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such
investments.
The Fund may invest in restricted securities issued
under Section 4(2) of the Securities Act, which exempts from
registration "transactions by an issuer not involving any public
offering." Section 4(2) instruments are restricted in the sense
that they can only be resold through the issuing dealer to
institutional investors and in private transactions; they cannot
be resold to the general public without registration.
6
<PAGE>
Rule 144A under the Securities Act allows a broader
institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A
establishes a "safe harbor" from the registration requirements of
the Securities Act for resales of certain securities to qualified
institutional buyers. An insufficient number of qualified
institutional buyers interested in purchasing certain restricted
securities held by the Fund, however, could affect adversely the
marketability of such portfolio securities and the Fund might be
unable to dispose of such securities promptly or at reasonable
prices. Rule 144A has already produced enhanced liquidity for
many restricted securities, and market liquidity for such
securities may continue to expand as a result of this regulation
and the consequent inception of the PORTAL System sponsored by
the National Association of Securities Dealers, Inc., an
automated system for the trading, clearance and settlement of
unregistered securities of domestic and foreign issuers.
The Adviser, under the supervision of the Board of
Directors, will monitor the liquidity of restricted securities in
the Fund's portfolio. In reaching liquidity decisions, the
Adviser will consider, among other factors, the following:
(1) the frequency of trades and quotes for the security; (2) the
number of dealers making quotations to purchase or sell the
security; (3) the number of other potential purchasers of the
security; (4) the number of dealers undertaking to make a market
in the security; (5) the nature of the security (including its
unregistered nature) and the nature of the marketplace for the
security (e.g., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of the transfer);
and (6) any applicable Securities and Exchange Commission (the
"Commission") interpretation or position with respect to such
type of security.
Currency Swaps. Currency swaps involve the individually
negotiated exchange by the Fund with another party of a series of
payments in specified currencies. A currency swap may involve
the delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a
currency swap is subject to the risk that the other party to the
swap will default on its contractual delivery obligations. The
net amount of the excess, if any, of the Fund's obligations over
its entitlements with respect to each currency swap will be
accrued on a daily basis and an amount of liquid assets having an
aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account by the Fund's
custodian. The Fund will not enter into any currency swap unless
the credit quality of the unsecured senior debt or the claims-
paying ability of the other party thereto is rated in the highest
rating category of at least one nationally recognized rating
7
<PAGE>
organization at the time of entering into the transaction. If
there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements
related to the transactions.
General. The successful use of the Fund's investment
practices draws upon the Adviser's special skills and experience
with respect to such instruments and usually depends on the
Investment Adviser's ability to forecast price movements
correctly. Should prices move unexpectedly, the Fund may not
achieve the anticipated benefits of the transactions or may
realize losses and thus be in a worse position than if such
strategies had not been used. In addition, the correlation
between movements in the prices of such instruments and movements
in the prices of the securities hedged will not be perfect and
could produce unanticipated losses.
The Fund's ability to dispose of its position in options
depends on the availability of liquid markets in such
instruments. If a secondary market does not exist with respect
to an option purchased or written by the Fund, it might not be
possible to effect a closing transaction in the option (i.e.,
dispose of the option) with the result that an option purchased
by the Fund would have to be exercised in order for the Fund to
realize any profit. Therefore, no assurance can be given that
the Fund will be able to utilize these instruments effectively
for the purposes set forth above. Furthermore, the Fund's
ability to engage in options and futures transactions may be
limited by tax considerations. See "Dividends, Distributions and
Taxes" in the Statement of Additional Information of the Fund.
Future Developments. The Fund may, following written
notice to its shareholders, take advantage of other investment
practices that are not currently contemplated for use by the Fund
or are not available but may yet be developed, to the extent such
investment practices are consistent with the Fund's investment
objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those
involved in the activities described above.
Defensive Position. For temporary defensive purposes,
the Fund may vary from its investment objective during periods in
which conditions in securities markets or other economic or
political conditions warrant. During such periods, the Fund may
reduce its position in equity securities and increase without
limit its position in short-term, liquid, high-grade debt
securities, which may include securities issued by the U.S.
government, its agencies and, instrumentalities ("U.S. Government
Securities"), bank deposits, money market instruments, short-term
(for this purpose, securities with a remaining maturity of one
year or less) debt securities, including notes and bonds, rated A
8
<PAGE>
or higher by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's Ratings Services ("S&P"), Duff & Phelps Credit
Rating Co. ("Duff & Phelps") or Fitch Investors Service, Inc.
("Fitch") or, if not so rated, of equivalent investment quality
as determined by the Adviser.
Certain Fundamental Investment Policies
The following restrictions may not be changed without a
vote of a majority of the Fund's outstanding voting securities.
The Fund may not: (i) purchase more than 10% of the
outstanding voting securities of any one issuer; (ii) invest more
than 15% of the value of its total assets in the securities of
any one issuer or 25% or more of the value of its total assets in
the same industry, except that the Fund will invest more than 25%
of its total assets in Environmental Companies, provided that
this restriction does not apply to U.S. Government securities,
but will apply to foreign government obligations unless the
Commission permits their exclusion; (iii) make loans except
through (a) the purchase of debt obligations in accordance with
its investment objective and policies and (b) the lending of
portfolio securities; (iv) borrow money or issue senior
securities, except that the Fund may borrow (a) from a bank if
immediately after such borrowing there is asset coverage of at
least 300% as defined in the 1940 Act and (b) for temporary
purposes in an amount not exceeding 5% of the value of the total
assets of the Fund; (v) pledge, hypothecate, mortgage or
otherwise encumber its assets, except (a) to secure permitted
borrowings and (b) in connection with initial and variation
margin deposits relating to futures contracts; (vi) purchase a
security (unless the security is acquired pursuant to a plan of
reorganization or an offer of exchange) if, as a result, the Fund
would own any securities of an open-end investment company or
more than 3% of the total outstanding voting stock of any closed-
end investment company, or more than 5% of the value of the
Fund's total assets would be invested in securities of any
closed-end investment company or more than 10% of such value in
closed-end investment companies in the aggregate; (vii) invest in
companies for the purpose of exercising control; (viii) make
short sales of securities or maintain a short position, unless at
all times when a short position is open it owns an equal amount
of such securities or securities convertible into or exchangeable
for, without payment of any further consideration, securities of
the same issue as, and equal in amount to, the securities sold
short ("short sales against the box"), and unless not more than
5% of the Fund's net assets (taken at market value) is held as
collateral for such sales at any onetime; (ix) buy or write
(i.e., sell) put or call options, except (a) the Fund may buy
foreign currency options or write covered foreign currency
options and options on foreign currency futures and (b) the Fund
9
<PAGE>
may purchase warrants; or (x) (a) purchase or sell real estate,
except that it may purchase and sell securities of companies
which deal in real estate or interests therein, (b) purchase or
sell commodities or commodity contracts (except foreign
currencies, foreign currency options and futures and forward
contracts or contracts for the future acquisition or delivery of
foreign currencies and related options on futures contracts and
other similar contracts), (c) invest in interests in oil, gas, or
other mineral exploration or development programs, except that it
may purchase and sell securities of companies that deal in oil,
gas or other mineral exploration or development programs,
(d) purchase securities on margin, except for such short-term
credits as may be necessary for the clearance of transactions or
(e) act as an underwriter of securities, except that the Fund may
acquire securities in private placements under circumstances in
which, if such securities were sold, the Fund might be deemed to
be an underwriter within the meaning of the Securities Act.
Whenever any investment restriction states a maximum
percentage of the Fund's assets which may be invested in any
security or other asset, it is intended that such maximum
percentage limitation be determined immediately after, and as a
result of the Fund's acquisition of, such securities or other
assets. Accordingly, any later increase or decrease in
percentage beyond the specified limitation resulting from a
change in values or net assets will not be considered a violation
of any such maximum.
________________________________________________________________
MANAGEMENT OF THE FUND
________________________________________________________________
Directors and Officers
The Directors and principal officers of the Fund, their
ages and their principal occupations during the past five years
are set forth below. Each such Director and officer is also a
director, trustee or officer of other registered investment
companies sponsored by the Adviser. Unless otherwise specified,
the address of each of the following persons is 1345 Avenue of
the Americas, New York, New York 10105.
Directors
JOHN D. CARIFA, 52,* Chairman and President of the Fund,
is the President and Chief Operating Officer, the Chief Financial
____________________
* An "interested person" of the Fund as defined in the
Investment Company Act of 1940, as amended (the "1940
Act").
10
<PAGE>
Officer and a Director of Alliance Capital Management
Corporation, the general partner of the Adviser ("ACMC"), with
which he has been associated since prior to 1992.
DAVID H. DIEVLER, 67, was formerly Chairman of the Board
of the Fund and a Senior Vice President of ACMC, with which he
had been associated since prior to 1992 through 1994. He is
currently an Independent Financial Consultant. His address is
P.O. Box 167, Spring Lake, New Jersey 07762.
JOHN H. DOBKIN, 55, has been the President of Historic
Hudson Valley (historic preservation) since 1990. He was
formerly Director of the National Academy of Design. From 1987
to 1992 he was a Director of the general partner of the Adviser.
His address is Historic Hudson Valley, 150 White Plains Road,
Tarrytown, New York 10591.
W.H. HENDERSON, 69, joined The Royal Dutch/Shell Group
in 1948 and served in Singapore, Japan, South Africa, Hong Kong
and London. The greater part of his service was in Japan and
between 1969 and 1972 he was Managing Director and Chief
Executive Officer of The Shell Company of Hong Kong Limited.
Mr. Henderson retired from the Royal Dutch/Shell Group in 1974 in
order to establish his own oil and gas consulting business.
Mr. Henderson is currently a Director of a number of investment
companies.
STIG HOST, 70, is the Chairman and Chief Executive
Officer of International Energy Corp. (oil and gas exploration),
with which he has been associated since prior to 1991. He is
also Chairman and Director of Kriti Exploration, Inc. (oil and
gas exploration and production), Managing Director of Kriti Oil
and Minerals, N.V., Chairman of Kriti Properties and Development
Corporation (real estate), Chairman of International Marine
Sales, Inc. (marine fuels), a Director of Florida Fuels, Inc.
(marine fuels) and President of Alexander Host Foundation. He is
also a Trustee of the Winthrop Focus Funds. His address is
36 Keofferam Road, Old Greenwich, Connecticut 06870.
RICHARD M. LILLY, 66, was formerly President and Chief
Executive Officer of Esso Italiana, S.p.A., Esso Europe-Africa
Services and Esso North Europe A/S since prior to 1991. His
address is 70 Palace Gardens Terrace, London W8 4RR England.
ALAN STOGA, 45, has been a Managing Director and a
member of the Board of Directors of Kissinger Associates, Inc.
since prior to 1992. His address is Kissinger Associates, Inc.,
350 Park Avenue, New York, New York 10022.
11
<PAGE>
Officers
JOHN D. CARIFA, Chairman and President, see biography
above.
KATHLEEN A. CORBET, 37, Senior Vice President, is an
Executive Vice President of ACMC, with which she has been
associated since July 1993. Prior thereto, she was employed by
Equitable Capital.
MARK H. BREEDON, 44, Vice President-Investments, is a
Vice President of ACMC and a Director and Senior Vice President
of Alliance Capital Limited ("ACL"), with which he has been
associated since prior to 1992.
FRANCIS P. REEVES, 23, Vice President, is a Vice
President of ACL with which he has been associated since March
1996. Prior thereto, he was an investment adviser for Citibank
and an assistant trader for Mitsubishi Finance International.
JEREMY R. KRAMER, 35, Vice President-Investments, is a
Vice President of ACMC with which he has been associated since
1993. Previously, he was a securities analyst with Neuberger &
Berman.
THOMAS BARDONG, 52, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1992.
DANIEL V. PANKER, 58, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since prior
to 1992.
EDMUND P. BERGAN, JR., 47, Secretary, is a Senior Vice
President and the General Counsel of Alliance Fund Distributors,
Inc. ("AFD") and Alliance Fund Services, Inc. ("AFS"), with which
he has been associated since prior to 1992.
DOMENICK PUGLIESE, 36, Assistant Secretary, is a Vice
President and Assistant General Counsel of AFD, with which he has
been associated since May 1995. Previously, he was Vice
President and Counsel of Concord Holding Corporation since 1994
and Vice President and Associate General Counsel of Prudential
Securities since 1992.
MARK D. GERSTEN, 46, Treasurer and Chief Financial
Officer, is a Senior Vice President of Alliance Fund Services
Inc., with which he has been associated since prior to 1992.
12
<PAGE>
VINCENT S. NOTO, 32, Controller, is an Assistant Vice
President of Alliance Fund Services, with which he has been
associated since 1992.
The Fund does not pay any fees to, or reimburse expenses
of, its Directors who are considered "interested persons" of the
Fund. The aggregate compensation paid by the Fund to each of the
Directors during the fiscal year ended October 31, 1996, the
aggregate compensation paid to each of the Directors during the
calendar year 1996 by all of the funds to which Alliance provides
investment advisory services (collectively, the "Alliance Fund
Complex") and the total number of funds in the Alliance Fund
Complex with respect to which each of the Directors serves as a
director or trustee, are set forth below. Neither the Fund nor
any other fund in the Alliance Fund Complex provides compensation
in the form of pension or retirement benefits to any of its
directors or trustees.
Total Number
of Funds in
the Alliance
Total Fund Complex,
Compensation Including the
From the Fund, as to
Alliance Fund which the
Name of Aggregate Complex, Director is a
Director Compensation Including the Director or
of the Fund From the Fund Fund Trustee
John D. Carifa $ -0- $ -0- 50
David H. Dievler $ 4,900 $182,200 43
John H. Dobkin $ 4,900 $121,250 30
W.H. Henderson $10,500 $ 31,750 5
Stig Host $10,500 $ 31,750 5
Richard M. Lilly $10,500 $ 31,750 5
Alan Stoga $10,500 $ 31,750 5
As of [ ], 1997 the Directors and officers of
the Fund as a group owned less than 1% of the shares of the Fund.
Adviser
Alliance Capital Management L.P., a New York Stock
Exchange ("Exchange") listed company with principal offices at
1345 Avenue of the Americas, New York, New York 10105, has been
retained under an Advisory Agreement (the "Advisory Agreement")
to provide investment advice and, in general, to conduct the
management and investment program of the Fund, subject to the
supervision and control of the Board of Directors of the Fund.
13
<PAGE>
The Advisor is a leading international investment
manager supervising client accounts with assets as of March 31,
1997 of more than $182 billion (of which more than $66 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 March 31, 1997, the
Advisor managed employee benefit assets for 31 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. Fifty-three registered
investment companies 115 separate investment portfolios managed
by the Adviser currently have more than two million shareholders.
ACMC, 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 Advisor ("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 American
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
14
<PAGE>
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
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 Officer
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 had 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 owed 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) or AXA-UAP.
Under the Advisory Agreement, the Adviser provides
investment advisory services and order placement facilities for
the Fund and pays all compensation of Directors and officers of
15
<PAGE>
the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnishes the Fund, without charge,
management supervision and assistance and office facilities and
provides persons satisfactory to the Fund's Board of Directors to
serve as the Fund's officers. Under the Advisory Agreement, the
Fund pays the Advisor a fee at the annual rate of 1.10% of the
Fund's average daily net assets up to $100 million, .95% of the
next $100 million of the Fund's average daily net assets, and
.80% of the Fund's average daily net assets over $200 million.
The fee is accrued daily and paid monthly.
The Advisory Agreement is terminable without penalty by
a vote of a majority of the Fund's outstanding voting securities,
or by a vote of a majority of the Fund's Directors on 60 days'
written notice or by the Adviser on 60 days' written notice, and
will automatically terminate in the event of its assignment. The
Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder,
the Adviser shall not be liable for any action or failure to act
in accordance with its duties thereunder.
The Advisory Agreement became effective on [ ],
1997. In connection with the conversion of the Fund to an open-
end investment company, the Advisory Agreement replaced an
Investment Management and Administration Agreement ("Management
Agreement") between the Fund and the Adviser. At a meeting
called for such purpose and held on April 23, 1997, the Advisory
Agreement was approved by a majority of the members of the Board
of Directors, including a majority of the Directors who are not
parties thereto nor interested persons of any such party as
defined in the 1940 Act. At a meeting held on July 17, 1997, a
majority of the outstanding voting securities of the Fund
approved the Advisory Agreement. The Advisory Agreement will
continue in effect until December 31, 1997 and thereafter for
successive twelve-month periods (computed from each January 1),
provided that such continuance is approved at least annually by a
vote of a majority of the Fund's outstanding voting securities or
by the Fund's Board of Directors, including in either case,
approval by a majority of the Directors who are not parties to
the Advisory Agreement or interested persons of any such party as
defined by the 1940 Act.
The rate of the advisory fee payable under the Advisory
Agreement is the same as the rate payable under the Management
Agreement, except that under the Management Agreement the Adviser
was paid a monthly fee at an annual rate computed upon the Fund's
average weekly net assets. For the fiscal years of the Fund
ended in 1996, 1995 and 1994, the Adviser received from the Fund
$1,073,769, $890,857 and $865,412, respectively, in management
fees.
16
<PAGE>
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Fund. The Adviser
may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients
simultaneously with the Fund. If transactions on behalf of more
than one client during the same period increase the demand for
securities being purchased or the supply of securities being
sold, there may be an adverse effect on price or quantity. It is
the policy of the Adviser to allocate advisory recommendations
and the placing of orders in a manner which is deemed equitable
by the Adviser to the accounts involved, including the Fund.
When two or more of the clients of the Adviser (including the
Fund) are purchasing or selling the same security on a given day
from the same broker-dealer, such transactions may be averaged as
to price.
The Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to the following registered investment
companies: ACM Institutional Reserves, Inc., AFD Exchange
Reserves, The Alliance Fund, Inc., Alliance All-Asia Investment
Fund, Inc., Alliance Balanced Shares, Inc., Alliance Bond Fund,
Inc., Alliance Capital Reserves, Alliance Developing Markets
Fund, Inc., Alliance Global Dollar Government Fund, Inc.,
Alliance Global Small Cap Fund, Inc., Alliance Global Strategic
Income Trust, Inc., Alliance Government Reserves, Alliance
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., 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., The Alliance
Portfolios, Fiduciary Management Associates and The Hudson River
Trust, all registered open-end investment companies; and to ACM
Government Income Fund, Inc., ACM Government Securities Fund,
Inc., ACM Government Spectrum Fund, Inc., ACM Government
Opportunity Fund, Inc., ACM Managed Income Fund, Inc., ACM
Managed Dollar Income Fund, Inc., ACM Municipal Securities Income
Fund, Inc., Alliance All-Market Advantage Fund, Inc., Alliance
World Dollar Government Fund, Inc., Alliance World Dollar
Government Fund II, Inc., The Austria Fund, Inc., The Korean
17
<PAGE>
Investment Fund, Inc., The Southern Africa Fund, Inc. and The
Spain Fund, Inc., all registered closed-end investment companies.
________________________________________________________________
EXPENSES OF THE FUND
________________________________________________________________
Distribution Services Agreement
The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Principal Underwriter to distribute
the Fund's shares and to permit the Fund to pay distribution
services fees to defray expenses associated with distribution of
its Class A, Class B and Class C shares in accordance with a plan
of distribution which is included in the Agreement and has been
duly adopted and approved in accordance with Rule 12b-1 adopted
by the Commission under the 1940 Act (the "Rule 12b-1 Plan").
Distribution services fees are accrued daily and paid
monthly and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge and at the same time to permit the Principal
Underwriter to compensate broker-dealers in connection with the
sale of such shares. In this regard the purpose and function of
the combined contingent deferred sales charge and distribution
services fee on the Class B shares and Class C shares are the
same as those of the initial sales charge and distribution
services fee with respect to the Class A shares in that in each
case the sales charge and/or distribution services fee provides
for the financing of the distribution of the relevant class of
the Fund's shares.
Under the Agreement, the Treasurer of the Fund reports
the amounts expended under the Rule 12b-1 Plan and the purposes
for which such expenditures were made to the Directors of the
Fund for their review on a quarterly basis. Also, the Agreement
provides that the selection and nomination of Directors who are
not "interested persons" of the Fund, as defined in the 1940 Act,
are committed to the discretion of such disinterested Directors
then in office.
The Agreement became effective on [ ], 1997.
The Agreement will continue in effect for successive twelve-month
periods with respect to Class A, Class B, Class C and Advisor
Class shares (computed from each January 1), provided, however,
that such continuance is specifically approved at least annually
18
<PAGE>
by the Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities (as defined in the
1940 Act) of that class, and in either case, by a majority of the
Directors of the Fund who are not parties to the Agreement or
interested persons, as defined in the 1940 Act, of any such party
(other than as directors of the Fund) and who have no direct or
indirect financial interest in the operation of the 12b-1 Plan or
any agreement related thereto.
The Adviser may from time to time and from its own funds
or such other resources as may be permitted by rules of the
Commission make payments for distribution services to the
Principal Underwriter; the latter may in turn pay part or all of
such compensation to brokers or other persons for their
distribution assistance.
In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.
All material amendments to the Agreement must be
approved by a vote of the Directors or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
either case, by a majority of the disinterested Directors, cast
in person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class or
classes affected. The Agreement may be terminated (a) by the
Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting
separately by class or by a majority vote of the Directors who
are not "interested persons" as defined in the 1940 Act, or
(b) by the Principal Underwriter. To terminate the Agreement,
any party must give the other parties 60 days' written notice; to
terminate the Rule 12b-1 Plan only, the Fund need give no notice
to the Principal Underwriter. The Agreement will terminate
automatically in the event of its assignment.
19
<PAGE>
Transfer Agency Agreement
Pursuant to a Transfer Agency Agreement that became
effective on [ ], 1997, Alliance Fund Services, Inc.,
an indirect wholly-owned subsidiary of the Adviser, receives a
transfer agency fee per account holder of each of the Class A
shares, Class B shares, Class C shares and Advisor Class shares
of the Fund, 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 and Advisor Class shares. Prior to [ ], 1997,
State Street Bank and Trust Company, which is not affiliated with
the Fund or the Adviser, provided transfer agency services to the
Fund.
PURCHASE OF SHARES
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Buy Shares."
General
Shares of the Fund are offered on a continuous basis at
a price equal to their net asset value plus an initial sales
charge at the time of purchase ("Class A shares"), with a
contingent deferred sales charge ("Class B shares"), without any
initial sales charge and, as long as the shares are held for one
year or more, without any contingent deferred sales charge
("Class C shares"), or, to investors eligible to purchase Advisor
Class shares, without any initial, contingent deferred or asset-
based sales charge, in each case as described below. Shares of
the Fund that are offered subject to a sales charge are offered
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.
Advisor Class shares of the Fund may be purchased and
held solely (i) through accounts established under fee-based
programs, sponsored and maintained by registered broker-dealers
or other financial intermediaries and approved by the Principal
Underwriter, (ii) through self-directed defined contribution
employee benefit plans (e.g., 401(k) plans) that have at least
1,000 participants or $25 million in assets, (iii) by the
20
<PAGE>
categories of investors described in clauses (i) through (iv)
below under "--Sales at Net Asset Value" (other than officers,
directors and present and full-time employees of selected dealers
or agents, or relatives of such person, or any trust, individual
retirement account or retirement plan account for the benefit of
such relative, none of whom is eligible on the basis solely of
such status to purchase and hold Advisor Class shares), or
(iv) by directors and present or retired full-time employees of
Koll Real Estate Services.
Generally, a fee-based program must charge an asset-
based or other similar fee and must invest at least $250,000 in
Advisor Class shares of the Fund in order to be approved by the
Principal Underwriter for investment in Advisor Class shares.
Investors may purchase shares of the Fund either through
selected dealers, agents or financial representatives or directly
through the Principal Underwriter. A transaction, service,
administrative or other similar fee may be charged by your
broker-dealer, agent, financial intermediary or other financial
representative with respect to the purchase, sale or exchange of
Class A, Class B, Class C or Advisor Class shares made through
such financial representative. Such financial representative may
also impose requirements with respect to the purchase, sale or
exchange of shares that are different from, or in addition to,
those imposed by the Fund, including requirements as to the
minimum initial and subsequent investment amounts. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B, Class C or Advisor Class shares.
Shares of the Fund may also be sold in foreign countries
where permissible. The Fund may refuse any order for the
purchase of shares. The Fund reserves the right to suspend the
sale of its shares to the public in response to conditions in the
securities markets or for other reasons.
The public offering price of shares of the Fund is their
net asset value, plus, in the case of Class A shares, a sales
charge which will vary depending on the purchase alternative
chosen by the investor, as shown in the table below under
"Class A Shares". On each Fund business day on which a purchase
or redemption order is received by the Fund and trading in the
types of securities in which the Fund invests might materially
affect the value of Fund shares, the per share net asset value is
computed in accordance with the Fund's Articles of Incorporation
and By-Laws as of the next close of regular trading on the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern
time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding.
21
<PAGE>
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, Class C and Advisor Class shares are expected
to be substantially the same. Under certain circumstances,
however, the per share net asset values of the Class B and
Class C shares may be lower than the per share net asset values
of the Class A and Advisor Class 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 Fund will accept unconditional orders for its shares
to be executed at the public offering price equal to their net
asset value next determined (plus applicable Class A sales
charges), as described below. Orders received by the Principal
Underwriter prior to the close of regular trading on the Exchange
on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on
the Exchange on that day (plus applicable Class A sales charges).
In the case of orders for purchase of shares placed through
selected dealers, 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. If the selected dealer, agent or financial
representative fails to do so, the investor's right to that day's
closing price must be settled between the investor and the
selected dealer, agent or financial representative, as
applicable. If the selected dealer, agent or financial
representative, as applicable, receives the order after the close
of regular trading on the Exchange, the price will be based on
the net asset value determined as of the close of regular trading
on the Exchange on the next day it is open for trading.
Following the initial purchase of Fund shares, a
shareholder may place orders to purchase additional shares by
telephone if the shareholder has completed the appropriate
portion of the Subscription Application or an "Autobuy"
application obtained by calling the "For Literature" telephone
number shown on the cover of this Statement of Additional
Information. Except with respect to certain omnibus accounts,
22
<PAGE>
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 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, stock certificates representing shares of the Fund
are not issued except upon written request to the Fund by the
shareholder or his or her authorized selected dealer or agent.
This facilitates later redemption and relieves the shareholder of
the responsibility for and inconvenience of lost or stolen
certificates. No certificates are issued for fractional shares,
although such shares remain in the shareholder's account on the
books of the Fund.
In addition to the discount or commission amount paid to
dealers or agents, the Principal Underwriter from time to time
pays additional cash or other incentives to dealers or agents,
including EQ Financial Consultants, Inc., formerly Equico
Securities, Inc., an affiliate of the Principal Underwriter, in
connection with the sale of shares of the Fund. Such additional
amounts may be utilized, in whole or in part, to provide
additional compensation to registered representatives who sell
shares of the Fund. On some occasions, cash or other incentives
will be conditioned upon the sale of a specified minimum dollar
amount of the shares of the Fund and/or other Alliance Mutual
Funds, as defined below, during a specific period of time. On
some occasions, such cash or other incentives may take the form
of payment for attendance at seminars, meals, sporting events or
theater performances, or payment for travel, 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, Class C and Advisor Class 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
23
<PAGE>
each bear the expense of a higher distribution services fee than
that borne by Class A shares, and Advisor Class shares do not
bear such a fee, (iii) Class B shares and Class C shares bear
higher transfer agency costs than that borne by Class A shares
and Advisor Class shares, (iv) each of Class A, Class B and
Class C shares has exclusive voting rights with respect to
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 of the 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, then such amendment will also be submitted
to the Class B shareholders and the Advisor Class shareholders
and the Class A shareholders, the Class B shareholders and
Advisor Class shareholders will vote separately by class, and (v)
Class B and Advisor Class shares are subject to a conversion
feature. Each class has different exchange privileges and
certain different shareholder service options available.
The Directors of the Fund have determined that currently
no conflict of interest exists between or among the Class A,
Class B, Class C and Advisor Class shares. On an ongoing basis,
the Directors of the Fund, 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, Class B 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 Fund, the accumulated distribution services fee
and contingent deferred sales charge 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
____________________
** Advisor Class shares are sold only to investors described
above in this section under "--General."
24
<PAGE>
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
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 of Class A shares. In
this example, an investor intending to maintain his or her
investment for a longer period might consider purchasing Class A
shares. This example does not take into account the time value of
money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in net
asset value or the effect of different performance assumptions.
Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.
25
<PAGE>
Class A Shares
The public offering price of Class A shares is the net
asset value plus a sales charge, as set forth below.
Sales Charge
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. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, as described below under "--Class B
Shares." 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
26
<PAGE>
contingent deferred sales charge on Class A shares are paid to
the Principal Underwriter and are used by the Principal
Underwriter to defray the expenses of the Principal Underwriter
related to providing distribution-related services to the Fund in
connection with the sales of Class A shares, such as the payment
of compensation to selected dealers and agents for selling
Class A shares. With respect to purchases of $1,000,000 or more
made through selected dealers or agents, the Adviser may,
pursuant to the Distribution Services Agreement described above,
pay such dealers or agents from its own resources a fee of up to
1% of the amount invested to compensate such dealers or agents
for their distribution assistance in connection with such
purchases.
No initial sales charge is imposed on Class A shares
issued (i) pursuant to the automatic reinvestment of income
dividends or capital gains distributions, (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 or (iii) upon the automatic conversion of Class B
shares or Advisor Class shares as described below under "Class B
Shares - Conversion Feature" and "--Conversion of Advisor Class
Shares to Class A Shares." The Fund receives the entire net
asset value of its Class A shares sold to investors. The
Principal Underwriter's commission is the sales charge shown
above less any applicable discount or commission "reallowed" to
selected dealers and agents. The Principal Underwriter will
reallow discounts to selected dealers and agents in the amounts
indicated in the table above. In this regard, the Principal
Underwriter may elect to reallow the entire sales charge to
selected dealers and agents for all sales with respect to which
orders are placed with the Principal Underwriter. A selected
dealer who receives reallowance in excess of 90% of such a sales
charge may be deemed to be an "underwriter" under the Securities
Act.
Set forth below is an example of the method of computing
the offering price of the Class A shares. The example assumes a
purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth above
at a price based upon the net asset value of Class A shares of
the Fund on [ ], 1997.
27
<PAGE>
Net Asset Value per Class A Share at $
June 2, 1997
Class A Per Share Sales Charge
4.25% of offering price (4.44% of
net asset value per share) .
Class A Per Share Offering Price to
the public $
======
Investors choosing the initial sales charge alternative
may under certain circumstances be entitled to pay (i) no initial
sales charge (but may be subject in most such 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 above by combining purchases of shares of the
Fund into a single "purchase," if the resulting "purchase" totals
at least $100,000. The term "purchase" refers to: (i) a single
purchase by an individual, or to concurrent purchases, which in
the aggregate are at least equal to the prescribed amounts, by an
individual, his or her spouse and their children under the age of
21 years purchasing shares of the Fund for his, her or their own
account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved;
or (iii) a single purchase for the employee benefit plans of a
single employer. The term "purchase" also includes purchases by
any "company," as the term is defined in the 1940 Act, but does
not include purchases by any such company which has not been in
existence for at least six months or which has no purpose other
than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term
"purchase" does not include purchases by any group of individuals
whose sole organizational nexus is that the participants therein
are credit card holders of a company, policy holders of an
insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include
shares, purchased at the same time through a single selected
dealer or agent, of any other "Alliance Mutual Fund" Currently,
the Alliance Mutual Funds include:
AFD Exchange Reserves
The Alliance Fund, Inc.
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
28
<PAGE>
-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 Portfolios
-Alliance Growth Fund
-Alliance Conservative Investors Fund
-Alliance Growth Investors Fund
-Alliance Strategic Balanced Fund
-Alliance Short-Term U.S. Government Fund
Prospectuses for the Alliance Mutual Funds may be
obtained without charge by contacting Alliance Fund Services,
Inc. at the address or the "For Literature" telephone number
29
<PAGE>
shown on the front cover of this Statement of Additional
Information.
Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on
the previous day) of (a) all 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 sales charge for the $100,000 purchase
would be at the 2.25% rate 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 sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B,
Class C and/or Advisor Class shares) of the Fund or any other
Alliance Mutual Fund. Each purchase of shares under a Statement
of Intention will be made at the public offering price or prices
applicable at the time of such purchase to a single transaction
of the dollar amount indicated in the Statement of Intention. At
the investor's option, a Statement of Intention may include
purchases of shares of the Fund or any other Alliance Mutual Fund
made not more than 90 days prior to the date that the investor
signs a Statement of Intention; however, the 13-month period
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during which the Statement of Intention is in effect will begin
on the date of the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to
invest 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 registered in the
name of the investor) to secure payment of the higher 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 sales
charge will be adjusted for the entire amount purchased at the
end of the 13-month period. The difference in the sales charge
will be used to purchase additional shares of the Fund subject to
the rate of the sales charge applicable to the actual amount of
the aggregate purchases.
Investors wishing to enter into a Statement of Intention
in conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting Alliance Fund Services, Inc.
at the address or telephone numbers shown on the cover of this
Statement of Additional Information.
Certain Retirement Plans. Multiple participant payroll
deduction retirement plans may also purchase shares of the Fund
or any other Alliance Mutual Fund at a reduced sales charge on a
monthly basis during the 13-month period following such a plan's
initial purchase. The sales charge applicable to such initial
purchase of shares of the Fund will be that normally applicable,
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<PAGE>
under the schedule of sales charges set forth in this Statement
of Additional Information, to an investment 13 times larger than
such initial purchase. The sales charge applicable to each
succeeding monthly purchase will be that normally applicable,
under such schedule, to an investment equal to the sum of (i) the
total purchase 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 the Fund to
be redeemed or repurchased may reinvest all or any portion of the
redemption or repurchase proceeds in Class A shares of the Fund
at net asset value without any sales charge, provided that
(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 income 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. Investors
may exercise the reinstatement privilege by written request sent
to the Fund at the address shown on the cover of this Statement
of Additional Information.
Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without an initial sales charge)
and without a 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 Directors of the
Fund; present or former directors and trustees of other
investment companies managed by the Adviser; present or retired
full-time employees of the Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates; officers and
directors of ACMC, the Principal Underwriter, Alliance Fund
Services, Inc. and their affiliates; officers, directors and
present full-time employees of selected dealers or agents; or the
spouse, sibling, direct ancestor or direct descendant
(collectively "relatives") of any such person; or any trust,
individual retirement account or retirement plan account for the
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benefit of any such person or relative; or the estate of any such
person or relative, if such shares are purchased for investment
purposes (such shares may not be resold except to the Fund);
(iii) the Adviser, the Principal Underwriter, Alliance
Fund Services, Inc. and their affiliates; and certain employee
benefit plans for employees of the Adviser, the Principal
Underwriter, Alliance Fund Services, Inc. and their affiliates;
(iv) registered investment advisers or other financial
intermediaries who charge a management, consulting or other fee
for their services 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
adviser 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 or other
financial intermediary and approved by the Principal Underwriter,
pursuant to which such persons pay an asset-based fee to such
broker-dealer or financial intermediary, or its affiliates or
agents, for services in the nature of investment advisory or
administrative services;
(vi) persons who establish to the Principal
Underwriter's satisfaction that they are investing within such
time period as may be designated by the Principal Underwriter,
proceeds of redemption of shares of such other registered
investment companies as may be designated from time to time by
the Principal Underwriter; and
(vii) employer-sponsored qualified pensions or
profit-sharing plans (including Section 401(k) plans), custodial
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 Fund will
receive the full amount of the investor's purchase payment.
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<PAGE>
Proceeds from the contingent deferred sales charge on
the Class B shares are paid to the Principal Underwriter and are
used by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares that
are redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.
To illustrate, assume that an investor purchased 100
Class B shares at $10 per share (at a cost of $1,000) and in the
second year after purchase, the net asset value per share is $12
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 the
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 2.0% (the
applicable rate in the second year after purchase as set forth
below).
The amount of the contingent deferred sales charge, if
any, will vary depending on the number of years from the time of
payment for the purchase of Class B shares until the time of
redemption of such shares.
34
<PAGE>
Contingent Deferred Sales Charge as a %
Year Since Purchase of Dollar Amount Subject to Charge
____________________ _______________________________________
First 4%
Second 3%
Third 2%
Fourth 1%
Fifth None
In determining the contingent deferred sales charge
applicable to a redemption of Class B shares, it will be assumed
that the redemption is, first, of any shares that 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 the
purchase of shares of the corresponding class of the Alliance
Mutual Fund 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 Directors of the Fund, by the relative of any
such person, by any trust, individual retirement account or
retirement plan account for the benefit of any such person or
relative, or by the estate of any such person or relative, or
(iv) pursuant to a systematic withdrawal plan (see "Shareholder
Services-Systematic Withdrawal Plan" below).
Conversion Feature. Eight years after the end of the
calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A
shares and will no longer be subject to a higher distribution
services fee. Such conversion will occur on the basis of the
relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares.
For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions
paid in respect of Class B shares in a shareholder's account will
35
<PAGE>
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.
The conversion of Class B shares to Class A shares is
subject to the continuing availability of an opinion of counsel
to the effect that the conversion of Class B shares to Class A
shares does not constitute a taxable event under federal income
tax law. The conversion of Class B shares to Class A shares may
be suspended if such an opinion is no longer available at the
time such conversion is to occur. In that event, no further
conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee
for an indefinite period which may extend beyond the period
ending eight years after the end of the calendar month in which
the shareholder's purchase order was accepted.
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 one year or more, upon redemption. Class C
shares are sold without an initial sales charge so that the Fund
will receive the full amount of the investor's purchase payment
and, 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 the 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 of the Fund and incur higher distribution
services fees and transfer agency costs than Class A shares and
Advisor Class shares, and will thus have a higher expense ratio
and pay correspondingly lower dividends than Class A and Advisor
Class 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 dollar amount subject thereto.
The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be
imposed on increases in net asset value above the initial
purchase price. In addition, no charge will be assessed on
shares derived from reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge on Class C
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<PAGE>
shares will be waived on certain redemptions, as described above
under "--Class B Shares."
In determining the contingent deferred sales charge
applicable to a redemption of Class C 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 the
shares 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 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
related to Class A shares and Advisor Class shares.
Conversion of Advisor Class Shares to Class A Shares
Advisor Class shares may be held solely through the fee-
based program accounts, employee benefit plans and registered
investment advisory or other financial intermediary relationships
described above under "Purchase of Shares-- General," and by
investment advisory clients of, and by certain other persons
associated with, the Adviser and its affiliates or the Fund. If
(i) a holder of Advisor Class shares ceases to participate in the
fee-based program or plan, or to be associated with the
investment advisory or financial intermediary that satisfies the
requirements to purchase shares set forth under "Purchase of
Shares--General" or (ii) the holder is otherwise no longer
eligible to purchase Advisor Class shares as described in the
Advisor Class Prospectus and this Statement of Additional
Information (each, a "Conversion Event"), then all Advisor Class
shares held by the shareholder will convert automatically and
without notice to the shareholder, other than the notice
contained in the Advisor Class Prospectus and this Statement of
Additional Information, to Class A shares of the Fund during the
calendar month following the month in which the Fund is informed
of the occurrence of the Conversion Event. The failure of a
shareholder or a fee-based program to satisfy the minimum
investment requirements to purchase Advisor Class shares will not
constitute a Conversion Event. The conversion would occur on the
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<PAGE>
basis of the relative net asset values of the two classes and
without the imposition of any sales load, fee or other charge.
Class A shares currently bear a .30% distribution services fee
and have a higher expense ratio than Advisor Class shares. As a
result, Class A shares may pay correspondingly lower dividends
and have a lower net asset value than Advisor Class shares.
The conversion of Advisor Class shares to Class A shares
is subject to the continuing availability of an opinion of
counsel to the effect that the conversion of Advisor Class shares
to Class A shares does not constitute a taxable event under
federal income tax law. The conversion of Advisor Class 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, the Advisor Class shareholder would be required to
redeem his Advisor Class shares, which would constitute a taxable
event under federal income tax law.
________________________________________________________________
REDEMPTION AND REPURCHASE OF SHARES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectus under the heading "Purchase and Sale of
Shares--How to Sell Shares." If you are an Advisor Class
shareholder through an account established under a fee-based
program your fee-based program may impose requirements with
respect to the purchase, sale or exchange of Advisor Class shares
of the Fund that are different from those described herein. A
transaction fee may be charged by your financial representative
with respect to the purchase, sale or exchange of Advisor Class
shares made through such financial representative.
Redemption
Subject only to the limitations described below, the
Fund's Articles of Incorporation require that the Fund redeem the
shares tendered to it, as described below, at a redemption price
equal to their net asset value as next computed following the
receipt of shares tendered for redemption in proper form. Except
for any contingent deferred sales charge which may be applicable
to Class A, Class B or Class C shares, there is no redemption
charge. Payment of the redemption price will be made within
seven days after the Fund's receipt of such tender for
redemption. If a shareholder is in doubt about what documents
are required by his or her fee-based program or employee benefit
plan, the shareholder should contact his or her financial
representative.
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<PAGE>
The right of redemption may not be suspended or the date
of payment upon redemption postponed for more than seven days
after shares are tendered for redemption, except for any period
during which the Exchange is closed (other than customary weekend
and holiday closings) or during which the Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists as a
result of which disposal by the Fund of securities owned by it is
not reasonably practicable or as a result of which it is not
reasonably practicable for the Fund fairly to determine the value
of its net assets, or for such other periods as the Commission
may by order permit for the protection of security holders of the
Fund.
Payment of the redemption price will be made in cash.
The value of a shareholder's shares on redemption or repurchase
may be more or less than the cost of such shares to the
shareholder, depending upon the market value of the Fund's
portfolio securities at the time of such redemption or
repurchase. Redemption proceeds on Class A, Class B and Class C
shares will reflect the deduction of the contingent deferred
sales charge, if any. Payment received by a shareholder upon
redemption or repurchase of his shares, assuming the shares
constitute capital assets in his hands, will result in long-term
or short-term capital gains (or loss) depending upon the
shareholder's holding period and basis in respect of the shares
redeemed.
To redeem shares of the Fund for which no share
certificates have been issued, the registered owner or owners
should forward a letter to the Fund containing a request for
redemption. The signature or signatures on the letter must be
guaranteed by an "eligible guarantor institution" as defined in
Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended.
To redeem shares of the Fund represented by stock
certificates, the investor should forward the appropriate stock
certificate or certificates, endorsed in blank or with blank
stock powers attached, to the Fund with the request that the
shares represented thereby, or a specified portion thereof, be
redeemed. The stock assignment form on the reverse side of each
stock certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the stock certificate or certificates or, where
tender is made by mail, separately mailed to the Fund. The
signature or signatures on the assignment form must be guaranteed
in the manner described above.
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<PAGE>
Telephone Redemption By Electronic Funds Transfer. Each
Fund shareholder is entitled to request redemption by Electronic
Funds Transfer once in any 30 day period (except for certain
omnibus accounts) of shares for which no stock certificates have
been issued by telephone at (800) 221-5672 by a shareholder who
has completed the appropriate portion of the Subscription
Application or, in the case of an existing shareholder, an
"Autosell" application obtained from Alliance Fund Services, Inc.
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
eligible to request redemption by check, once in any 30-day
period, of Fund shares for which no stock certificates have been
issued by telephone at (800) 221-5672 before 4:00 p.m. Eastern
time on a Fund business day in an amount not exceeding $50,000.
Proceeds of such redemptions are remitted by check to the
shareholder's address of record. Telephone redemption by check
is not available with respect to shares (i) for which
certificates have been issued, (ii) held in nominee or "street
name" accounts, (iii) held by a shareholder who has changed his
or her address of record within the preceding 30 calendar days or
(iv) held in any retirement plan account. A shareholder
otherwise eligible for telephone redemption by check may cancel
the privilege by written instruction to Alliance Fund Services,
Inc., 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 Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information. The
Fund reserves the right to suspend or terminate its telephone
redemption service at any time without notice. Neither the Fund
nor the Adviser, the Principal Underwriter or Alliance Fund
Services, Inc. will be responsible for the authenticity of
telephone requests for redemptions that the Fund reasonably
believes to be genuine. The Fund will employ reasonable
procedures in order to verify that telephone requests for
redemptions are genuine, including, among others, recording such
telephone instructions and causing written confirmations of the
40
<PAGE>
resulting transactions to be sent to shareholders. If the Fund
did not employ such procedures, it could be liable for losses
arising from unauthorized or fraudulent telephone instructions.
Selected dealers or agents may charge a commission for handling
telephone requests for redemptions.
Temporary Fee Applicable to Redemptions and Exchanges of
Certain Class A Shares. Class A shares of the Fund that were
outstanding and reclassified as Class A shares at the time the
Fund converted to an open-end investment company and that are
redeemed or exchanged for shares of other Alliance Mutual Funds
on or prior to [ ], 1998, will be subject to a fee equal
to 2% of the net asset value of such shares at the time of such
redemption or exchange. The fee will be deducted from the amount
otherwise payable to holders of such Class A shares upon
redemption or exchange and will be retained by the Fund. The fee
will not be imposed with respect to other outstanding Class A
shares of the Fund or shares issued upon reinvestment of
dividends paid on shares of the Fund. In determining the amount
of the fee with respect to a particular redemption or exchange,
it will be assumed that the redemption or exchange is first of
any shares to which the fee does not apply and second of any
shares to which the fee does apply. The fee may be reduced or
terminated at any time at the direction of the Board of Directors
of the Fund.
Repurchase
The Fund 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,
with respect to the Class A, Class B and Class C shares), except
that requests placed through selected dealers or agents before
the close of regular trading on the Exchange on any day will be
executed at the net asset value determined as of such close of
regular trading on that day if received by the Principal
Underwriter prior to its close of business on that day (normally
5:00 p.m. Eastern time). The financial intermediary or selected
dealer or agent is responsible for transmitting the request to
the Principal Underwriter by 5:00 p.m. 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 dealer or agent. A
shareholder may offer shares of the Fund to the Principal
Underwriter either directly or through a selected dealer or
agent. Neither the Fund nor the Principal Underwriter charges a
fee or commission in connection with the repurchase of shares
(except for the contingent deferred sales charge, if any, with
respect to Class A, Class B and Class C shares). Normally, if
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<PAGE>
shares of the Fund are offered through a financial intermediary
or selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.
General
The Fund reserves the right to close out an account that
through redemption has remained below $200 for 90 days.
Shareholders will receive 60 days' written notice to increase the
account value before the account is closed. No contingent
deferred sales charge will be deducted from the proceeds of this
redemption. In the case of a redemption or repurchase of shares
of the Fund recently purchased by check, redemption proceeds will
not be made available until the Fund is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date.
________________________________________________________________
SHAREHOLDER SERVICES
________________________________________________________________
The following information supplements that set forth in
the Fund's Prospectuses under the heading "Purchase and Sale of
Shares--Shareholder Services." The shareholder services set
forth below are applicable to Class A, Class B, Class C and
Advisor Class shares unless otherwise indicated. If you are an
Advisor Class shareholder through an account established under a
fee-based program your fee-based program may impose requirements
with respect to the purchase, sale or exchange of Advisor Class
shares of the Fund that are different from those described
herein. A transaction fee may be charged by your financial
representative with respect to the purchase, sale or exchange of
Advisor Class shares made through such financial representative.
Automatic Investment Program
Investors may purchase shares of the Fund through an
automatic investment program utilizing Electronic Funds Transfer
drawn on the investor's own bank account. Under such a program,
pre-authorized monthly drafts for a fixed amount (at least $25)
are used to purchase shares through the selected dealer or
selected agent designated by the investor at the public offering
price next determined after the Principal Underwriter receives
the proceeds from the investor's bank. In electronic form,
drafts can be made on or about a date each month selected by the
shareholder. Investors wishing to establish an automatic
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<PAGE>
investment program in connection with their initial investment
should complete the appropriate portion of the Subscription
Application found in the Prospectus. Current shareholders should
contact Alliance Fund Services, Inc. at the address or telephone
numbers shown on the cover of this Statement of Additional
Information to establish an automatic investment program.
Exchange Privilege
You may exchange your investment in the Fund for shares
of the same class of other Alliance Mutual Funds (including AFD
Exchange Reserves, a money market fund managed by Alliance). 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, Alliance
Fund Services, Inc. and their affiliates may on a tax-free basis,
exchange Class A shares of the Fund for Advisor Class shares of
the Fund. Exchanges of shares are made at the net asset value
next determined and without sales or service charges. Exchanges
may be made by telephone or written request. Telephone exchange
requests must be received by Alliance Fund Services, Inc. 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,
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 Alliance Fund Services, Inc. at (800) 221-5672 to exchange
uncertificated shares. Except with respect to exchanges of
Class A shares of the Fund for Advisor Class shares of the Fund,
exchanges of shares as described above in this section are
taxable transactions for federal income 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
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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.
Each Fund shareholder and the shareholder's selected
dealer, agent or financial representative, as applicable, are
authorized to make telephone requests for exchanges unless
Alliance Fund Services, Inc., receives written instruction to the
contrary from the shareholder, or the shareholder declines the
privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
stock certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.
Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their account
number and other details of the exchange, at (800) 221-5672
before 4:00 p.m., Eastern time, on a Fund business day as defined
above. Telephone requests for exchange received before 4:00 p.m.
Eastern time on a Fund business day will be processed as of the
close of business on that day. During periods of drastic
economic or market developments, such as the market break of
October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.
A shareholder may elect to initiate a monthly "Auto
Exchange" whereby a specified dollar amount's worth of his or her
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 Alliance Fund Services, Inc. will be
responsible for the authenticity of telephone requests for
exchanges that the Fund reasonably believes to be genuine. The
Fund will employ reasonable procedures in order to verify that
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telephone requests for exchanges are genuine, including, among
others, recording such telephone instructions and causing written
confirmations of the resulting transactions to be sent to
shareholders. If the Fund did not employ such procedures, it
could be liable for losses arising from unauthorized or
fraudulent telephone instructions. 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 Fund being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to
acquire its shares through exchange or otherwise to modify,
restrict or terminate the exchange privilege.
Retirement Plans
The Fund may be a suitable investment vehicle for part
or all of the assets held in various types of retirement plans,
such as those listed below. The Fund has available forms of such
plans pursuant to which investments can be made in the Fund and
other Alliance Mutual Funds. Persons desiring information
concerning these plans should contact Alliance Fund Services,
Inc. at the "For Literature" telephone number on the cover of
this Statement of Additional Information, or write to:
Alliance Fund Services, Inc.
Retirement Plans
P.O. Box 1520
Secaucus, New Jersey 07096-1520
Individual Retirement Account ("IRA"). Individuals who
receive compensation, including earnings from self-employment,
are entitled to establish and make contributions to an IRA.
Taxation of the income and gains paid to an IRA by the Fund is
deferred until distribution from the IRA. An individual's
eligible contribution to an IRA will be deductible if neither the
individual nor his or her spouse is an active participant in an
employer-sponsored retirement plan. If the individual or his or
her spouse is an active participant in an employer-sponsored
retirement plan, the individual's contributions to an IRA may be
deductible, in whole or in part, depending on the amount of the
adjusted gross income of the individual and his or her spouse.
Employer-Sponsored Qualified Retirement Plans. Sole
proprietors, partnerships and corporations may sponsor qualified
money purchase pension and profit-sharing plans, including
Section 401(k) plans ("qualified plans"), under which annual tax-
deductible contributions are made within prescribed limits based
on compensation paid to participating individuals. The minimum
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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 reaches $5 million
on or before December 15 in any year, all Class B or Class C
shares of the Fund held by the plan can be exchanged, at the
plan's request, without any sales charge, for Class A shares of
the Fund.
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.
The Alliance Plans Division of Frontier Trust Company, a
subsidiary of Equitable, which serves as custodian or trustee
under the retirement plan prototype forms available from the
Fund, charges certain nominal fees for establishing an account
and for annual maintenance. A portion of these fees is remitted
to Alliance Fund Services, Inc. as compensation for its services
to the retirement plan accounts maintained with the Fund.
Distributions from retirement plans are subject to
certain Code requirements in addition to normal redemption
procedures. For additional information please contact Alliance
Fund Services, Inc.
Dividend Direction Plan
A shareholder who already maintains, in addition to his
or her Class A, Class B, Class C or Advisor Class Fund account, a
Class A, Class B, Class C or Advisor Class account with one or
more other Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B, Class C
or Advisor Class Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges, in
shares of the same class of such other Alliance Mutual Fund(s).
Further information can be obtained by contacting Alliance Fund
Services, Inc. at the address or the "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
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the appropriate section of the Subscription Application found in
the Prospectus. Current shareholders should contact Alliance
Fund Services, Inc. to establish a dividend direction plan.
Systematic Withdrawal Plan
General. Any shareholder who owns or purchases shares
of the Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for bi-monthly
payments) or $10,000 (for monthly payments) may establish a
systematic withdrawal plan under which the shareholder will
periodically receive a payment in a stated amount of not less
than $50 on a selected date. Systematic withdrawal plan
participants must elect to have their dividends and distributions
from the Fund automatically reinvested in additional shares of
the Fund.
Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such payments will be subject to any
taxes applicable to redemptions and, except as discussed below,
any applicable contingent deferred sales charge. Shares acquired
with reinvested dividends and distributions will be liquidated
first to provide such withdrawal payments and thereafter other
shares will be liquidated to the extent necessary, and depending
upon the amount withdrawn, the investor's principal may be
depleted. A systematic withdrawal plan may be terminated at any
time by the shareholder or the Fund.
Withdrawal payments will not automatically end when a
shareholder's account reaches a certain minimum level.
Therefore, redemptions of shares under the plan may reduce or
even liquidate a shareholder's account and may subject the
shareholder to the Fund's involuntary redemption provisions. See
"Redemption and Repurchase of Shares--General." Purchases of
additional shares concurrently with withdrawals are undesirable
because of sales charges when purchases are made. While an
occasional lump-sum investment may be made by a holder of Class A
shares who is maintaining a systematic withdrawal plan, such
investment should normally be an amount equivalent to three times
the annual withdrawal or $5,000, whichever is less.
Payments under a systematic withdrawal plan may be made
by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus, while current
Fund shareholders desiring to do so can obtain an application
form by contacting Alliance Fund Services, Inc. at the address or
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the "For Literature" telephone number shown on the cover of this
Statement of Additional Information.
CDSC Waiver for Class B 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
limitations. Redemptions in excess of those limitations will be
subject to any otherwise applicable contingent deferred sales
charge.
Statements and Reports
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent auditors, [ ],
as well as a confirmation of each purchase and redemption. By
contacting his or her broker or Alliance Fund Services, Inc., a
shareholder can arrange for copies of his or her account
statements to be sent to another person.
________________________________________________________________
NET ASSET VALUE
________________________________________________________________
The per share net asset value is determined once daily
as of the next close of regular trading on the Exchange
(currently 4:00 p.m. Eastern time) following receipt of a
purchase or redemption order by the Fund, on each Fund business
day on which such an order is received and trading in the types
of securities in which the Fund invests might materially affect
the value of Fund shares and on such other days as the Directors
of the Fund deem necessary in order to comply with Rule 22c-1
under the 1940 Act. A Fund business day is any day on which the
Exchange is open for trading. The net asset value is the net
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worth of the Fund (assets including securities at market value
minus liabilities) divided by the number of Fund shares
outstanding.
The assets belonging to the Class A shares, the Class B
shares, the Class C shares and the Advisor Class shares will be
invested together in a single portfolio. The net asset value of
each class will be determined separately by subtracting the
accrued expenses and liabilities allocated to that class from the
assets belonging to that class.
All securities listed on an exchange for which market
quotations are readily available are valued at the closing price
on the exchange on the day of valuation or, if no such closing
price is available, at the mean of bid and ask price quoted on
such day. Other securities for which market quotations are
readily available will be valued in a like manner. Options will
be valued at such market value or fair value if no market exists.
Futures contracts will be valued in a like manner, except that
open futures contracts sales will be valued using the closing
settlement price or, in the absence of such a price, the most
recent quoted asked price. If there are no quotations available
for the day of valuations, the last available closing price will
be used. Securities and assets for which market quotations are
not readily available (including investments that are subject to
limitations as to their sale) are valued at fair value as
determined in good faith by the Fund's Board of Directors.
Short-term debt securities that mature in less than 60
days are valued at amortized cost if their term to maturity from
date of purchase was less than 60 days, or by amortizing their
value on the 61st day prior to maturity if their term to maturity
from date of purchase when acquired by the Fund was more than 60
days, unless such amortized cost is determined by the Board of
Directors not to represent fair value.
For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in
foreign currencies will be converted into U.S. Dollars at the
mean of the current bid and asked prices of such currency against
the U.S. Dollar last quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a
pricing service that takes into account the quotes provided by a
number of such major banks.
Each shareholder of the Fund receives semi-annual and
annual reports which include a portfolio of investments,
financial statements and, in the case of the annual report, the
report of the Fund's independent accountants,
[ ], as well as a confirmation of each purchase
and redemption. By contacting his or her broker or Alliance Fund
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Services, Inc., a shareholder can arrange for copies of his or
her account statements to be sent to another person.
________________________________________________________________
DIVIDENDS, DISTRIBUTIONS AND TAXES
________________________________________________________________
United States Federal Income Taxation of Dividends and
Distributions
General. The Fund intends to qualify and elect to be
treated as a "regulated investment company" under sections 851
through 855 of the Code. To so qualify, the Fund must, among
other things, (i) derive at least 90% of its gross income in each
taxable year from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of
stock or securities or foreign currency, or certain other income
(including, but not limited to, gains from options, futures and
forward contracts) derived with respect to its business of
investing in stock, securities or currency; (ii) derive less than
30% of its gross income in each taxable year from the sale or
other disposition within three months of their acquisition by the
Fund of stocks, securities, options, futures or forward contracts
and foreign currencies (or options, futures or forward contracts
on foreign currencies) that are not directly related to the
Fund's principal business of investing in stock or securities (or
options and futures with respect to stocks or securities); and
(iii) diversify its holdings so that, at the end of each quarter
of its taxable year, the following two conditions are
met: (a) at least 50% of the value of the Fund's assets is
represented by cash, U.S. Government Securities, securities of
other regulated investment companies and other securities with
respect to which the Fund's investment is limited, in respect of
any one issuer, to an amount not greater than 5% of the Fund's
assets and 10% of the outstanding voting securities of such
issuer, and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than
U.S. Government Securities or securities of other regulated
investment companies). These requirements, among other things,
may limit the Fund's ability write and purchase options and
futures contracts.
If the Fund qualifies as a regulated investment company
for any taxable year and makes timely distributions to its
shareholders of 90% or more of its net investment income for that
year (calculated without regard to its net capital gain, i.e.,
the excess of its net long-term capital gain over its net short-
term capital loss), it will not be subject to federal income tax
on the portion of its taxable income for the year (including any
net capital gain) that it distributes to shareholders.
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The Fund intends to also avoid the 4% federal excise tax
that would otherwise apply to certain undistributed income for a
given calendar year if it makes timely distributions to the
shareholders equal to at least the sum of (i) 98% of its ordinary
income for that year; (ii) 98% of its capital gain net income and
foreign currency gains for the twelve-month period ending on
October 31 of that year; and (iii) any ordinary income or capital
gain net income from the preceding calendar year that was not
distributed during that year. For this purpose, income or gain
retained by the Fund that is subject to corporate income tax will
be considered to have been distributed by the Fund by year-end.
For federal income and excise tax purposes, dividends declared
and payable to shareholders of record as of a date in October,
November or December of a given year but actually paid during the
immediately following January will be treated as if paid by the
Fund on December 31 of that calendar year, and will be taxable to
these shareholders for the year declared, and not for the year in
which the shareholders actually receive the dividend.
The Fund intends to make timely distributions of the
Fund's taxable income (including any net capital gain) so that
the Fund will not be subject to federal income or excise taxes.
However, exchange control or other regulations on the
repatriation of investment income, capital or the proceeds of
securities sales, if any exist or are enacted in the future, may
limit the Fund's ability to make distributions sufficient in
amount to avoid being subject to one or both of such federal
taxes.
Dividends and Distributions. The Fund intends to make
timely distributions of the Fund's taxable income (including any
net capital gain) so that the Fund will not be subject to federal
income and excise taxes. Dividends of the Fund's net ordinary
income and distributions of any net realized short-term capital
gain are taxable to shareholders as ordinary income.
The excess of net long-term capital gains over the net
short-term capital losses realized and distributed by the Fund to
its shareholders will be taxable to the shareholders as long-term
capital gains, irrespective of the length of time a shareholder
may have held his Fund shares. Any dividend or distribution
received by a shareholder on shares of the Fund will have the
effect of reducing the net asset value of such shares by the
amount of such dividend or distribution. Furthermore, a dividend
or distribution made shortly after the purchase of such shares by
a shareholder, although in effect a return of capital to that
particular shareholder, would be taxable to him as described
above. Dividends are taxable in the manner discussed regardless
of whether they are paid to the shareholder in cash or are
reinvested in additional shares of the Fund.
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After the end of the taxable year, the Fund will notify
shareholders of the federal income tax status of any
distributions made by the Fund to shareholders during such year.
It is the present policy of the Fund to distribute to
shareholders all net investment income and to distribute realized
capital gains, if any, annually. There is no fixed dividend rate
and there can be no assurance that the Fund will pay any
dividends. The amount of any dividend or distribution paid on
shares of the Fund must necessarily depend upon the realization
of income and capital gains from the Fund's investments.
Sales and Redemptions. Any gain or loss arising from a
sale or redemption of Fund shares generally will be capital gain
or loss except in the case of a dealer or a financial
institution, and will be long-term capital gain or loss if such
shareholder has held such shares for more than one year at the
time of the sale or redemption; otherwise it will be short-term
capital gain or loss. However, if a shareholder has held shares
in the Fund for six months or less and during that period has
received a distribution taxable to the shareholder as a long-term
capital gain, any loss recognized by the shareholder on the sale
of those shares during the six-month period will be treated as a
long-term capital loss to the extent of the dividend. In
determining the holding period of such shares for this purpose,
any period during which a shareholder's risk of loss is offset by
means of options, short sales or similar transactions is not
counted.
Any loss realized by a shareholder on a sale or exchange
of shares of the Fund will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30
days before and ending 30 days after the shares are sold or
exchanged. For this purpose, acquisitions pursuant to the
Dividend Reinvestment Plan would constitute a replacement if made
within the period. If disallowed, the loss will be reflected in
an upward adjustment to the basis of the shares acquired.
Foreign Taxes. Income received by the Fund may also be
subject to foreign income taxes, including withholding taxes. The
United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of such taxes
or exemption from taxes on such income. It is impossible to
determine the effective rate of foreign tax in advance since the
amount of the Fund's assets to be invested within various
countries is not known. If more than 50% of the value of the
Fund's total assets at the close of its taxable year consists of
stocks or securities of foreign corporations, the Fund will be
eligible and intends to file an election with the Internal
Revenue Service to pass through to its shareholders the amount of
foreign taxes paid by the Fund. However, there can be no
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assurance that the Fund will be able to do so. Pursuant to this
election a United States shareholder will be required to
(i) include in gross income (in addition to taxable dividends
actually received) his pro rata share of such foreign taxes as
having been paid by him, and (iii) either deduct such pro rata
share of foreign taxes in computing his taxable income or treat
such foreign taxes as a credit against United States federal
income taxes. Shareholders who are not liable for federal income
taxes, such as retirement plans qualified under section 401 of
the Code, will not be affected by any such pass through of taxes
by the Fund. No deduction for foreign taxes may be claimed by an
individual United States shareholder who does not itemize
deductions. In addition, certain United States shareholders may
be subject to rules which limit or reduce their ability to fully
deduct, or claim a credit for, their pro rata share of the
foreign taxes paid by the Fund. Each shareholder will be
notified within 60 days after the close of the Fund's taxable
year whether the foreign taxes paid by the Fund will pass through
for that year, and if so, such notification will designate
(i) the shareholder's portion of the foreign taxes paid to each
such country and (ii) the portion of dividends that represents
income derived from sources within each such country.
Backup Withholding. The Fund may be required to
withhold United States federal income tax at the rate of 31% of
all taxable distributions payable to shareholders who fail to
provide the Fund with their correct taxpayer identification
numbers or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to
backup withholding. Corporate shareholders and certain other
shareholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against a United States
Shareholder's United States federal income tax liability or
refunded.
United States Federal Income Taxation of the Fund
The following discussion relates to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.
Passive Foreign Investment Companies. If the Fund owns
shares in a foreign corporation that constitutes a "passive
foreign investment company" (a "PFIC") for federal income tax
purposes and the Fund does not elect to treat the foreign
corporation as a "qualified electing fund" within the meaning of
the Code, the Fund may be subject to United States federal income
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taxation on a portion of any "excess distribution" it receives
from the PFIC or any gain it derives from the disposition of such
shares, even if such income is distributed as a taxable dividend
by the Fund to its shareholders. The Fund may also be subject to
additional interest charges in respect of deferred taxes arising
from such distributions or gains. Any tax paid by the Fund as a
result of its ownership of shares in a PFIC will not give rise to
any deduction or credit to the Fund or to any shareholder. A
PFIC means any foreign corporation if, for the taxable year
involved, either (i) it derives at least 75% of its gross income
from "passive income" (including, but not limited to, interest,
dividends, royalties, rents and annuities), or (ii) on average,
at least 50% of the value (or adjusted tax basis, if elected) of
the assets held by the corporation produce "passive income." The
Treasury has issued proposed regulations which would provide a
"marked to market" election solely with respect to gain inherent
in PFIC stock held by a regulated investment company, such as the
Fund, which does not elect to treat the PFIC as a "qualified
electing fund." If the proposed regulations are adopted in final
form and the election provided therein were to be made by the
Fund, the Fund would recognize a gain as of the last business day
of its taxable year equal to the excess of the fair market value
of each share of stock in the PFIC over the Fund's adjusted tax
basis in that share. This gain, which would be treated as
derived from securities held by the Fund for at least three
months, generally would not be subject to the deferred tax and
interest charge amounts to which it might otherwise be subject,
as discussed above, in the event of an "excess distribution" or
gain with regard to shares of a PFIC. If the Fund purchases
shares in a PFIC and the Fund does elect to treat the foreign
corporation as a "qualified electing fund" under the Code, the
Fund may be required to include in its income each year a portion
of the ordinary income and net capital gains of the foreign
corporation, even if this income is not distributed to the Fund.
Any such income would be subject to the 90% and calendar year
distribution requirements described above.
Currency Fluctuations. "Section 988" Gains or Losses.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
dividends or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies or
from the disposition or a forward contract denominated in a
foreign currency which are attributable to fluctuations in the
value of the foreign currency between the date of acquisition of
the asset and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under
the Code as "Section 988" gains or losses, increase or decrease
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the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary
income, rather than increasing or decreasing the amount of the
Fund's net capital gain. Because section 988 losses reduce the
amount of ordinary dividends the Fund will be allowed to
distribute for a taxable year, such section 988 losses may result
in all or a portion of prior dividend distributions for such year
being recharacterized as a non-taxable return of capital to
shareholders, rather than as an ordinary dividend, reducing each
shareholder's basis in his Fund shares. If such distributions
exceed such shareholder's basis, such excess will be treated as a
gain from the sale of shares.
Options and Futures Contracts. Certain listed options
and regulated futures contracts are considered "section 1256
contracts" for federal income tax purposes. Section 1256
contracts held by the Fund at the end of each taxable year will
be "marked to market" and treated for federal income tax purposes
as though sold for fair market value on the last business day of
such taxable year. Gain or loss realized by the Fund on section
1256 contracts will be considered 60% long-term and 40% short-
term capital gain or loss. The Fund can elect to exempt its
section 1256 contracts which are part of a "mixed straddle" (as
described below) from the application of section 1256.
With respect to equity options or options traded over-
the-counter, gain or loss realized by the Fund upon the lapse or
sale of such options held by the Fund will be either long-term or
short-term capital gain or loss depending upon the Fund's holding
period with respect to such option. However, gain or loss
realized upon the lapse or closing out of such options that are
written by the Fund will be treated as short-term capital gain or
loss. In general, if the Fund exercises an option, or an option
that the Fund has written is exercised, gain or loss on the
option will not be separately recognized but the premium received
or paid will be included in the calculation of gain or loss upon
disposition of the property underlying the option.
Gain or loss realized by the Fund on the lapse or sale
of put and call options on foreign currencies which are traded
over-the-counter or on certain foreign exchanges will be treated
as section 988 gain or loss and will therefore be characterized
as ordinary income or loss and will increase or decrease the
amount of the Fund's net investment income available to be
distributed to shareholders as ordinary income, as described
above. The amount of such gain or loss will be determined by
subtracting the amount paid, if any, for or with respect to the
option (including any amount paid by the Fund upon termination of
an option written by the Fund) from the amount received, if any,
for or with respect to the option (including any amount received
by the Fund upon termination of an option held by the Fund). In
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general, if the Fund exercises such an option on a foreign
currency, or such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option. The foregoing rules will also
apply to other put and call options which have as their
underlying property foreign currency and which are traded over-
the-counter or on certain foreign exchanges to the extent gain or
loss with respect to such options is attributable to fluctuations
in foreign currency exchange rates.
Tax Straddles. Any option or futures contract or other
position entered into or held by the Fund in conjunction with any
other position held by the Fund may constitute a "straddle" for
federal income tax purposes. A straddle of which at least one,
but not all, the positions are section 1256 contracts may
constitute a "mixed straddle". In general, straddles are subject
to certain rules that may affect the character and timing of the
Fund's gains and losses with respect to straddle positions by
requiring, among other things, that (i) loss realized on
disposition of one position of a straddle not be recognized to
the extent that the Fund has unrealized gains with respect to the
other position in such straddle; (ii) the Fund's holding period
in straddle positions be suspended while the straddle exists
(possibly resulting in gain being treated as short-term capital
gain rather than long-term capital gain); (iii) losses recognized
with respect to certain straddle positions which are part of a
mixed straddle and which are non-section 1256 positions be
treated as 60% long-term and 40% short-term capital loss;
(iv) losses recognized with respect to certain straddle positions
which would otherwise constitute short-term capital losses be
treated as long-term capital losses; and (v) the deduction of
interest and carrying charges attributable to certain straddle
positions may be deferred. The Treasury Department is authorized
to issue regulations providing for the proper treatment of a
mixed straddle where at least one position is ordinary and at
least one position is capital. No such regulations have yet been
issued. Various elections are available to the Fund which may
mitigate the effects of the straddle rules, particularly with
respect to mixed straddles. In general, the straddle rules
described above do not apply to any straddles held by the Fund
all of the offsetting positions of which consist of section 1256
contracts.
Taxation of Foreign Stockholders
The foregoing discussion relates only to United States
federal income tax law as it affects shareholders who are United
States citizens or residents or United States corporations. The
56
<PAGE>
effects of federal income tax law on shareholders who are non-
resident alien individuals or foreign corporations may be
substantially different. Foreign investors should therefore
consult their counsel for further information as to the United
States tax consequences of receipt of income from the Fund.
Other Taxation
As noted above, the Fund may be subject to other state
and local taxes.
________________________________________________________________
BROKERAGE AND PORTFOLIO TRANSACTIONS
________________________________________________________________
The management of the Fund has the responsibility for
allocating its brokerage orders and may direct orders to any
broker. It is the Fund's general policy to seek favorable net
prices and prompt reliable execution in connection with the
purchase or sale of all portfolio securities. In the purchase
and sale of over-the-counter securities, it is the Fund's policy
to use the primary market makers except when a better price can
be obtained by using a broker. The Board of Directors has
approved, as in the best interests of the Fund and the
shareholders, a policy of considering, among other factors, sales
of the Fund's shares as a factor in the selection of broker-
dealers to execute portfolio transactions, subject to best
execution. The Adviser is authorized under the Advisory
Agreement to place brokerage business with such brokers and
dealers. The use of brokers who supply supplemental research and
analysis and other services may result in the payment of higher
commissions than those available from other brokers and dealers
who provide only the execution of portfolio transactions. In
addition, the supplemental research and analysis and other
services that may be obtained from brokers and dealers through
which brokerage transactions are affected may be useful to the
Adviser in connection with advisory clients other than the Fund.
Investment decisions for the Fund are made independently
from those for other investment companies and other advisory
accounts managed by the Adviser. It may happen, on occasion,
that the same security is held in the portfolio of the Fund and
one or more of such other companies or accounts. Simultaneous
transactions are likely when several funds or accounts are
managed by the same Adviser, particularly when a security is
suitable for the investment objectives of more than one of such
companies or accounts. When two or more companies or accounts
managed by the Adviser are simultaneously engaged in the purchase
or sale of the same security, the transactions are allocated to
the respective companies or accounts both as to amount and price,
57
<PAGE>
in accordance with a method deemed equitable to each company or
account. In some cases this system may adversely affect the
price paid or received by the Fund or the size of the position
obtainable for the Fund.
Allocations are made by the officers of the Fund or of
the Adviser. Purchases and sales of portfolio securities are
determined by the Adviser and are placed with broker-dealers by
the order department of the Adviser.
The extent to which commissions that will be charged by
broker-dealers selected by the Fund 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 Fund places 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 Fund; but, 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 serving the Fund. Consistent with the Conduct Rules of
the National Association of Securities Dealers, Inc. and subject
to seeking best execution, the Fund may consider sales of shares
of the Fund or other investment companies managed by the Adviser
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ for which DLJ may receive a portion of the
brokerage commissions. In such instances, the placement of
orders with such brokers would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that DLJ is an affiliate of the Adviser.
During the fiscal years ended in 1996, 1995 and 1994,
the Fund incurred brokerage commissions amounting in the
aggregate to $875,673, $347,909 and $148,540, respectively.
During the fiscal years ended November 30, 1996, 1995 and 1994,
brokerage commissions amounting in the aggregate to $0, $0 and
$0, respectively, were paid to DLJ, and brokerage commissions
amounting in the aggregate to $0, $0 and $0, respectively, were
paid to brokers utilizing the Pershing Division of DLJ. During
the fiscal year ended October 31, 1996, the brokerage commissions
paid to DLJ constituted 0% of the Fund's aggregate brokerage
commissions and the brokerage commissions paid to brokers
utilizing the Pershing Division of DLJ constituted 0% of the
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<PAGE>
Fund's aggregate brokerage commissions. During the fiscal year
ended October 31, 1996, of the Fund's aggregate dollar amount of
brokerage transactions involving the payment of commissions of 0%
were effected through DLJ and 0% were effected through brokers
utilizing the Pershing Division of DLJ. During the fiscal year
ended October 31, 1996, transactions in the portfolio securities
of the Fund aggregating $[ ] with associated brokerage
commissions of approximately $[ ] were allocated to
persons or firms supplying research services to the Fund or the
Adviser.
________________________________________________________________
GENERAL INFORMATION
________________________________________________________________
Capitalization
The authorized capital stock of the Fund currently
consists of 3,000,000,000 shares of Class A Common Stock,
3,000,000,000 shares of Class B Common Stock, 3,000,000,000
shares of Class C Common Stock and 3,000,000,000 shares of
Advisor Class Common Stock , each having a par value of $.001 per
share. All shares of the Fund, when issued, are fully paid and
non-assessable. The Directors are authorized to reclassify and
issue any unissued shares to any number of additional series and
classes without shareholder approval. Accordingly, the Directors
in the future, for reasons such as the desire to establish one or
more additional portfolios with different investment objectives,
policies or restrictions, may create additional classes or series
of shares. Any issuance of shares of another class or series
would be governed by the 1940 Act and the law of the State of
Maryland. If shares of another series were issued in connection
with the creation of a second portfolio, each share of either
portfolio would normally be entitled to one vote for all
purposes. Generally, shares of both portfolios would vote as a
single series on matters, such as the election of Directors, that
affected both portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of
the Investment Advisory Contract and changes in investment
policy, shares of each portfolio would vote as a separate series.
At [ ], 1997, there were [ ] shares of
common stock of the Fund outstanding, including [ ] Class A
shares, no Class B shares, no Class C shares and no Advisor Class
shares. To the knowledge of the Fund, the following persons
owned of record 5% or more of a class of the outstanding shares
of the Fund as of [ ], 1997:
59
<PAGE>
% of
Name and No. of % of % of % of Advisor
Address: Shares Class A Class B Class C Class
_______ _______ _______ _______ _______ _______
Procedures for calling a shareholders' meeting for the
removal of Directors of the Fund, similar to those set forth in
Section 16(c) of the 1940 Act will be available to shareholders
of the Fund. The rights of the holders of shares of a series may
not be modified except by the vote of a majority of the
outstanding shares of such series.
Custodian
Brown Brothers Harriman & Co., 40 Water Street, Boston,
Massachusetts 02109-3661 ("Brown Brothers") will act as the
Fund's custodian. The Fund's securities and cash are held by
Brown Brothers pursuant to a custodian agreement. Rules adopted
under the 1940 Act permit the Fund to maintain its securities and
cash in the custody of certain eligible banks and securities
depositories. Pursuant to those rules, the Fund's portfolio of
securities and cash, when invested in securities of foreign
countries, will be held by its subcustodians, subject to approval
by the Board of Directors of the Fund as and when appropriate in
accordance with the rules of the Securities and Exchange
Commission. Selection of the subcustodians will be made by the
Board of Directors of the Fund following a consideration of a
number of factors, including, but not limited to, the reliability
and financial stability of the institution, the ability of the
institution to capably perform custodial services of the Fund,
the reputation of the institution in its national market, the
political and economic stability of the countries in which the
subcustodians will be located, and risks of potential
nationalization or exportation of Fund assets. In addition, the
1940 Act requires that foreign bank subcustodians, among other
things, have shareholder equity in excess of $200,000,000, have
no lien on the Fund's asset and maintain adequate and accessible
records.
Principal Underwriter
Alliance Fund Distributors, Inc., 1345 Avenue of the
Americas, New York, New York 10105, serves as the Fund's
Principal Underwriter, and as such may solicit orders from the
public to purchase shares of the Fund. Under the Distribution
Services Agreement, the Fund has agreed to indemnify the
Principal Underwriter, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities,
60
<PAGE>
including liabilities under the Securities Act of 1933, as
amended.
Counsel
Legal matters in connection with the issuance of the
shares offered hereby are passed upon by Seward & Kissel, New
York, New York. Seward & Kissel has relied upon the opinion of
Venable, Baetjer and Howard, LLP, Baltimore, Maryland, for
matters relating to Maryland law.
Independent Auditors
[ ], New York, New York, has been
appointed as independent auditors for the Fund.
Performance Information
From time to time the Fund advertises its "total
return." Computed separately for each class, the Fund's "total
return" is its average annual compounded total return for its
most recently completed one, five and ten-year periods (or the
period since the Fund's inception). The Fund's total return for
such a period is computed by finding, through the use of a
formula prescribed by the Securities and Exchange Commission, the
average annual compounded rate of return over the period that
would equate an assumed initial amount invested to the value of
such investment at the end of the period. For purposes of
computing total return, income dividends and capital gains
distributions paid on shares of the Fund are assumed to have been
reinvested when paid and the maximum sales charge applicable to
purchases of Fund shares is assumed to have been paid.
The Fund's total return is computed separately for
Class A, Class B, Class C and Advisor Class shares. The Fund's
total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and
quality of the securities in the Fund's portfolio and the Fund's
expenses. Total return information is useful in reviewing the
Fund's performance, but such information may not provide a basis
for comparison with bank deposits or other investments which pay
a fixed yield for a stated period of time. An investor's
principal invested in the Fund is not fixed and will fluctuate in
response to prevailing market conditions.
Advertisements quoting performance ratings of the Fund
as measured by financial publications or independent
organizations such as Lipper Analytical Services, Inc. and
Morningstar, Inc. and advertisements presenting the historical
record of payments of income dividends by the Fund may also from
time to time be sent to investors or placed in newspapers,
61
<PAGE>
magazines such as Barrons, Business Week, Changing Times, Forbes,
Investor's Daily, Money Magazine, The New York Times and The Wall
Street Journal or other media on behalf of the Fund.
Additional Information
Any shareholder inquiries may be directed to the
shareholder's broker or to Alliance Fund Services, Inc. at the
address or telephone numbers shown on the front cover of this
Statement of Additional Information. This Statement of
Additional Information does not contain all the information set
forth in the Registration Statement filed by the Fund with the
Securities and Exchange Commission under the Securities Act of
1933. Copies of the Registration Statement may be obtained at a
reasonable charge from the Securities and Exchange Commission or
may be examined, without charge, at the offices of the Securities
and Exchange Commission in Washington, D.C.
_______________________________________________________________
FINANCIAL STATEMENTS
_______________________________________________________________
The required financial statements will be filed prior to
the effective date of the Fund's Registration Statement by means
of a pre-effective amendment thereto.
62
00250070.AP5
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits.
(a) Financial Statements
No financial statements are included in this
Registration Statement. Prior to the effective
date of this Registration Statement, the necessary
financial statements will be filed by amendment
hereto.
(b) Exhibits
(1) (a) Articles of Incorporation*
(b) Certificate of Correction***
(c) Articles of Amendment and Restatement****
(2) (a) By-Laws*
(b) Amended and Related By-Laws****
(3) Not applicable.
(4) Not Applicable.
(5) (a) Investment Management and Administration
Agreement**
(b) Copy of Advisory Agreement****
(6) (a) Copy of Distribution Services Agreement****
(b) Form of Selected Dealer Agreement between
Alliance Fund Distributors, Inc. and selected
dealers offering shares of Registrant****
(c) Form of Selected Agent Agreement between
Alliance Fund Distributors, Inc. and selected
agents making available shares of
Registrant****
(7) Not applicable.
(8) Custodian Agreement***
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(9) (a) Transfer Agency Agreement with State Street
Bank and Trust Company***
(b) Copy of Transfer Agency Agreement with
Alliance Fund Services, Inc.****
(10) Opinion and Consent of counsel****
(11) Consent of Independent Auditors****
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Rule 12b-1 Plan - See Exhibit 6(a) above.
(16) Schedule for computation of performance
quotations.****
(17) Not Applicable
(18) Rule 18f-3 Plan****
Other Exhibit -- Powers of Attorney****
___________________
* Incorporated by reference from Registrant's Registration
Statement on Form N-2 File Nos. 33-33751 and 811-5993, as
filed with the Securities and Exchange Commission on March
12, 1990.
** Incorporated by reference from Registrant's Pre-Effective
Amendment No. 1 to its Registration Statement on Form N-2,
File Nos. 33-33751 and 811-5993, as filed with the
Securities Exchange Commission on April 5, 1990.
*** Incorporated by reference from Registrant's Amendment No. 3
to its Registration Statement on Form N-2, File
No. 811-5993, as filed with the Securities Exchange
Commission on April 5, 1991.
**** To be filed by an amendment hereto.
C-2
<PAGE>
ITEM 25. Persons Controlled by or under Common Control with
Registrant.
ITEM 26. Number of Holders of Securities.
As of [ ], 1997, Registrant had [ ] record
holders of its shares of Common Stock, consisting of
[ ] Class A shares, -0- Class B shares, -0- Class C
shares and -0- Advisor Class shares.
ITEM 27. Indemnification.
It is the Registrant's policy to indemnify its directors
and officers, employees and other agents to the maximum
extent permitted by Section 2-418 of the General
Corporation Law of the State of Maryland, which is
incorporated by reference herein, and as set forth in
Article EIGHTH of Registrant's Charter, filed as
Exhibit 1(c) hereto, Article VII and Article VIII of
Registrant's Amended and Restated By-Laws, filed as
Exhibit 2(b) hereto, and Section 10 of the proposed
Distribution Services Agreement, filed as Exhibit 6(a)
hereto. The Adviser's liability for any loss suffered
by the Registrant or its shareholders is set forth in
Section 4 of the proposed Advisory Agreement, filed as
Exhibit 5(b) hereto.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of
whether such indemnification by it is against public
policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2,
1980), the Registrant will indemnify its directors,
C-3
<PAGE>
officers, investment manager and principal underwriters
only if (1) a final decision on the merits was issued by
the court or other body before whom the proceeding was
brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office ("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the facts,
that the indemnitee was not liable by reason of
disabling conduct, by (a) the vote of a majority of a
quorum of the directors who are neither "interested
persons" of the Registrant as defined in section
2(a)(19) of the Investment Company Act of 1940 nor
parties to the proceeding ("disinterested, non-party
directors"), or (b) an independent legal counsel in a
written opinion. The Registrant will advance attorneys
fees or other expenses incurred by its directors,
officers, investment adviser or principal underwriters
in defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless it
is ultimately determined that he is entitled to
indemnification and, as a condition to the advance,
(1) the indemnitee shall provide a security for his
undertaking, (2) the Registrant shall be insured against
losses arising by reason of any lawful advances, or
(3) a majority of a quorum of disinterested, non-party
directors of the Registrant, or an independent legal
counsel in a written opinion, shall determine, based on
a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.
The Registrant participates in a joint
trustees/directors and officers liability insurance
policy issued by the ICI Mutual Insurance Company.
Coverage under this policy has been extended to
directors, trustees and officers of the investment
companies managed by Alliance Capital Management L.P.
Under this policy, outside trustees and directors are
covered up to the limits specified for any claim against
them for acts committed in their capacities as trustee
or director. A pro rata share of the premium for this
coverage is charged to each investment company and to
the Adviser.
C-4
<PAGE>
ITEM 28. Business and Other Connections of Investment Adviser.
The descriptions of Alliance Capital Management L.P.
under the captions "Management of the Fund" in the
Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively, of
this Registration Statement are incorporated by
reference herein.
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the
general partner of Alliance Capital Management L.P., set
forth in Alliance Capital Management L.P.'s Form ADV
filed with the Securities and Exchange Commission on
April 21, 1988 (File No. 801-32361) and amended through
the date hereof, is incorporated by reference.
ITEM 29. Principal Underwriters.
(a) Alliance Fund Distributors, Inc. is the
Registrant's Principal Underwriter in connection
with the sale of shares of the Registrant.
Alliance Fund Distributors, Inc. also acts as
Principal Underwriter or Distributor for the
following investment companies:
ACM Institutional Reserves, Inc.
AFD Exchange Reserves
Alliance All-Asia Investment Fund, Inc.
Alliance Balanced Shares, Inc.
Alliance Bond Fund, Inc.
Alliance Capital Reserves
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Environment 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.
C-5
<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.
Positions and Offices Positions and Offices
Name With Underwriter With Registrant
____ _____________________ _____________________
Michael J. Laughlin Chairman
Robert L. Errico President
Edmund P. Bergan, Jr. Senior Vice President, Secretary
General Counsel
and 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
Bradley F. Hanson Senior Vice President
C-6
<PAGE>
Geoffrey L. Hyde Senior Vice President
Robert H. Joseph, Jr. Senior Vice President
and Treasurer
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
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
William W. Collins, Jr. Vice President
Leo H. Cook Vice President
C-7
<PAGE>
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 &
Controller
Andrew L. Gangolf Vice President and Assistant
Assistant General Secretary
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
Thomas Leavitt, III Vice President
James M. Liptrot Vice President
C-8
<PAGE>
James P. Luisi Vice President
Christopher J. MacDonald Vice President
Michael F. Mahoney Vice President
Lori E. Master Vice President
Shawn P. McClain Vice President
Maura A. McGrath Vice President
Matthew P. Mintzer Vice President
Joanna D. Murray Vice President
Thomas F. Monnerat Vice President
Jeanette M. Nardella Vice President
Nicole Nolan-Koester Vice President
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
Domenick Pugliese Vice President and Assistant
Assistant General Secretary
Counsel
Bruce W. Reitz Vice President
Dennis A. Sanford Vice President
Karen C. Satterberg Vice President
Robert C. Schultz Vice President
Raymond S. Sclafani Vice President
Richard J. Sidell Vice President
Andrew D. Strauss Vice President
Michael J. Tobin Vice President
C-9
<PAGE>
Joseph T. Tocyloski Vice President
Martha D. Volcker Vice President
Patrick E. Walsh Vice President
William C. White Vice President
Emilie D. Wrapp Vice President and Assistant
Special Counsel Secretary
Charles M. Barrett Assistant Vice President
Maria L. Carreras 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
Nicholas J. Lapi Assistant Vice President
Patrick Look Assistant Vice President
& Assistant Treasurer
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
C-10
<PAGE>
Mark R. Manley Assistant Secretary
(c) Not applicable. Registrant is a newly organized
corporation.
ITEM 30. Location of Accounts and Records.
The majority of the accounts, books and other documents
required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the rules thereunder
are maintained as follows: journals, ledgers,
securities records and other original records are
maintained principally at the offices of Alliance Fund
Services, Inc., 500 Plaza Drive, Secaucus, New Jersey,
07094 and at the offices of Brown Brothers Harriman &
Co., the Registrant's custodian, 40 Water Street,
Boston, Massachusetts 02109. All other records so
required to be maintained are maintained at the offices
of Alliance Capital Management L.P., 1345 Avenue of the
Americas, New York, New York, 10105.
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
(b) Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest report to shareholders, upon
request and without charge.
The Registrant undertakes to provide assistance to
shareholders in communications concerning the
removal of any Director of the Fund in accordance
with Section 16 of the Investment Company Act of
1940.
C-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York and the State
of New York, on the 27th day of June, 1997.
Alliance/Global Environment Fund, Inc.
/s/ John D. Carifa
__________________________________
John D. Carifa
Chairman and President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities and on the date
indicated.
Signature Title Date
(1)Principal Executive Officer:
/s/John D. Carifa Chairman and June 27, 1997
______________________ President
(2) Principal Financial
and Accounting Officer:
/s/Mark D. Gersten Treasurer and June 27, 1997
_____________________ Chief Financial
Officer
(3) A majority of the Directors
John D. Carifa
David H. Dievler
John H. Dobkin
W.H. Henderson
Stig Host
Richard M. Lilly
Alan Stoga
By:
/s/Edmund P. Bergan, Jr. Secretary June 27, 1997
________________________
(Attorney-in-fact)
C-12
<PAGE>
INDEX TO EXHIBITS
C-13
00250070.AP5
