ALLIANCE WORLDWIDE PRIVATIZATION FUND INC, 497, 1995-06-16

ALLIANCE WORLDWIDE PRIVATIZATION FUND INC
497, 1995-06-16

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<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 33-76598 and 811-08426.

<PAGE>

Alliance Capital [Logo] The Alliance Stock Funds
____________________________________________________________
June 1, 1995

Supplement to Prospectus dated February 1, 1995

This supplement sets forth unaudited per share income
and capital change information for the periods indicated for
Alliance All-Asia Investment Fund, Inc. ("All-Asia Fund"),
pursuant to the requirements of the Securities and Exchange
Commission applicable to registered investment companies in
their first year of operations and for Alliance
International Fund ("International Fund"), Alliance
Worldwide Privatization Fund, Inc. ("Worldwide Privatization
Fund"), Alliance New Europe Fund, Inc. ("New Europe Fund"),
Alliance Global Small Cap Fund, Inc. ("Global Small Cap
Fund"), Alliance Strategic Balanced Fund ("Strategic
Balanced Fund") and Alliance Balanced Shares, Inc.
("Balanced Shares") (collectively, the "Funds"). Unaudited
financial statements and related notes as of the same dates
for the respective Funds have also been added to the
Statement of Additional Information for each Fund.

The following information supplements the information
under the heading "Financial Information" on pages 7 through
15 of the Prospectus.

<PAGE>

Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ _____________ ___________ ____________ ___________ _____________

International Fund

Class A
Six months
ended 12/31/94.... $18.38 $(.05) $(.26) $(.31) $0.00 $(1.62)
Class B
Six months
ended 12/31/94.... $17.90 $(.06)(b) $(.31) $(.37) $0.00 $(1.62)
Class C
Six months
ended 12/31/94.... $17.91 $(.03) $(.34) $(.37) $0.00 $(1.62)

Worldwide
Privatization Fund

Class A
Six months
ended 12/31/94.... $9.75 $(.01) $.24 $.23 $0.00 $0.00
Class B
Six months
ended 12/31/94.... $9.74 $(.03) $.23 $.20 $0.00 $0.00

New Europe Fund

Class A
Six months
ended 1/31/95..... $12.66 $(.07) $.23 $.16 $(.09) $0.00
Class B
Six months
ended 1/31/95..... $12.41 $(.11) $.22 $.11 $(.09) $0.00
Class C
Six months

<PAGE>

ended 1/31/95..... $12.42 $(.12) $.23 $.11 $(.09) $0.00

All Asia Fund

Class A
11/28/94**
- 4/30/95......... $10.00 $.11(c) $.13 $.24 $0.00 $0.00
Class B
11/18/94**
- 4/30/95......... $10.00 $.09(c) $.13 $.22 $0.00 $0.00
Class C
11/28/94**
- 4/30/95......... $10.00 $.08(c) $.16 $.24 $0.00 $0.00

</TABLE>

<PAGE>

Total Net Assets Ratio of Net
Total Net Asset Investment At End of Ratio Of Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of On Net Asset (000's) To Average To Average Portfolio
Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
_____________ _________ _____________ ____________ ____________ ___________ _____________

$(1.62) $16.45 (1.57)% $176,845 1.77%* (.46)%* 57%

$(1.62) $15.91 (1.94)% $49,532 2.56%* (1.32)%* 57%

$(1.62) $15.92 (1.94)% $29,173 2.56%* (1.29)%* 57%

$0.00 $9.98 2.36% $14,226 2.30%* (.04)%* 16%

$0.00 $9.94 2.05% $81,181 2.99%* (.75)%* 16%

$(.09) $12.73 1.29% $76,095 2.04%* (.89)%* 39%

$(.09) $12.43 .91% $29,978 2.74%* (1.59)%* 39%

$(.09) $12.44 .91% $8,863 2.73%* (1.59)%* 39%

<PAGE>

$0.00 $10.24 2.40% $1,917 .19%*(d) 3.44%* 51%

$0.00 $10.22 2.20% $3,019 .90%*(d) 2.73%* 51%

$0.00 $10.24 2.40% $185 .71%*(d) 2.87%* 51%

</TABLE>

<PAGE>

Net Realized
and Net Increase
Net Asset Unrealized (Decrease) Dividends Distributions
Value Net Gain in Net Asset from Net from Net
Beginning Investment (Loss) on Value from Investment Realized
Fiscal Period of Period Income (Loss) Investments Operations Income Gains
_____________ _________ ____________ ____________ ____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>

Global Small
Cap Fund

Class A
Six months
ended 1/31/95..... $11.08 $(.04)(b) $(.23) $(.27) $(2.11) $0.00
Class B
Six months
ended 1/31/95..... $10.78 $(.02) $(.28) $(.30) $(2.11) $0.00
Class C
Six months
ended 1/31/95..... $10.79 $(.09) $(.22) $(.31) $(2.11) $0.00

Strategic
Balanced Fund

Class A
Six months
ended 1/31/95..... $16.26 $.18(c) $(.47) $(.29) $(.22) $(.04)
Class B
Six months
ended 1/31/95..... $14.10 $.11(c) $(.40) $(.29) $(.12) $(.04)
Class C
Six months
ended 1/31/95..... $14.11 $.10(c) $(.39) $(.29) $(.12) $(.04)

Balanced Shares

Class A
Six months
ended 1/31/95..... $13.38 $.23 $(.23) $0.00 $(.20) $(.02)
Class B
Six months
ended 1/31/95..... $13.23 $.16 $(.21) $(.05) $(.16) $(.02)
Class C
Six months

<PAGE>

ended 1/31/95..... $13.24 $.16 $(.21) $(.05) $(.16) $(.02)

</TABLE>

<PAGE>

$(2.11) $8.70 (2.26)% $53,830 2.52%* (1.24)%* 65%

$(2.11) $8.37 (2.61)% $4,574 3.24%* (2.00)%* 65%

$(2.11) $8.37 (2.73)% $1,131 3.21%* (1.96)%* 65%

$(.26) $15.71 (1.79)% $9,102 1.40%*(d) 2.14%* 34%

$(.16) $13.65 (2.07)% $39,008 2.10%*(d) 1.44%* 34%

$(.16) $13.66 (2.07)% $4,119 2.10%*(d) 1.45%* 34%

$(.22) $13.16 .09% $146,840 1.26%* 3.36%* 61%

$(.18) $13.00 (.32)% $13,350 2.04%* 2.58%* 61%

$(.18) $13.01 (.32)% $4,690 2.03%* 2.56%* 61%

___________________________________________

<PAGE>

* Annualized
** Commencement of operations
(a) Total investment return is calculated assuming an initial investment made at the net asset value at
the beginning of the period, reinvestment of all dividends and distributions at the net asset value
during the period, and a redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of total investment return.
Total investment returns calculated for periods of less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of fee waived and expenses reimbursed by Alliance
(d) Net of expenses waived/reimbursed. If All-Asia Fund had borne all expenses, the expense ratios
would have been, with respect to Class A shares 11.71% (annualized), with respect to Class B shares
12.35% (annualized) and with respect to Class C shares 11.80% (annualized). If Strategic Balanced
Fund had borne all expenses, the expense ratios would have been, with respect to Class A shares
1.59% (annualized) and with respect to Class B and Class C shares 2.29% (annualized).
</TABLE>

Additionally, as of May 1, 1995, the portfolio manager of
Strategic Balanced Fund is Bruce W. Calvert. Mr. Calvert is a
Vice Chairman and the Chief Investment Officer of Alliance
Capital Management Corporation, the sole general partner of
Alliance Capital Management L.P., with which he has been
associated since prior to 1990.

9
00250157.BA7

<PAGE>

The Alliance
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Stock Funds
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P.O. Box 1520, Secaucus, New Jersey 07096-1520
Toll Free (800) 221-5672
For Literature: Toll Free (800) 227-4618

Prospectus and Application

February 1, 1995

Domestic Stock Funds Global Stock Funds
- -The Alliance Fund -Alliance International Fund
- -Alliance Growth Fund -Alliance Worldwide Privatization Fund
- -Alliance Premier Growth Fund -Alliance New Europe Fund
- -Alliance Counterpoint Fund -Alliance All-Asia Investment Fund
- -Alliance Technology Fund -Alliance Global Small Cap Fund
- -Alliance Quasar Fund

Total Return Funds
-Alliance Strategic Balanced Fund
-Alliance Balanced Shares
-Alliance Income Builder Fund
-Alliance Utility Income Fund
-Alliance Growth and Income Fund

Table of Contents Page
The Funds at a Glance................................................. 2
Expense Information................................................... 4
Financial Highlights.................................................. 7
Glossary.............................................................. 16
Description of the Funds.............................................. 17
Investment Objectives and Policies................................ 17
Additional Investment Practices................................... 26
Certain Fundamental Investment Policies........................... 33
Risk Considerations............................................... 36
Purchase and Sale of Shares........................................... 39
Management of the Funds............................................... 42
Dividends, Distributions and Taxes.................................... 44
General Information................................................... 46

Adviser
Alliance Capital Management L.P.
1345 Avenue Of The Americas
New York, New York 10105

The Alliance Stock Funds provide a broad selection of investment alternatives to
investors seeking capital growth or high total return. The Domestic Stock Funds
invest mainly in the United States equity markets, and the Global Stock Funds
diversify their investments among equity markets around the world, while the
Total Return Funds invest in both equity and fixed-income securities.

Each fund or portfolio (each a "Fund") is, or is a series of, an open-end
management investment company. This Prospectus sets forth concisely the
information which a prospective investor should know about each Fund before
investing. A "Statement of Additional Information" for each Fund which provides
further information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to some investors has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. For
a free copy, call or write Alliance Fund Services, Inc. at the indicated address
or "Literature" telephone number.

Each Fund offers three classes of shares which may be purchased at the
investor's choice at a price equal to their net asset value (i) plus an initial
sales charge imposed at the time of purchase (the "Class A shares"), (ii) with a
contingent deferred sales charge imposed on most redemptions made within four
years of purchase (the "Class B shares"), or (iii) without any initial or
contingent deferred sales charge (the "Class C shares"). See "Purchase and Sale
of Shares."

An investment in these securities is not a deposit or obligation of, or
guaranteed or endorsed by, any bank and is not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any other agency.

Investors are advised to read this Prospectus carefully and to retain it for
future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Alliance(R)
Mutual funds without the Mystery/TM/

(R)/SM These are registered marks used under licenses from the owner, Alliance
Capital Management L.P.
<PAGE>

The Funds At A Glance

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

The Funds' Investment Manager Is . . .

Alliance Capital Management L.P. ("Alliance"), a global investment manager
providing diversified services to institutions and individuals through a
broad line of investments including 102 mutual funds. Since 1971, Alliance
has earned a reputation as a leader in the investment world with over $123
billion in assets under management. Alliance provides investment management
services to 28 of the FORTUNE 100 companies.

Domestic Stock Funds

Alliance Fund

Seeks . . . Long-term growth of capital and income primarily through
investment in common stocks.

Invests Principally in . . . A diversified portfolio of equity securities that,
in the judgment of Alliance, have the potential to achieve capital appreciation.

Growth Fund

Seeks . . . Long-term growth of capital by investing primarily in common
stocks and other equity securities.

Invests Principally in . . . A diversified portfolio of equity securities of
companies with a favorable outlook for earnings and whose rate of growth is
expected to exceed that of the United States economy over time.

Premier Growth Fund

Seeks . . . Long-term growth of capital by investing in the equity securities
of a limited number of large, carefully selected, high-quality American
companies of a relatively small number of intensively researched companies.

Invests Principally in . . . A non-diversified portfolio of equity securities
that, in the judgment of Alliance, are likely to achieve superior earnings
growth. Normally, approximately 40 companies will be represented in the
Fund's investment portfolio. The Fund's investments in 25 of these companies
most highly regarded at any point in time by Alliance will usually constitute
approximately 70% of the Fund's net assets.

Counterpoint Fund

Seeks . . . Long-term capital growth, primarily, and current income,
secondarily.

Invests Principally in . . . A diversified portfolio of price-depressed,
undervalued or out-of-favor equity securities.

Technology Fund

Seeks . . . Growth of capital through investment in companies expected to
benefit from advances in technology.

Invests Principally in . . . A diversified portfolio of securities of
companies which use technology extensively in the development of new or
improved products or processes.

Quasar Fund

Seeks . . . Growth of capital by pursuing aggressive investment policies.

Invests Principally in . . . A diversified portfolio of equity securities of any
company and industry and in any type of security which is believed to offer
possibilities for capital appreciation.

Global Stock Funds

International Fund

Seeks . . . A total return on its assets from long-term growth of capital and
from income.

Invests Principally in . . . A diversified portfolio of marketable securities
of established non-United States companies, companies participating in
foreign economies with prospects for growth, and foreign government securities.

Worldwide Privatization Fund

Seeks . . . Long-term capital appreciation.

Invests Principally in . . . A non-diversified portfolio of equity securities
issued by enterprises that are undergoing, or have undergone, privatization.
The balance of the Fund's investment portfolio will include securities of
companies that are believed by Alliance to be beneficiaries of the
privatization process.

New Europe Fund

Seeks . . . Long-term capital appreciation through investment primarily in
the equity securities of companies based in Europe.

Invests Principally in . . . A non-diversified portfolio of equity securities
of European companies.

All-Asia Fund

Seeks . . . Long-term capital appreciation.

Invests Principally in . . . A non-diversified portfolio of equity securities
of Asian companies.

Global Small Cap Fund

Seeks . . . Long-term growth of capital.

Invests Principally in . . . A diversified global portfolio of the equity
securities of small capitalization companies.

2
<PAGE>

Total Return Funds

Strategic Balanced Fund

Seeks . . . A high long-term total return by investing in a combination of
equity and debt securities.

Invests Principally in . . . A diversified portfolio of dividend-paying
common stocks and fixed-income securities, and also in equity-type securities
such as warrants, preferred stocks and convertible debt instruments.

Balanced Shares

Seeks . . . A high return through a combination of current income and capital
appreciation.

Invests Principally in . . . A diversified portfolio of equity and fixed-income
securities such as common and preferred stocks, U.S. Government and agency
obligations, bonds and senior debt securities.

Income Builder Fund

Seeks . . . Both an attractive level of current income and long-term growth
of income and capital.

Invests Principally in . . . A non-diversified portfolio of fixed-income
securities and dividend-paying common stocks. Alliance currently expects to
continue to maintain approximately 60% of the Fund's net assets in
fixed-income securities and 40% in equity securities.

Utility Income Fund

Seeks . . . Current income and capital appreciation through investment in the
utilities industry.

Invests Principally in . . . A diversified portfolio of equity securities,
such as common stocks, securities convertible into common stocks and rights
and warrants to subscribe for purchase of common stocks, and in fixed-income
securities such as bonds and preferred stocks.

Growth and Income Fund

Seeks . . . Income and appreciation through investment in dividend-paying
common stocks of quality companies.

Invests Principally in . . . A diversified portfolio of dividend-paying
common stocks of good quality, and, under certain market conditions, other
types of securities, including bonds, convertible bonds and preferred stocks.

A Word About Risk . . .

The price of the shares of the Alliance Stock Funds will fluctuate as the daily
prices of the individual securities in which they invest fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost. With
respect to those Funds permitted to invest in foreign currency denominated
securities, these fluctuations may be magnified by changes in foreign exchange
rates. Investment in the Global Stock Funds involves risks not associated with
funds that invest primarily in securities of U.S. issuers. While the Funds
invest principally in common stocks and other equity securities, in order to
achieve their investment objectives the Funds may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
involve risks different from, and, in certain cases, greater than, the risks
presented by more traditional investments. These risks are fully discussed in
this Prospectus.

Getting Started . . .

Shares of the Funds are available through your financial representative and
most banks, insurance companies and brokerage firms nationwide. Shares can be
purchased for a minimum initial investment of $250, and subsequent
investments can be made for as little as $50. For detailed information about
purchasing and selling shares, see "Purchase and Sale of Shares." In
addition, the Funds offer several time and money saving services to
investors. Be sure to ask your financial representative about:

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Automatic Reinvestment
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Automatic Investment Program
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Retirement Plans
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Shareholder Communications
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Dividend Direction Plans
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Auto Exchange
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Systematic Withdrawals
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A Choice of Purchase Plans
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Telephone Transactions
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24 Hour Information
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Alliance(R)
Mutual funds without the Mystery/TM/

(R)/SM These are registered marks used under licenses from the owner,
Alliance Capital Management L.P.

3
<PAGE>

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Expense Information
- --------------------------------------------------------------------------------

Shareholder Transaction Expenses are one of several factors to consider when
you invest in a Fund. The following table summarizes your maximum transaction
costs from investing in a Fund and annual expenses for each class of shares
of each Fund. For each Fund, the "Examples" to the right of the table below
show the cumulative expenses attributable to a hypothetical $1,000 investment
in each class for the periods specified.

Class A Shares Class B Shares Class C Shares
-------------- -------------- --------------
<S> <C> <C> <C>
Maximum sales charge imposed on purchases (as a percentage of
offering price)........................................................ 4.25%(a) None None
Sales charge imposed on dividend reinvestments......................... None None None
Deferred sales charge (as a
percentage of original purchase
price or redemption proceeds,
whichever is lower).................................................... None(a) 4.0% None
during the
first year,
decreasing 1.0%
annually to 0%
after the
fourth year (b)
Exchange fee........................................................... None None None
</TABLE>

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(a) Reduced for larger purchases. Purchases of $1,000,000 or more are not
subject to an initial sales charge but may be subject to a 1% deferred sales
charge on redemptions within one year of purchase. See "Purchase and Sale of
Shares--How to Buy Shares" -pages 39 and 40.

(b) Class B shares of each Fund other than Premier Growth Fund automatically
convert to Class A shares after eight years and the Class B shares of
Premier Growth Fund convert to Class A shares after six years. See "Purchase
and Sale of Shares--How to Buy Shares" -pages 39 and 40.

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Please refer to the footnotes on page 6.

4
<PAGE>

<TABLE>
<CAPTION>
Operating Expenses Examples
- ------------------------------------------------------------------ ------------------------------------------------------------
Technology Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 65 $ 25 $ 24
12b-1 fees .30% 1.00% 1.00% After 3 years $ 93 $ 96 $ 76 $ 75
Other expenses (a) .36% .43% .41% After 5 years $129 $130 $130 $129
---- ---- ----
Total fund After 10 years $231 $258(b) $258(b) $275
operating expenses 1.66% 2.43% 2.41%
==== ==== ====
<CAPTION>
Quasar Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 59 $ 65 $ 25 $ 25
12b-1 fees .21% 1.00% 1.00% After 3 years $ 93 $ 98 $ 78 $ 77
Other expenses (a) .46% .50% .48% After 5 years $129 $133 $133 $132
---- ---- ----
Total fund After 10 years $232 $263(b) $263(b) $282
operating expenses 1.67% 2.50% 2.48%
==== ==== ====
<CAPTION>
International Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 61 $ 68 $ 28 $ 28
12b-1 fees .18% 1.00% 1.00% After 3 years $100 $106 $ 86 $ 86
Other expenses (a) .72% .78% .78% After 5 years $141 $147 $147 $147
---- ---- ----
Total fund After 10 years $255 $290(b) $290(b) $311
operating expenses 1.90% 2.78% 2.78%
==== ==== ====
<CAPTION>
Worldwide Privatization Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 69 $ 75 $ 35 $ 35
12b-1 fees .30% 1.00% 1.00% After 3 years $124 $126 $106 $106
Other expenses (a) 1.45% 1.45% 1.45% After 5 years $182 $179 $179 $179
---- ---- ----
Total fund After 10 years $337 $357(b) $357(b) $373
operating expenses 2.75% 3.45% 3.45%
==== ==== ====
<CAPTION>
New Europe Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.07% 1.07% 1.07% After 1 year $ 63 $ 68 $ 28 $ 28
12b-1 fees .30% 1.00% 1.00% After 3 years $104 $106 $ 86 $ 86
Other expenses (a) .69% .69% .69% After 5 years $149 $146 $146 $146
---- ---- ----
Total fund After 10 years $271 $292(b) $292(b) $309
operating expenses 2.06% 2.76% 2.76%
==== ==== ====
<CAPTION>
All-Asia Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 64 $ 69 $ 29 $ 29
12b-1 fees .30% 1.00% 1.00% After 3 years $108 $109 $ 89 $ 89
Other expenses After 5 years $154 $152 $152 $152
Administration fees (f) .15% .15% .15% After 10 years $283 $304(b) $304(b) $320
Other operating expenses (a) .73% .73% .73%
---- ---- ----
Total other expenses .88% .88% .88%
---- ---- ----
Total fund
operating expenses 2.18% 2.88% 2.88%
==== ==== ====
<CAPTION>
Global Small Cap Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 1.00% 1.00% 1.00% After 1 year $ 66 $ 72 $ 32 $ 32
12b-1 fees .30% 1.00% 1.00% After 3 years $115 $117 $ 97 $ 97
Other expenses (a) 1.12% 1.15% 1.13% After 5 years $166 $165 $165 $164
---- ---- ----
Total fund After 10 years $306 $329(b) $329(b) $344
operating expenses 2.42% 3.15% 3.13%
==== ==== ====
<CAPTION>
Strategic Balanced Fund Class A Class B Class C Class A Class B+ Class B++ Class C
------- ------- ------- ------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees
(after waiver) (c) .45% .45% .45% After 1 year $ 56 $ 61 $ 21 $ 21
12b-1 fees .30% 1.00% 1.00% After 3 years $ 85 $ 86 $ 66 $ 66
Other expenses (a) After 5 years $116 $113 $113 $113
(after reimbursement) (d) .65% .65% .65% After 10 years $203 $225(b) $225(b) $243
---- ---- ----
Total fund
operating expenses (d) 1.40% 2.10% 2.10%
==== ==== ====
</TABLE>

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Please refer to the footnotes on page 6.

5
<PAGE>

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+ Assumes redemption at end of period.

++ Assumes no redemption at end of period.

(a) These expenses include a transfer agency fee payable to Alliance Fund
Services, Inc., an affiliate of Alliance, based on a fixed dollar amount
charged to the Fund for each shareholder's account.

(b) Assumes Class B shares converted to Class A shares after eight years, or
six years with respect to Premier Growth Fund.

(c) Net of voluntary fee waiver. In the absence of such waiver, management
fees would be .75% for Strategic Balanced Fund.

(d) Net of voluntary fee waiver and expense reimbursement. In the absence of
such waiver and reimbursement, annualized other expenses for Strategic
Balanced Fund would have been 1.19%, 1.19% and 1.19%, respectively, for
Class A, Class B and Class C shares, and annualized total fund operating
expenses for Strategic Balanced Fund would have been 1.94%, 2.64% and 2.64%,
respectively, for Class A, Class B and Class C shares.

(e) Net of expense reimbursements. Absent expense reimbursements, total fund
operating expenses for Utility Income Fund would be 27.21%, 14.42% and
14.42%, respectively, for Class A, Class B and Class C shares.

(f) Reflects the fees payable by All-Asia Fund to Alliance pursuant to an
administration agreement.

The purpose of the foregoing table is to assist the investor in understanding
the various costs and expenses that an investor in a Fund will bear directly or
indirectly. Long-term shareholders of a Fund may pay aggregate sales charges
totaling more than the economic equivalent of the maximum initial sales charges
permitted by the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. See "Management of the Funds--Distribution Services
Agreements." The Rule 12b-1 fee for each class comprises a service fee not
exceeding .25% of the aggregate average daily net assets of the Fund
attributable to the class and an asset-based sales charge equal to the remaining
portion of the Rule 12b-1 fee. The information shown in the table for Alliance
Fund, Growth Fund, Technology Fund, New Europe Fund, Global Small Cap Fund,
Strategic Balanced Fund, Balanced Shares and Income Builder Fund reflects
annualized expenses based on the Funds' most recent fiscal periods. "Total Fund
Operating Expenses" for Utility Income Fund are based on estimated amounts for
the Funds' current fiscal year. See "Management of the Funds." "Other Expenses"
for Class A, Class B and Class C shares of All-Asia Fund and Class C shares of
Worldwide Privatization Fund are based on estimated amounts for each Fund's
current fiscal year. The management fee rates of Growth Fund, Premier Growth
Fund, Counterpoint Fund, Strategic Balanced Fund, Technology Fund, International
Fund, Worldwide Privatization Fund, New Europe Fund, All-Asia Fund, Income
Builder Fund and Utility Income Fund are higher than those paid by most other
investment companies, but Alliance believes the fees are comparable to those
paid by investment companies of similar investment orientation. The expense
ratios for Class B and Class C shares of Counterpoint Fund, Technology Fund and
Quasar Fund, and for each Class of shares of Global Small Cap Fund and Worldwide
Privatization Fund, are higher than the expense ratios of most other mutual
funds, but are comparable to the expense ratios of mutual funds whose shares are
similarly priced. The examples set forth above assume reinvestment of all
dividends and distributions and utilize a 5% annual rate of return as mandated
by Commission regulations. The examples should not be considered representative
of past or future expenses; actual expenses may be greater or less than those
shown.

6
<PAGE>

- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------

The tables on the following pages present, for each Fund, per share income and
capital changes for a share outstanding throughout each period indicated. The
information in the tables for Alliance Fund, Growth Fund, Premier Growth Fund,
Strategic Balanced Fund, Balanced Shares, Utility Income Fund, Worldwide
Privatization Fund and Growth and Income Fund has, except as noted otherwise,
been audited by Price Waterhouse LLP, the independent accountants for each Fund,
and for Counterpoint Fund, Technology Fund, Quasar Fund, International Fund, New
Europe Fund, Global Small Cap Fund and Income Builder Fund by Ernst & Young LLP,
the independent auditors for each Fund. A report of Price Waterhouse LLP or
Ernst & Young LLP, as the case may be, on the information with respect to each
Fund appears in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are included in the Fund's Statement of
Additional Information. Per share data and ratios are not presented for Class C
shares of Worldwide Privatization Fund since no such shares were outstanding
during the period presented below for that Fund. No information is presented for
All-Asia Fund since it commenced operations on November 23, 1994.

Further information about a Fund's performance is contained in the Fund's annual
report to shareholders, which may be obtained without charge by contacting
Alliance Fund Services, Inc. at the address or the "Literature" telephone number
shown on the cover of this Prospectus.

7
<PAGE>

<TABLE>
<CAPTION>
Net Asset Net Realized Net Increase
Value and Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
- --------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Fund
Class A
1/1/94 to 11/30/94**... $ 6.85 $ .01 $ (.23) $ (.22) $0.00 $ 0.00
Year ended 12/31/93.... 6.68 .02 .93 .95 (.02) (.76)
Year ended 12/31/92.... 6.29 .05 .87 .92 (.05) (.48)
Year ended 12/31/91.... 5.22 .07 1.70 1.77 (.07) (.63)
Year ended 12/31/90.... 6.87 .09 (.32) (.23) (.18) (1.24)
Year ended 12/31/89.... 5.60 .12 1.19 1.31 (.04) 0.00
Year ended 12/31/88.... 5.15 .08 .80 .88 (.08) (.35)
Year ended 12/31/87.... 6.87 .08 .27 .35 (.13) (1.94)
Year ended 12/31/86.... 11.15 .11 .87 .98 (.10) (5.16)
Year ended 12/31/85.... 9.18 .20 2.51 2.71 (.23) (.51)
Year ended 12/31/84.... 11.48 .24 (.84) (.60) (.24) (1.46)
Class B
1/1/94 to 11/30/94**... $ 6.76 $ (.03) $ (.23) $ (.26) $0.00 $ 0.00
Year ended 12/31/93.... 6.64 (.03) .91 .88 0.00 (.76)
Year ended 12/31/92.... 6.27 (.01)(b) .87 .86 (.01) (.48)
3/4/91++ to 12/31/91... 6.14 .01 (b) .79 .80 (.04) (.63)
Class C
1/1/94 to 11/30/94**... $ 6.77 $ (.03) $ (.24) $ (.27) $0.00 $ 0.00
5/3/93++ to 12/31/93... 6.67 (.02) .88 .86 0.00 (.76)

Growth Fund (i)
Class A
5/1/94 to 10/31/94**... $ 23.89 $ .09 $ 1.10 $ 1.19 $0.00 $ 0.00
Year ended 4/30/94..... 22.67 (.01)(c) 3.55 3.54 0.00 (2.32)
Year ended 4/30/93..... 20.31 .05 (c) 3.68 3.73 (.14) (1.23)
Year ended 4/30/92..... 17.94 .29 (c) 3.95 4.24 (.26) (1.61)
9/4/90++ to 4/30/91.... 13.61 .17 (c) 4.22 4.39 (.06) 0.00
Class B
5/1/94 to 10/31/94**... $ 20.27 $ .01 $ .93 $ .94 $0.00 $ 0.00
Year ended 4/30/94..... 19.68 (.07)(c) 2.98 2.91 0.00 (2.32)
Year ended 4/30/93..... 18.16 (.06)(c) 3.23 3.17 (.03) (1.62)
Year ended 4/30/92..... 16.88 .17 (c) 3.67 3.84 (.21) (2.35)
Year ended 4/30/91..... 14.38 .08 (c) 3.22 3.30 (.09) (.71)
Year ended 4/30/90..... 14.13 .01 (b)(c) 1.26 1.27 0.00 (1.02)
Year ended 4/30/89..... 12.76 (.01)(c) 2.44 2.43 0.00 (1.06)
10/23/87+ to 4/30/88... 10.00 (.02)(c) 2.78 2.76 0.00 0.00
Class C
5/1/94 to 10/31/94**... $ 20.28 $ .01 $ .93 $ .94 $0.00 $ 0.00
8/2/93++ to 4/30/94.... 21.47 (.02)(c) 1.15 1.13 0.00 (2.32)

Premier Growth Fund
Class A
Year ended 11/30/94.... $ 11.78 $ (.09) $ (.28) $ (.37) $0.00 $ 0.00
Year ended 11/30/93.... 10.79 (.05) 1.05 1.00 (.01) 0.00
9/28/92+ to 11/30/92... 10.00 .01 .78 .79 0.00 0.00
Class B
Year ended 11/30/94.... $ 11.72 $ (.15) $ (.28) $ (.43) $0.00 $ 0.00
Year ended 11/30/93.... 10.79 (.10) 1.03 .93 0.00 0.00
9/28/92+ to 11/30/92... 10.00 0.00 .79 .79 0.00 0.00
Class C
Year ended 11/30/94.... $ 11.72 $ (.09) $ (.33) $ (.42) $0.00 $ 0.00
5/3/93++ to 11/30/93... 10.48 (.05) 1.29 1.24 0.00 0.00

Counterpoint Fund
Class A
Year ended 9/30/94..... $ 20.89 $ (.10) $ (.82) $ (.92) $0.00 $(2.83)
Year ended 9/30/93..... 19.45 (.01) 2.60 2.59 (.04) (1.11)
Year ended 9/30/92..... 19.08 .13 1.76 1.89 (.16) (1.36)
Year ended 9/30/91..... 15.18 .17 4.92 5.09 (.20) (.99)
Year ended 9/30/90..... 19.86 .23 (3.63) (3.40) (.20) (1.08)
Year ended 9/30/89..... 15.02 .21 5.30 5.51 (.23) (.44)
Year ended 9/30/88..... 18.05 .27 (2.09) (1.82) (.26) (.95)
Year ended 9/30/87..... 14.26 .26 4.20 4.46 (.36) (.31)
Year ended 9/30/86..... 10.98 .37 3.31 3.68 (.35) (.09)
2/28/85+ to 9/30/85.... 10.00 .13 .85 .98 0.00 0.00
Class B
Year ended 9/30/94..... $ 20.82 $ (.08) $ (.97) $(1.05) $0.00 $(2.83)
5/3/93++ to 9/30/93.... 18.51 (.07) 2.38 2.31 0.00 0.00
Class C
Year ended 9/30/94..... $ 20.83 $ (.14) $ (.91) $(1.05) $0.00 $(2.83)
5/3/93++ to 9/30/93...... 18.51 (.05) 2.37 2.32 0.00 0.00
</TABLE>
- -------------------------------------------------------------------------------
Please refer to the footnotes on pages 14 and 15.

8
<PAGE>

Growth Fund (i)
Class A
5/1/94 to 10/31/94**... $ 0.00 $25.08 4.98% $167,800 1.35%* .86%* 24%
Year ended 4/30/94..... (2.32) 23.89 15.66 102,406 1.40 (f) .32 87
Year ended 4/30/93..... (1.37) 22.67 18.89 13,889 1.40 (f) .20 124
Year ended 4/30/92..... (1.87) 20.31 23.61 8,228 1.40 (f) 1.44 137
9/4/90++ to 4/30/91.... (.06) 17.94 32.40 713 1.40*(f) 1.99* 130
Class B
5/1/94 to 10/31/94**... $ 0.00 $21.21 4.64% $751,521 2.05%* .16%* 24%
Year ended 4/30/94..... (2.32) 20.27 14.79 394,227 2.10 (f) (.36) 87
Year ended 4/30/93..... (1.65) 19.68 18.16 56,704 2.15 (f) (.53) 124
Year ended 4/30/92..... (2.56) 18.16 22.75 37,845 2.15 (f) .78 137
Year ended 4/30/91..... (.80) 16.88 24.72 22,710 2.10 (f) .56 130
Year ended 4/30/90..... (1.02) 14.38 8.81 15,800 2.00 (f) .07 165
Year ended 4/30/89..... (1.06) 14.13 20.31 7,672 2.00 (f) (.03) 139
10/23/87+ to 4/30/88... 0.00 12.76 27.60 1,938 2.00*(f) (.40)* 52
Class C
5/1/94 to 10/31/94**... $ 0.00 $21.22 4.64% $114,455 2.05%* .16%* 24%
8/2/93++ to 4/30/94.... (2.32) 20.28 5.27 64,030 2.10*(f) (.31)* 87

Premier Growth Fund
Class A
Year ended 11/30/94.... $ 0.00 $11.41 (3.14)% $ 35,146 1.96% (.67)% 98%
Year ended 11/30/93.... (.01) 11.78 9.26 40,415 2.18 (.61) 68
9/28/92+ to 11/30/92... 0.00 10.79 7.90 4,893 2.17*(f) .91*(f) 0
Class B
Year ended 11/30/94.... $0.00 $11.29 (3.67)% $139,988 2.47% (1.19)% 98%
Year ended 11/30/93.... 0.00 11.72 8.64 151,600 2.70 (1.14) 68
9/28/92+ to 11/30/92... 0.00 10.79 7.90 19,941 2.68*(f) .35*(f) 0
Class C
Year ended 11/30/94.... $0.00 $11.30 (3.58)% $ 7,332 2.47% (1.16)% 98%
5/3/93++ to 11/30/93... 0.00 11.72 11.83 3,899 2.79* (1.35)* 68

Counterpoint Fund
Class A
Year ended 9/30/94..... $(2.83) $17.14 (4.91)% $ 42,712 1.94% (.43)% 25%
Year ended 9/30/93..... (1.15) 20.89 13.76 67,356 1.79 (.04) 48
Year ended 9/30/92..... (1.52) 19.45 10.76 70,876 1.62 .79 39
Year ended 9/30/91..... (1.19) 19.08 35.39 59,690 1.64 1.02 38
Year ended 9/30/90..... (1.28) 15.18 (17.91) 49,198 1.72 1.38 57
Year ended 9/30/89..... (.67) 19.86 38.25 60,478 1.69 1.28 37
Year ended 9/30/88..... (1.21) 15.02 (8.94) 44,789 1.76 1.93 33
Year ended 9/30/87..... (.67) 18.05 32.24 57,752 1.64 (f) 1.68(f) 24
Year ended 9/30/86..... (.40) 14.26 34.00 36,713 1.55 (f) 2.88(f) 17
2/28/85+ to 9/30/85.... 0.00 10.98 9.80 22,365 1.50*(f) 3.20*(f) 6
Class B
Year ended 9/30/94..... $(2.83) $16.94 (5.63)% $ 527 2.73% (1.17)% 25%
5/3/93++ to 9/30/93.... 0.00 20.82 12.48 120 3.35* (1.60)* 48
Class C
Year ended 9/30/94..... $(2.83) $16.95 (5.62)% $ 418 2.66% (1.11)% 25%
5/3/93++ to 9/30/93.... 0.00 20.83 12.53 242 3.22* (1.34)* 48
</TABLE>
- -------------------------------------------------------------------------------

9
<PAGE>

<TABLE>
<CAPTION>
Net Net
Net Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
- --------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Technology Fund
Class A
1/1/94 to 11/30/94**...... $26.12 $(.32) $ 6.18 $ 5.86 $0.00 $ 0.00
Year ended 12/31/93....... 28.20 (.29) 6.39 6.10 0.00 (8.18)
Year ended 12/31/92....... 26.38 (.22) (b) 4.31 4.09 0.00 (2.27)
Year ended 12/31/91....... 19.44 (.02) 10.57 10.55 0.00 (3.61)
Year ended 12/31/90....... 21.57 (.03) (.56) (.59) 0.00 (1.54)
Year ended 12/31/89....... 20.35 0.00 1.22 1.22 0.00 0.00
Year ended 12/31/88....... 20.22 (.03) .16 .13 0.00 0.00
Year ended 12/31/87....... 23.11 (.10) 4.54 4.44 0.00 (7.33)
Year ended 12/31/86....... 20.64 (.14) 2.62 2.48 (.01) 0.00
Year ended 12/31/85....... 16.52 .02 4.30 4.32 (.20) 0.00
Year ended 12/31/84....... 21.44 .20 (3.72) (3.52) (.01) (1.39)
Class B
1/1/94 to 11/30/94**...... $25.98 $(.23) $ 5.86 $ 5.63 $0.00 $ 0.00
5/3/93++ to 12/31/93...... 27.44 (.12) 6.84 6.72 0.00 (8.18)
Class C
1/1/94 to 11/30/94**...... $25.98 $(.24) $ 5.87 $ 5.63 $0.00 $ 0.00
5/3/93++ to 12/31/93...... 27.44 (.13) 6.85 6.72 0.00 (8.18)
Quasar Fund
Class A
Year ended 9/30/94........ $24.43 $(.60) $ (.36) $ (.96) $0.00 $ (.82)
Year ended 9/30/93........ 19.34 (.41) 6.38 5.97 0.00 (.88)
Year ended 9/30/92........ 21.27 (.24) (1.53) (1.77) 0.00 (.16)
Year ended 9/30/91........ 15.67 (.05) 5.71 5.66 (.06) 0.00
Year ended 9/30/90........ 24.84 .03 (b) (7.18) (7.15) 0.00 (2.02)
Year ended 9/30/89........ 17.60 .02 (b) 7.40 7.42 0.00 (.18)
Year ended 9/30/88........ 24.47 (.08) (2.08) (2.16) 0.00 (4.71)
Year ended 9/30/87(d)..... 21.80 (.14) 5.88 5.74 0.00 (3.07)
Year ended 9/30/86(d)..... 17.25 0.00 5.54 5.54 (.03) (.96)
Year ended 9/30/85(d)..... 14.67 .04 2.87 2.91 (.11) (.22)
Year ended 9/30/84(d)..... 20.73 .12 (2.24) (2.12) (.05) (3.89)
Class B
Year ended 9/30/94........ $23.88 $(.53) $ (.61) $(1.14) $0.00 $ (.82)
Year ended 9/30/93........ 19.07 (.18) 5.87 5.69 0.00 (.88)
Year ended 9/30/92........ 21.14 (.39) (1.52) (1.91) 0.00 (.16)
Year ended 9/30/91........ 15.66 (.13) 5.67 5.54 (.06) 0.00
9/17/90++ to 9/30/90...... 17.17 (.01) (1.50) (1.51) 0.00 0.00
Class C
Year ended 9/30/94........ $23.88 $(.36) $ (.78) $(1.14) $0.00 $ (.82)
5/3/93++ to 9/30/93....... 20.33 (.10) 3.65 3.55 0.00 0.00
International Fund
Class A
Year ended 6/30/94........ $16.01 $(.09) $ 3.02 $ 2.93 $0.00 $ (.56)
Year ended 6/30/93........ 14.98 (.01) 1.17 1.16 (.04) (.09)
Year ended 6/30/92........ 14.00 .01 (b) 1.04 1.05 (.07) 0.00
Year ended 6/30/91........ 17.99 .05 (3.54) (3.49) (.03) (.47)
Year ended 6/30/90........ 17.24 .03 2.87 2.90 (.04) (2.11)
Year ended 6/30/89........ 16.09 .05 3.73 3.78 (.13) (2.50)
Year ended 6/30/88........ 23.70 .17 (1.22) (1.05) (.21) (6.35)
Year ended 6/30/87........ 22.02 .15 4.31 4.46 (.03) (2.75)
Year ended 6/30/86........ 11.94 .02 10.50 10.52 (.03) (.41)
Year ended 6/30/85........ 10.77 .06 (c) 1.79 1.85 (.10) (.58)
Class B
Year ended 6/30/94........ $15.74 $(.19) (b) $ 2.91 $ 2.72 $0.00 $ (.56)
Year ended 6/30/93........ 14.81 (.12) 1.14 1.02 0.00 (.09)
Year ended 6/30/92........ 13.93 (.11) (b) 1.02 .91 (.03) 0.00
9/17/90++ to 6/30/91...... 15.52 .03 (1.12) (1.09) (.03) (.47)
Class C
Year ended 6/30/94........ $15.74 $(.11) $ 2.84 $ 2.73 $0.00 $ (.56)
4/30/93++ to 6/30/93...... 15.93 0.00 (.19) (.19) 0.00 0.00
Worldwide Privatization Fund
Class A
6/2/94+ to 6/30/94........ $10.00 $ .01 $ (.26) $ (.25) $0.00 $ 0.00
Class B
6/2/94+ to 6/30/94........ $10.00 $ .00 $ (.26) $ (.26) $0.00 $ 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on pages 14 and 15.

10
<PAGE>

<TABLE>
<CAPTION>
Total Net Assets Ratio of
Total Net Asset Investment At End Of Ratio Of Net Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of on Net Asset (000's To Average To Average Portfolio
Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- --------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Technology Fund
Class A
1/1/94 to 11/30/94**...... $ 0.00 $31.98 22.44% $202,929 1.66%* (1.22)%* 55%
Year ended 12/31/93....... (8.18) 26.12 21.63 173,732 1.73 (1.32) 64
Year ended 12/31/92....... (2.27) 28.20 15.50 173,566 1.61 (.90) 73
Year ended 12/31/91....... (3.61) 26.38 54.24 191,693 1.71 (.20) 134
Year ended 12/31/90....... (1.54) 19.44 (3.08) 131,843 1.77 (.18) 147
Year ended 12/31/89....... 0.00 21.57 6.00 141,730 1.66 .02 139
Year ended 12/31/88....... 0.00 20.35 0.64 169,856 1.42(f) (.16)(f) 139
Year ended 12/31/87....... (7.33) 20.22 19.16 167,608 1.31(f) (.56)(f) 248
Year ended 12/31/86....... (.01) 23.11 12.03 147,733 1.13(f) (.57)(f) 141
Year ended 12/31/85....... (.20) 20.64 26.24 147,114 1.14(f) .07(f) 259
Year ended 12/31/84....... (1.40) 16.52 (16.44) 140,227 1.13(f) 1.13(f) 242
Class B
1/1/94 to 11/30/94**...... $ 0.00 $31.61 21.67% $ 18,397 2.43%* (1.95)%* 55%
5/3/93++ to 12/31/93...... (8.18) 25.98 24.49 1,645 2.57* (2.30)* 64
Class C
1/1/94 to 11/30/94**...... $ 0.00 $31.61 21.67% $ 7,470 2.41%* (1.94)%* 55%
5/3/93++ to 12/31/93...... (8.18) 25.98 24.49 1,096 2.52* (2.25)* 64
Quasar Fund
Class A
Year ended 9/30/94........ $ (.82) $22.65 (4.05)% $155,470 1.67% (1.15)% 110%
Year ended 9/30/93........ (.88) 24.43 31.58 228,874 1.65 (1.00) 102
Year ended 9/30/92........ (.16) 19.34 (8.34) 252,140 1.62 (.89) 128
Year ended 9/30/91........ (.06) 21.27 36.28 333,806 1.64 (.22) 118
Year ended 9/30/90........ (2.02) 15.67 (30.81) 251,102 1.66 .16 90
Year ended 9/30/89........ (.18) 24.84 42.68 263,099 1.73 .10 90
Year ended 9/30/88........ (4.71) 17.60 (8.61) 90,713 1.28(f) (.40)(f) 58
Year ended 9/30/87(d)..... (3.07) 24.47 29.61 134,676 1.18(f) (.56)(f) 76
Year ended 9/30/86(d)..... (.99) 21.80 33.79 144,959 1.18(f) .02 (f) 84
Year ended 9/30/85(d)..... (.33) 17.25 20.29 77,067 1.18 .22 77
Year ended 9/30/84(d)..... (3.94) 14.67 (12.55) 48,654 1.18 .83 47
Class B
Year ended 9/30/94........ $ (.82) $21.92 (4.92)% $ 13,901 2.50% (1.98)% 110%
Year ended 9/30/93........ (.88) 23.88 30.53 16,779 2.46 (1.81) 102
Year ended 9/30/92........ (.16) 19.07 (9.05) 9,454 2.42 (1.67) 128
Year ended 9/30/91........ (.06) 21.14 35.54 7,346 2.41 (1.28) 118
9/17/90++ to 9/30/90...... 0.00 15.66 (8.79) 71 2.09* (.26)* 90
Class C
Year ended 9/30/94........ $ (.82) $21.92 (4.92)% $ 1,220 2.48% (1.96)% 110%
5/3/93++ to 9/30/93....... 0.00 23.88 17.46 118 2.49* (1.90)* 102
International Fund
Class A
Year ended 6/30/94........ $ (.56) $18.38 18.68% $201,916 1.90% (.50)% 97%
Year ended 6/30/93........ (.13) 16.01 7.86 161,048 1.88 (.14) 94
Year ended 6/30/92........ (.07) 14.98 7.52 179,807 1.82 .07 72
Year ended 6/30/91........ (.50) 14.00 (19.34) 214,442 1.73 .37 71
Year ended 6/30/90........ (2.15) 17.99 16.98 265,999 1.45 .33 37
Year ended 6/30/89........ (2.63) 17.24 27.65 166,003 1.41 .39 87
Year ended 6/30/88........ (6.56) 16.09 (4.20) 132,319 1.41 .84 55
Year ended 6/30/87........ (2.78) 23.70 23.05 194,716 1.30 .77 58
Year ended 6/30/86........ (.44) 22.02 90.87 139,326 1.29 .16 62
Year ended 6/30/85........ (.68) 11.94 18.28 71,707 1.35(c) .73(c) 40
Class B
Year ended 6/30/94........ $ (.56) $17.90 17.65% $ 29,943 2.78% (1.15)% 97%
Year ended 6/30/93........ (.09) 15.74 6.98 6,363 2.70 (.96) 94
Year ended 6/30/92........ (.03) 14.81 6.54 5,585 2.68 (.70) 72
9/17/90++ to 6/30/91...... (.50) 13.93 (6.97) 3,515 3.39* .84* 71
Class C
Year ended 6/30/94........ $ (.56) $17.91 17.72% $ 13,503 2.78% (1.12)% 97%
4/30/93++ to 6/30/93...... 0.00 15.74 (1.19) 229 2.57* .08* 94
Worldwide Privatization Fund
Class A
6/2/94+ to 6/30/94........
Class B $ 0.00 $ 9.75 (2.50)% $ 4,990 2.75%* 1.03%* 0%
6/2/94+ to 6/30/94........ $ 0.00 $ 9.74 (2.60)% $ 22,859 3.45%* .33%* 0%
</TABLE>
- --------------------------------------------------------------------------------

11
<PAGE>

<TABLE>
<CAPTION>
Net Net
Net Asset Realized and Increase
Value Unrealized (Decrease) In Dividends From Distributions
Beginning Of Net Investment Gain (Loss) On Net Asset Value Net Investment From Net
Fiscal Year or Period Period Income (Loss) Investments From Operations Income Realized Gains
- --------------------- ------------ -------------- -------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
New Europe Fund
Class A
Period ended 7/31/94**.... $12.53 $ .09 $ .04 $ .13 $0.00 $ 0.00
Year ended 2/28/94........ 9.37 .02 (b) 3.14 3.16 0.00 0.00
Year ended 2/28/93........ 9.81 .04 (.33) (.29) (.15) 0.00
Year ended 2/29/92........ 9.76 .02 (b) .05 .07 (.02) 0.00
4/2/90+ to 2/28/91........ 11.11 (e) .26 (.91) (.65) (.26) (.44)
Class B
Period ended 7/31/94**.... $12.32 $ .07 $ .02 $ .09 $0.00 $ 0.00
Year ended 2/28/94........ 9.28 (.05) (b) 3.09 3.04 0.00 0.00
Year ended 2/28/93........ 9.74 (.02) (.33) (.35) (.11) 0.00
3/5/91++ to 2/29/92....... 9.84 (.04) (b) (.04) (.08) (.02) 0.00
Class C
Period ended 7/31/94**.... $12.33 $ .06 $ .03 $ .09 $0.00 $ 0.00
5/3/93++ to 2/28/94....... 10.21 (.04) (b) 2.16 2.12 0.00 0.00
Global Small Cap Fund
Class A
Period ended 7/31/94**.... $11.24 $(.15) $ (.01) $ (.16) $0.00 $ 0.00
Year ended 9/30/93........ 9.33 (.15) 2.49 2.34 0.00 (.43)
Year ended 9/30/92........ 10.55 (.16) (1.03) (1.19) 0.00 (.03)
Year ended 9/30/91........ 8.26 (.06) 2.35 2.29 0.00 0.00
Year ended 9/30/90........ 15.54 (.05) (b) (4.12) (4.17) 0.00 (3.11)
Year ended 9/30/89........ 11.41 (.03) 4.25 4.22 0.00 (.09)
Year ended 9/30/88........ 15.07 (.05) (1.83) (1.88) 0.00 (1.78)
Year ended 9/30/87........ 15.47 (.07) 4.19 4.12 (.04) (4.48)
Year ended 9/30/86........ 12.94 .05 3.74 3.79 (.04) (1.22)
Year ended 9/30/85........ 13.75 .07 .25 .32 (.12) (1.01)
Class B
Period ended 7/31/94**.... $11.00 $(.17)(b) $ (.05) $ (.22) $0.00 $ 0.00
Year ended 9/30/93........ 9.20 (.15) 2.38 2.23 0.00 (.43)
Year ended 9/30/92........ 10.49 (.20) (1.06) (1.26) 0.00 (.03)
Year ended 9/30/91........ 8.26 (.07) 2.30 2.23 0.00 0.00
9/17/90++ to 9/30/90...... 9.12 (.01) (.85) (.86) 0.00 0.00
Class C
Period ended 7/31/94**.... $11.00 $(.17)(b) $ (.04) $ (.21) $0.00 $ 0.00
5/3/93++ to 9/30/93....... 9.86 (.05) 1.19 1.14 0.00 0.00
Strategic Balanced Fund (i)
Class A
Period ended 7/31/94**.... $16.46 $ .07 (c) $ (.27) $ (.20) $0.00 $ 0.00
Year ended 4/30/94........ 16.97 .16 (c) .74 .90 (.24) (1.17)
Year ended 4/30/93........ 17.06 .39 (c) .59 .98 (.42) (.65)
Year ended 4/30/92........ 14.48 .27 (c) 2.80 3.07 (.17) (.32)
9/4/90++ to 4/30/91....... 12.51 .34 (c) 1.66 2.00 (.03) 0.00
Class B
Period ended 7/31/94**.... $14.30 $ .03 (c) $ (.23) $ (.20) $0.00 $ 0.00
Year ended 4/30/94........ 14.92 .06 (c) .63 .69 (.14) (1.17)
Year ended 4/30/93........ 15.51 .23 (c) .53 .76 (.25) (1.10)
Year ended 4/30/92........ 13.96 .22 (c) 2.70 2.92 (.29) (1.08)
Year ended 4/30/91........ 12.40 .43 (c) 1.60 2.03 (.47) 0.00
Year ended 4/30/90........ 11.97 .50 (b)(c) .60 1.10 (.25) (.42)
Year ended 4/30/89........ 11.45 .48 (c) 1.11 1.59 (.30) (.77)
10/23/87+ to 4/30/88...... 10.00 .13 (c) 1.38 1.51 (.06) 0.00
Class C
Period ended 7/31/94**.... $14.31 $ .03 (c) $ (.23) $ (.20) $0.00 $ 0.00
8/2/93++ to 4/30/94....... 15.64 .15 (c) (.17) (.02) (.14) (1.17)
Balanced Shares
Class A
Period ended 7/31/94**.... $14.40 $ .29 $ (.74) $ (.45) $(.28) $ (.29)
Year ended 9/30/93........ 13.20 .34 1.29 1.63 (.43) 0.00
Year ended 9/30/92........ 12.64 .44 .57 1.01 (.45) 0.00
Year ended 9/30/91........ 10.41 .46 2.17 2.63 (.40) 0.00
Year ended 9/30/90........ 14.13 .45 (2.14) (1.69) (.40) (1.63)
Year ended 9/30/89........ 12.53 .42 2.18 2.60 (.46) (.54)
Year ended 9/30/88........ 16.33 .46 (1.07) (.61) (.44) (2.75)
Year ended 9/30/87........ 14.64 .67 1.62 2.29 (.60) 0.00
Year ended 9/30/86........ 11.74 .68 3.40 4.08 (.65) (.53)
Year ended 9/30/85........ 10.41 .68 1.67 2.35 (.81) (.21)(j)
Class B
Period ended 7/31/94**.... $14.27 $ .22 $ (.75) $ (.53) $(.22) $ (.29)
Year ended 9/30/93........ 13.13 .29 1.22 1.51 (.37) 0.00
Year ended 9/30/92........ 12.61 .37 .54 .91 (.39) 0.00
2/4/91++ to 9/30/91....... 11.84 .25 .80 1.05 (.28) 0.00
Class C
Period ended 7/31/94**.... $14.28 $ .24 $ (.77) $ (.53) $(.22) $ (.29)
5/3/93++ to 9/30/93....... 13.63 .11 .71 .82 (.17) 0.00
</TABLE>
- --------------------------------------------------------------------------------
Please refer to the footnotes on pages 14 and 15.

12
<PAGE>

<TABLE>
<CAPTION>
Total Net Assets Ratio of
Total Net Asset Investment At End Of Ratio Of Net Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End of on Net Asset (000's To Average To Average Portfolio
Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- --------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
New Europe Fund
Class A
Period ended 7/31/94**.... $ 0.00 $12.66 1.04% $ 86,739 2.06%* 1.85%* 35%
Year ended 2/28/94........ 0.00 12.53 33.73 90,372 2.30 .17 94
Year ended 2/28/93........ (.15) 9.37 (2.82) 79,285 2.25 .47 125
Year ended 2/29/92........ (.02) 9.81 .74 108,510 2.24 .16 34
4/2/90+ to 2/28/91........ (.70) 9.76 (5.63) 188,016 1.52* 2.71* 48
Class B
Period ended 7/31/94**.... $ 0.00 $12.41 .73% $ 31,404 2.76%* 1.15%* 35%
Year ended 2/28/94........ 0.00 12.32 32.76 20,729 3.02 (.52) 94
Year ended 2/28/93........ (.11) 9.28 (3.49) 1,732 3.00 (.50) 125
3/5/91++ to 2/29/92....... (.02) 9.74 .03 1,423 3.02* (.71)* 34
Class C
Period ended 7/31/94**.... $ 0.00 $12.42 .73% $ 11,875 2.76%* 1.15%* 35%
5/3/93++ to 2/28/94....... 0.00 12.33 20.77 10,886 3.00* (.52)* 94
Global Small Cap Fund
Class A
Period ended 7/31/94**.... $ 0.00 $11.08 (1.42)% $ 61,372 2.42%* (1.26)%* 78%
Year ended 9/30/93........ (.43) 11.24 25.83 65,713 2.53 (1.13) 97
Year ended 9/30/92........ (.03) 9.33 (11.30) 58,491 2.34 (.85) 108
Year ended 9/30/91........ 0.00 10.55 27.72 84,370 2.29 (.55) 104
Year ended 9/30/90........ (3.11) 8.26 (31.90) 68,316 1.73 (.46) 89
Year ended 9/30/89........ (.09) 15.54 37.34 113,583 1.56 (.17) 106
Year ended 9/30/88........ (1.78) 11.41 (8.11) 90,071 1.54(f) (.50)(f) 74
Year ended 9/30/87........ (4.52) 15.07 34.11 113,305 1.41(f) (.44)(f) 98
Year ended 9/30/86........ (1.26) 15.47 31.76 90,354 1.22(f) .30(f) 107
Year ended 9/30/85........ (1.13) 12.94 2.74 76,220 1.27(f) .51(f) 72
Class B
Period ended 7/31/94**.... $ 0.00 $10.78 (2.00)% $ 3,889 3.15%* (1.93)%* 78%
Year ended 9/30/93........ (.43) 11.00 24.97 1,150 3.26 (1.85) 97
Year ended 9/30/92........ (.03) 9.20 (12.03) 819 3.11 (1.31) 108
Year ended 9/30/91........ 0.00 10.49 27.00 121 2.98 (1.39) 104
9/17/90++ to 9/30/90...... 0.00 8.26 (9.43) 183 2.61* (1.30)* 89
Class C
Period ended 7/31/94**.... $ 0.00 $10.79 (1.91)% $ 1,330 3.13%* (1.92)%* 78%
5/3/93++ to 9/30/93....... 0.00 11.00 11.56 261 3.75* (2.51)* 97
Strategic Balanced Fund (i)
Class A
Period ended 7/31/94**.... $ 0.00 $16.26 (1.22)% $ 9,640 1.40%*(f) 1.63%* 21%
Year ended 4/30/94........ (1.41) 16.46 5.06 9,822 1.40 (f) 1.67 139
Year ended 4/30/93........ (1.07) 16.97 5.85 8,637 1.40 (f) 2.29 98
Year ended 4/30/92........ (.49) 17.06 20.96 6,843 1.40 (f) 1.92 103
9/4/90++ to 4/30/91....... (.03) 14.48 16.00 443 1.40*(f) 3.54* 137
Class B
Period ended 7/31/94**.... $ 0.00 $14.10 (1.40)% $ 43,578 2.10%*(f) .92%* 21%
Year ended 4/30/94........ (1.31) 14.30 4.29 43,616 2.10 (f) .93 139
Year ended 4/30/93........ (1.35) 14.92 4.96 36,155 2.15 (f) 1.55 98
Year ended 4/30/92........ (1.37) 15.51 20.14 31,842 2.15 (f) 1.34 103
Year ended 4/30/91........ (.47) 13.96 16.73 22,552 2.10 (f) 3.23 137
Year ended 4/30/90........ (.67) 12.40 8.85 19,523 2.00 (f) 3.85 120
Year ended 4/30/89........ (1.07) 11.97 14.66 5,128 2.00 (f) 4.31 103
10/23/87+ to 4/30/88...... (.06) 11.45 15.10 2,344 2.00*(f) 2.44* 72
Class C
Period ended 7/31/94**.... $ 0.00 $14.11 (1.40)% $ 4,317 2.10%*(f) .93%* 21%
8/2/93++ to 4/30/94....... (1.31) 14.31 .45 4,289 2.10 (f) .69 139
Balanced Shares
Class A
Period ended 7/31/94**.... $ (.57) $13.38 (3.21)% $157,637 1.27%* 2.50%* 116%
Year ended 9/30/93........ (.43) 14.40 12.52 172,484 1.35 2.50 188
Year ended 9/30/92........ (.45) 13.20 8.14 143,883 1.40 3.26 204
Year ended 9/30/91........ (.40) 12.64 25.52 154,230 1.44 3.75 70
Year ended 9/30/90........ (2.03) 10.41 (13.12) 140,913 1.36 4.01 169
Year ended 9/30/89........ (1.00) 14.13 22.27 159,290 1.42 3.29 132
Year ended 9/30/88........ (3.19) 12.53 (1.10) 111,515 1.42 3.74 190
Year ended 9/30/87........ (.60) 16.33 15.80 129,786 1.17 4.14 136
Year ended 9/30/86........ (1.18) 14.64 35.01 78,900 .99 4.78 26
Year ended 9/30/85........ (1.02) 11.74 22.91 40,502 1.15 5.85 19
Class B
Period ended 7/31/94**.... $ (.51) $13.23 (3.80)% $ 14,347 2.05%* 1.73%* 116%
Year ended 9/30/93........ (.37) 14.27 11.65 12,789 2.13 1.72 188
Year ended 9/30/92........ (.39) 13.13 7.32 6,499 2.16 2.46 204
2/4/91++ to 9/30/91....... (.28) 12.61 8.96 1,830 2.13* 3.19* 70
Class C
Period ended 7/31/94**.... $ (.51) $13.24 (3.80)% $ 6,254 2.03%* 1.81%* 116%
5/3/93++ to 9/30/93....... (.17) 14.28 6.01 1,487 2.29* 1.47* 188
</TABLE>
- --------------------------------------------------------------------------------

13
<PAGE>

Class A
3/25/94++ to 10/31/94.... $10.00 $ .96 $(1.02) $ (.06) $(.05)(g) $ (.20)

Class B
3/25/94++ to 10/31/94.... $10.00 $ .88 $ (.98) $ (.10) $(.06)(g) $ (.16)

Class C
Year ended 10/31/94...... $10.47 $ .50 $ (.85) $ (.35) $(.11)(g) $ (.35)
Year ended 10/31/93...... 9.80 .52 .51 1.03 (.36) 0.00
Year ended 10/31/92...... 10.00 .55 (.28) .27 (.47) 0.00
10/25/91+ to 10/31/91.... 10.00 .01 0.00 .01 (.01) 0.00

Utility Income Fund

Class A
Year ended 11/30/94...... $ 9.92 $ .42 (c) $ (.89) $ (.47) $(.48) $ 0.00
10/18/93+ to 11/30/93.... 10.00 .02 (c) (.10) (.08) 0.00 0.00

Class B
Year ended 11/30/94...... $ 9.91 $ .37 (c) $ (.91) $ (.54) $(.41) $ 0.00
10/18/93+ to 11/30/93.... 10.00 .01 (c) (.10) (.09) 0.00 0.00

Class C
Year ended 11/30/94...... $ 9.92 $ .39 (c) $ (.93) $ (.54) $(.41) $ 0.00
10/27/93+ to 11/30/93.... 10.00 .01 (c) (.09) (.08) 0.00 0.00

Growth and Income Fund

Class A
Year ended 10/31/94...... $ 2.61 $ .06 $ (.08) $ (.02) $(.06) (.18)
Year ended 10/31/93...... 2.48 .06 .29 .35 (.06) (.16)
Year ended 10/31/92...... 2.52 .06 .11 .17 (.06) (.15)
Year ended 10/31/91...... 2.28 .07 .56 .63 (.09) (.30)
Year ended 10/31/90...... 3.02 .09 (.30) (.21) (.10) (.43)
Year ended 10/31/89...... 3.05 .10 .43 .53 (.08) (.48)
Year ended 10/31/88...... 3.48 .10 .33 .43 (.08) (.78)
Year ended 10/31/87...... 3.52 .11 (.03) .08 (.12) 0.00
Year ended 10/31/86...... 3.01 .12 .92 1.04 (.13) (.40)
Year ended 10/31/85...... 2.93 .14 .42 .56 (.15) (.33)
Year ended 10/31/84...... 3.20 .14 .03 .17 (.13) (.31)

Class B
Year ended 10/31/94...... $ 2.60 $ .04 $ (.08) $ (.04) $(.04) (.18)
Year ended 10/31/93...... 2.47 .05 .28 .33 (.04) (.16)
Year ended 10/31/92...... 2.52 .04 .11 .15 (.05) (.15)
2/8/91++ to 10/31/91..... 2.40 .04 .12 .16 (.04) 0.00

Class C
Year ended 10/31/94...... $ 2.60 $ .04 $ (.08) $ (.04) (.04) (.18)
5/3/93 ++ to 10/31/93.... 2.43 .02 .17 .19 (.02) 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

+ Commencement of operations.
++ Commencement of distribution.
* Annualized.
** Reflects newly adopted fiscal year end.
(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at the net asset value during the period, and a
redemption on the last day of the period. Initial sales charge or
contingent deferred sales charge is not reflected in the calculation of
total investment return. Total investment returns calculated for periods
of less than one year are not annualized.
(b) Based on average shares outstanding.
(c) Net of expense reimbursement.
(d) Adjusted for a 200% stock dividend paid to shareholders of record on
January 15, 1988.
(e) Net of offering costs of ($.05).
(f) Net of expenses assumed and/or waived/reimbursed. If GROWTH FUND had borne
all expenses, the expense ratios would have been, with respect to Class A
shares, 8.79% (annualized) for 1991, 1.94% for 1992, 1.84% for 1993 and
1.46% for the fiscal period ended April 30, 1994; with respect to Class B
shares, 13.92% (annualized) for 1988, 7.03% for 1989, 3.62% for 1990, 3.06%
for 1991, 2.65% for 1992, 2.52% for 1993 and 2.13% for the fiscal period
ended April 30, 1994; and with respect to Class C shares, 2.13% (annualized
for the fiscal period ended April 30, 1994. If PREMIER GROWTH FUND had
borne all expenses, the expense ratios would have been 3.33% and 3.78% for
Class A and Class B shares, respectively; and net investment income ratios
would have been (.25)% and (.75)% for Class A and Class B shares,
respectively. If COUNTERPOINT FUND had borne all expenses, the expense
ratios for Class A shares would have been 1.77%, 1.60% and 1.73% for the
periods ended in 1985, 1986 and 1987, respectively; and the investment
income ratios for Class A shares would have been 2.93% for 1985, 2.83% for
1986 and 1.51% for 1987. If TECHNOLOGY FUND had borne all expenses, the
expense ratios would have been 1.39%, 1.43%, 1.40%, 1.59% and 1.73% for the
periods ended in 1984, 1985, 1986, 1987, and 1988, respectively; and the
investment income ratios would have been .87% for

14
<PAGE>

<TABLE>
<CAPTION>
Total Net Assets Ratio Of
Total Net Asset Investment At End Of Ratio Of Net Investment
Dividends Value Return Based Period Expenses Income (Loss)
And End Of on Net Asset (000's To Average To Average Portfolio
Fiscal Year or Period Distributions Period Value (a) omitted) Net Assets Net Assets Turnover Rate
- --------------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>

Income Builder Fund (h)

Class A
3/25/94++ to 10/31/94.... $ (.25) $ 9.69 (.54)% $ 600 2.52%* 6.11%* 126%

Class B
3/25/94++ to 10/31/94.... $ (.22) $ 9.68 (.99)% $ 1,998 3.09%* 5.07%* 126%

Class C
Year ended 10/31/94...... $ (.46) $ 9.66 (3.44)% $ 64,027 2.67% 3.82% 126%
Year ended 10/31/93...... (.36) 10.47 10.65 106,034 2.32 6.85 101
Year ended 10/31/92...... (.47) 9.80 2.70 152,617 2.33 5.47 108
10/25/91+ to 10/31/91.... (.01) 10.00 .11 41,813 0.00* (f) .94* 0

Utility Income Fund

Class A
Year ended 11/30/94...... $ (.48) $ 8.97 (4.86)% $ 1,068 1.50%(f) 4.13%(f) 30%
10/18/93+ to 11/30/93.... 0.00 9.92 (.80) 229 1.50*(f) 2.35*(f) 11

Class B
Year ended 11/30/94...... $ (.41) $ 8.96 (5.59)% $ 2,352 2.20%(f) 3.53%(f) 30%
10/18/93+ to 11/30/93.... 0.00 9.91 (.90) 244 2.20*(f) 2.84*(f) 11

Class C
Year ended 11/30/94...... $ (.41) $ 8.97 (5.58)% $ 2,651 2.20%(f) 3.60%(f) 30%
10/27/93+ to 11/30/93.... 0.00 9.92 (.80) 18 2.20*(f) 3.08*(f) 11

Growth and Income Fund

Class A
Year ended 10/31/94...... $ (.24) $ 2.35 (.67)% $414,386 1.03% 2.36% 68%
Year ended 10/31/93...... (.22) 2.61 14.98 459,372 1.07 2.38 91
Year ended 10/31/92...... (.21) 2.48 7.23 417,018 1.09 2.63 104
Year ended 10/31/91...... (.39) 2.52 31.03 409,597 1.14 2.74 84
Year ended 10/31/90...... (.53) 2.28 (8.55) 314,670 1.09 3.40 76
Year ended 10/31/89...... (.56) 3.02 21.59 377,168 1.08 3.49 79
Year ended 10/31/88...... (.86) 3.05 16.45 350,510 1.09 3.09 66
Year ended 10/31/87...... (.12) 3.48 2.04 348,375 .86 2.77 60
Year ended 10/31/86...... (.53) 3.52 34.92 347,679 .81 3.31 11
Year ended 10/31/85...... (.48) 3.01 19.53 275,681 .95 3.78 15
Year ended 10/31/84...... (.44) 2.93 5.41 258,428 .99 4.54 14

Class B
Year ended 10/31/94...... $ (.22) $ 2.34 (1.50)% $102,546 1.85% 1.56% 68%
Year ended 10/31/93...... (.20) 2.60 14.22 76,633 1.90 1.58 91
Year ended 10/31/92...... (.20) 2.47 6.22 29,656 1.90 1.69 104
2/8/91++ to 10/31/91..... (.04) 2.52 6.83 10,221 1.99* 1.67* 84

Class C
Year ended 10/31/94...... $ (.22) $ 2.34 (1.50)% $ 19,395 1.84% 1.61% 68%
5/3/93 ++ to 10/31/93.... (.02) 2.60 7.85 7,774 1.96* 1.45* 91

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1984, (.23)% for 1985, (.85)% for 1986, (.84)% for 1987, and (.46)% for
1988. If QUASAR FUND had borne all expenses, the expense ratios would have
been 1.37% for 1987 and 1.64% for 1988; and the investment income ratios
would have been (.75)% for 1987 and (.75)% for 1988. If GLOBAL SMALL CAP
FUND had borne all expenses, the expense ratios would have been 1.46% for
1985, 1.33% for 1986, 1.61% for 1987 and 1.86% for 1988; and the investment
income ratios would have been .32% for 1985, .19% for 1986, (.63)% for 1987
and (.82)% for 1988. If STRATEGIC BALANCED FUND had borne all expenses, the
expense ratios would have been, with respect to Class A Shares, 11.59%
(annualized) for 1991, 2.05% for 1992, 1.85% for 1993 and 1.70% for the
fiscal year ended April 30, 1994 and 1.94% (annualized) for the fiscal
period ended July 31, 1994; with respect to Class B Shares, 10.61%
(annualized) for 1988, 7.82% for 1989, 3.59% for 1990, 2.93% for 1991,
2.70% for 1992, 2.56% for 1993 and 2.42% for the fiscal year ended April
30, 1994 and 2.64% (annualized) for the fiscal period ended July 31, 1994;
and with respect to Class C shares, 2.07% (annualized) for the fiscal
period ended April 30, 1994 and 2.64% (annualized) for the fiscal period
ended July 31, 1994. If INCOME BUILDER FUND had borne all expenses, the
expense ratio would have been 1.99% (annualized). If UTILITY INCOME FUND
had borne all expenses, the expense ratios would have been 145.63%, 133.62%
and 148.03% for Class A, Class B and Class C shares, respectively, for the
fiscal period ended April 30, 1993 and 13.72%, 14.42% and 14.42% for Class
A, Class B, and Class C shares, respectively, for 1994.
(g) "Dividends from Net Investment Income" includes a return of capital. INCOME
BUILDER FUND had a return of capital with respect to Class A shares, for
the period ended October 31, 1994, of $(.01); with respect to Class B
shares, $(.01); and with respect to Class C shares, for the year ended
October 31, 1994, $.02).
(h) On March 25, 1994, all existing shares of INCOME BUILDER FUND, previously
known as Alliance Multi-Market Income and Growth Trust, were converted into
Class C shares.
(i) Prior to July 22, 1993, Equitable Capital Management Corporation
("Equitable Capital") served as the investment adviser to the predecessor
to The Alliance Portfolios, of which GROWTH FUND and STRATEGIC BALANCED
FUND are series. On July 22, 1993, Alliance acquired the business and
substantially all assets of Equitable Capital and became investment adviser
to the Funds.
(j) Includes $(.08) distribution from paid-in capital.

15
<PAGE>

- --------------------------------------------------------------------------------
Glossary
- --------------------------------------------------------------------------------

The following terms are frequently used in this Prospectus.

Equity securities are (i) common stocks, partnership interests, business
trust shares and other equity or ownership interests in business enterprises,
and (ii) securities convertible into, and rights and warrants to subscribe
for the purchase of, such stocks, shares and interests.

Debt securities are bonds, debentures, notes, bills, repurchase agreements,
loans, other direct debt instruments and other fixed, floating and variable
rate debt obligations, but do not include convertible securities.

Fixed-income securities are debt securities and dividend-paying preferred
stocks and include floating rate and variable rate instruments.

Convertible securities are fixed-income securities that are convertible into
common stock.

U.S. Government securities are securities issued or guaranteed by the United
States Government, its agencies or instrumentalities.

Foreign government securities are securities issued or guaranteed, as to payment
of principal and interest, by governments, quasi-governmental entities,
governmental agencies or other governmental entities.

Asian company is an entity that (i) is organized under the laws of an Asian
country and conducts business in an Asian country, (ii) derives 50% or more
of its total revenues from business in Asian countries, or (iii) issues
equity or debt securities that are traded principally on a stock exchange in
an Asian country.

Asian countries are Australia, the Democratic Socialist Republic of Sri
Lanka, Hong Kong, the Islamic Republic of Pakistan, Japan, the Kingdom of
Thailand, Malaysia, Negara Brunei Darussalam (Brunei), New Zealand, the
People's Republic of China, the People's Republic of Kampuchea (Cambodia),
the Republic of China (Taiwan), the Republic of India, the Republic of
Indonesia, the Republic of Korea (South Korea), the Republic of the
Philippines, the Republic of Singapore, the Socialist Republic of Vietnam and
the Union of Myanmar.

Moody's is Moody's Investors Service, Inc.

S&P is Standard & Poor's Corporation.

Duff & Phelps is Duff & Phelps Credit Rating Co.

Fitch is Fitch Investors Service, Inc.

Investment grade securities are fixed-income securities rated Baa and above
by Moody's or BBB and above by S&P, Duff & Phelps or Fitch, or determined by
Alliance to be of equivalent quality.

Lower-rated securities are fixed-income securities rated Ba or below by Moody's
or BB or below by S&P, Duff & Phelps or Fitch, or determined by Alliance to be
of equivalent quality, and are commonly referred to as "junk bonds."

Prime commercial paper is commercial paper rated Prime 1 by Moody's or A-1 or
higher by S&P or, if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.

Qualifying bank deposits are certificates of deposit, bankers' acceptances and
interest-bearing savings deposits of banks having total assets of more than $1
billion and which are members of the Federal Deposit Insurance Corporation.

Rule 144A securities are securities that may be resold pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act").

Depositary receipts include American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs") and other types of depositary receipts.

Commission is the Securities and Exchange Commission.

1940 Act is the Investment Company Act of 1940, as amended.

Code is the Internal Revenue Code of 1986, as amended.

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- --------------------------------------------------------------------------------
Description Of The Funds
- --------------------------------------------------------------------------------

Except as noted, (i) the Funds' investment objectives are "fundamental" and
cannot be changed without shareholder vote, and (ii) the Funds' investment
policies are not fundamental and thus can be changed without a shareholder
vote. No Fund will change a non-fundamental objective or policy without
notifying its shareholders. There is no guarantee that any Fund will achieve
its investment objective.

INVESTMENT OBJECTIVES AND POLICIES

Domestic Stock Funds

The Domestic Stock Funds have been designed to offer investors seeking
capital appreciation a range of alternative approaches to investing in the
U.S. equity markets.

The Alliance Fund

The Alliance Fund, Inc. ("Alliance Fund") is a diversified investment company
that seeks long-term growth of capital and income primarily through
investment in common stocks. The Fund normally invests substantially all of
its assets in common stocks that Alliance believes will appreciate in value,
but it may invest in other types of securities such as convertible
securities, high-grade instruments, U.S. Government securities and
high-quality, short-term obligations such as repurchase agreements, bankers'
acceptances and domestic certificates of deposit and, may invest without
limit in foreign securities. While the diversification and generally high
quality of the Fund's investments cannot prevent fluctuations in market
values, they tend to limit investment risk and contribute to achieving the
Fund's objective. The Fund generally does not effect portfolio transactions
in order to realize short-term trading profits or exercise control.

The Fund may also: (i) make secured loans of its portfolio securities equal
in value up to 25% of its total assets to brokers, dealers and financial
institutions; (ii) enter into repurchase agreements of up to one week in
duration with commercial banks, but only if those agreements together with
any restricted securities and any securities which do not have readily
available market quotations do not exceed 10% of its net assets; and (iii)
write exchange-traded covered call options with respect to up to 25% of its
total assets. For additional information on the use, risks and costs of these
policies and practices see "Additional Investment Practices."

Alliance Growth Fund

Alliance Growth Fund ("Growth Fund") is a diversified investment company that
seeks long-term growth of capital. Current income is only an incidental
consideration. The Fund seeks its objective by investing primarily in equity
securities of companies with favorable earnings outlooks and whose long-term
growth rates are expected to exceed that of the U.S. economy. The Fund's
investment objective is not fundamental.

The Fund may also invest up to 25% of its total assets in lower-rated
fixed-income and convertible securities. See "Risk Considerations--Securities
Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund
generally will not invest in securities with ratings below Caa- by Moody's
and CCC- by S&P, Duff & Phelps or Fitch or in securities judged by Alliance
to be of comparable investment quality. However, from time to time, the Fund
may invest in securities rated in the lowest grades (i.e., C by Moody's or D
or equivalent by S&P, Duff & Phelps or Fitch), or securities Alliance judges
to be of comparable investment quality, if there are prospects for an upgrade
or a favorable conversion into equity securities. For the fiscal period ended
October 31, 1994, the Fund did not invest in any lower-rated securities. If
the credit rating of a security held by the Fund falls below its rating at
the time of purchase (or Alliance determines that the quality of such
security has so deteriorated), the Fund may continue to hold the security if
such investment is considered appropriate under the circumstances.

The Fund may also: (i) invest in "zero-coupon" bonds and "payment-in-kind"
bonds; (ii) invest in foreign securities, although the Fund will not
generally invest more than 15% of its total assets in foreign securities;
(iii) invest in securities that are not publicly traded, including Rule 144A
securities; (iv) buy or sell foreign currencies, options on foreign
currencies, foreign currency futures contracts (and related options) and deal
in forward foreign exchange contracts; (v) lend portfolio securities
amounting to not more than 25% of its total assets; (vi) enter into
repurchase agreements on up to 25% of its total assets and purchase and sell
securities on a forward commitment basis; (vii) buy and sell stock index
futures contracts and buy and sell options on those contracts and on stock
indices; (viii) purchase and sell futures contracts, options thereon and
options with respect to U.S. Treasury securities; (ix) write covered call and
put options on securities it owns or in which it may invest; and (x) purchase
and sell put and call options. For additional information on the use, risks
and costs of these policies and practices see "Additional Investment Practices."

Alliance Premier Growth Fund

Alliance Premier Growth Fund, Inc. ("Premier Growth Fund") is a non-diversified
investment company that seeks long-term growth of capital by investing
predominantly in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth. Normally, about 40 companies will be represented in the Fund's
portfolio, with the 25 most highly regarded of these companies usually
constituting approximately 70% of the Fund's net assets. The Fund is thus
atypical from most equity mutual funds in its focus on a relatively small number
of intensively researched companies and is designed for those seeking to
accumulate capital over time with less volatility than that associated with
investment in smaller companies.

As a matter of fundamental policy, the Fund normally invests at least 85% of
its total assets in the equity securities of U.S. companies. These are
companies (i) organized under U.S. law that have their principal office in
the U.S., and (ii) the equity securities of which are traded principally in
the U.S.

Alliance's investment strategy for the Fund emphasizes stock selection and
investment in the securities of a limited number of issuers. Alliance relies
heavily upon the fundamental analysis and research of its large internal
research staff, which generally

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<PAGE>

follows a primary research universe of more than 600 companies that have
strong management, superior industry positions, excellent balance sheets and
superior earnings growth prospects. An emphasis is placed on identifying
companies whose substantially above average prospective earnings growth is
not fully reflected in current market valuations.

In managing the Fund, Alliance seeks to utilize market volatility judiciously
(assuming no change in company fundamentals), striving to capitalize on
apparently unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings. The Fund
normally remains nearly fully invested and does not take significant cash
positions for market timing purposes. During market declines, while adding to
positions in favored stocks, the Fund becomes somewhat more aggressive,
gradually reducing the number of companies represented in its portfolio.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Fund becomes somewhat more conservative, gradually increasing
the number of companies represented in its portfolio. Alliance thus seeks to
gain positive returns in good markets while providing some measure of
protection in poor markets.

Alliance expects the average market capitalization of companies represented
in the Fund's portfolio normally to be in the range, or in excess, of the
average market capitalization of companies comprising the "S&P 500" (the
Standard & Poor's 500 Composite Stock Price Index, a widely recognized
unmanaged index of market activity).

The Fund may also: (i) invest up to 20% of its net assets in convertible
securities of companies whose common stocks are eligible for purchase by it;
(ii) invest up to 5% of its net assets in rights or warrants; (iii) invest up
to 15% of its total assets in securities of foreign issuers whose common
stocks are eligible for purchase by it; (iv) purchase and sell
exchange-traded index options and stock index futures contracts; and (v)
write covered exchange-traded call options on common stocks, unless as a result,
the amount of its securities subject to call options would exceed 15% of its
total assets, and purchase and sell exchange-traded call and put options on
common stocks written by others, but the total cost of all options held by the
Fund (including exchange-traded index options) may not exceed 10% of its total
assets. For additional information on the use, risks and costs of these policies
and practices see "Additional Investment Practices." The Fund will not write put
options or invest in illiquid securities if as a result more than 15% of its net
assets would be so invested.

Alliance Counterpoint Fund

Alliance Counterpoint Fund ("Counterpoint Fund") is a diversified investment
company that seeks long-term capital growth by investing principally in price-
depressed, undervalued or out-of-favor equity securities. Secondarily, the Fund
seeks current income. The Fund follows a flexible investment policy which allows
it to shift among equity alternatives depending on such factors as relative
growth rates, normalized price-earnings ratios and yields. It selects securities
based on fundamental business and financial factors (e.g., financial strength,
book values, asset values, earnings and dividends) and reasonable current
valuations (weighing the factors against market prices) and focuses on the
relationship of a company's earning power and dividend payout to the price of
its stock. The Fund's investment strategy can be characterized as unconventional
or "contrarian" in that its holdings often have relatively low normalized price-
earnings ratios and, when purchased, are often believed by Alliance to be
overlooked or undervalued in the marketplace. (A "normalized" price-earnings
ratio is one that has been adjusted to eliminate the effects of the economic
cycle. Alliance may conclude that a company's normalized price-earnings ratio is
low in comparison to either the company's price-earnings history or the price-
earnings ratios of comparable companies.)

Because it evaluates securities based on their long-term potential, the Fund
is best suited for investors who understand and can accept the risk that the
securities held by the Fund may not appreciate or yield significant income
over the shorter term. The Fund invests in companies experiencing poor
operating results, which may include companies whose earnings have been
severely depressed by unfavorable operating conditions or special competitive
or product obsolescence problems, if it believes that they will react
positively to changing economic conditions or will restructure or take other
actions to overcome adversity. The Fund invests in listed and unlisted
securities, and will invest in any company and industry and in any type of
security that may help it achieve its objectives. While its strategy normally
emphasizes equity securities, the Fund also invests in fixed-income
securities when such investments can provide capital growth, such as when
interest rates decline, and to generate income.

The Fund may also: (i) invest up to 5% of its total assets in warrants; (ii)
invest up to 15% of its total assets in foreign securities; (iii) invest in
restricted securities and in other assets having no ready market if as a
result no more than 5% of its net assets would be invested in such securities
and assets; (iv) write exchange-listed covered call options, unless as a
result the amount of its securities subject to call options would exceed 5%
of its total assets; (v) lend portfolio securities equal in value to not more
than 15% of its total assets; (vi) purchase and sell stock index futures
contracts; and (vii) enter into repurchase agreements on U.S. Government
securities with member banks of the Federal Reserve System or primary dealers
in such securities. For additional information on the use, risks and costs of
these policies and practices see "Additional Investment Practices."

Alliance Technology Fund

Alliance Technology Fund, Inc. ("Technology Fund") is a diversified investment
company that emphasizes growth of capital and invests for capital appreciation,
and only incidentally for current income. The Fund may seek income by writing
listed call options. The Fund invests primarily in securities of companies
expected to benefit from technological advances and improvements (i.e.,
companies that use technology extensively in the development of new or improved
products or processes). The Fund will normally have at least

18
<PAGE>

80% of its assets invested in the securities of these companies. The Fund
normally will have substantially all its assets invested in equity
securities, but it also invests in debt securities offering an opportunity
for price appreciation. The Fund will invest in listed and unlisted
securities and U.S. and foreign securities, but it will not purchase a
foreign security if as a result 10% or more of the Fund's total assets would
be invested in foreign securities.

The Fund's policy is to invest in any company and industry and in any type of
security with potential for capital appreciation. It invests in well-known
and established companies and in new and unseasoned companies.

The Fund may also: (i) write and purchase exchange-listed call options and
purchase listed put options, including exchange-traded index put options;
(ii) invest up to 10% of its total assets in warrants; (iii) invest in
restricted securities and in other assets having no ready market if as a
result no more than 10% of the Fund's net assets are invested in such
securities and assets; (iv) lend portfolio securities equal in value to not
more than 30% of the Fund's total assets; and (v) invest up to 10% of its
total assets in foreign securities. For additional information on the use,
risks and costs of the policies and practices see "Additional Investment
Practices."

Alliance Quasar Fund

Alliance Quasar Fund, Inc. ("Quasar Fund") is a diversified investment
company that seeks growth of capital by pursuing aggressive investment
policies. It invests for capital appreciation and only incidentally for
current income. The selection of securities based on the possibility of
appreciation cannot prevent loss in value. Moreover, because the Fund's
investment policies are aggressive, an investment in the Fund is risky and
investors who want assured income or preservation of capital should not invest
in the Fund.

The Fund invests in any company and industry and in any type of security with
potential for capital appreciation. It invests in well-known and established
companies and in new and unseasoned companies. When selecting securities,
Alliance considers the economic and political outlook, the values of specific
securities relative to other investments, trends in the determinants of
corporate profits and management capability and practices.

The Fund invests principally in equity securities, but it also invests to a
limited degree in non-convertible bonds and preferred stocks. The Fund
invests in listed and unlisted U.S. and foreign securities. The Fund
periodically invests in special situations, which occur when the securities
of a company are expected to appreciate due to a development particularly or
uniquely applicable to that company and regardless of general business
conditions or movements of the market as a whole.

The Fund may also: (i) invest in restricted securities and in other assets
having no ready market, but not more than 10% of its total assets may be
invested in such securities or assets; (ii) make short sales of securities
"against the box," but not more than 15% of its net assets may be deposited
on short sales; and (iii) write call options and purchase and sell put and
call options written by others. For additional information on the use, risks
and costs of these policies and practices see "Additional Investment
Practices."

Global Stock Funds

The Global Stock Funds have been designed to enable investors to participate
in the potential for long-term capital appreciation available from investment
in foreign securities.

Alliance International Fund

Alliance International Fund ("International Fund") is a diversified
investment company that seeks a total return on its assets from long-term
growth of capital and from income primarily through a broad portfolio of
marketable securities of established non-U.S. companies, companies
participating in foreign economies with prospects for growth, including U.S.
companies having their principal activities and interests outside the U.S.
and foreign government securities. Normally, more than 80% of the Fund's assets
will be invested in such issuers.

The Fund expects to invest primarily in common stocks of established non-U.S.
companies that Alliance believes have potential for capital appreciation or
income or both, but the Fund is not required to invest exclusively in common
stocks or other equity securities, and it may invest in any other type of
investment grade security, including convertible securities, warrants, or
obligations of the U.S. or foreign governments and their political
subdivisions.

The Fund intends to diversify its investments broadly among countries and
normally invests in at least three foreign countries, although it may invest
a substantial portion of its assets in one or more of such countries. At July
31, 1994, approximately 50% of the Fund's assets were invested in securities
of Japanese issuers. The Fund may invest in companies, wherever organized,
that Alliance judges have their principal activities and interests outside
the U.S. These companies may be located in developing countries, which
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less
stability, than those of developed countries. The Fund currently does not
intend to invest more than 10% of its total assets in companies in, or
governments of, developing countries.

The Fund may also: (i) purchase or sell forward foreign currency exchange
contracts; (ii) write, sell and purchase U.S. or foreign exchange-listed put
and call options, including exchange-traded index options; (iii) enter into
financial futures contracts, including contracts for the purchase or sale for
future delivery of foreign currencies and stock index futures, and purchase
and write put and call options on futures contracts traded on U.S. or foreign
exchanges or over-the-counter; (iv) purchase and write put options on foreign
currencies traded on securities exchanges or boards of trade or
over-the-counter; (v) lend portfolio securities equal in value to not more
than 30% of its total assets; and (vi) enter into repurchase agreements of up
to seven days' duration,

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<PAGE>

provided that more than 10% of the Fund's total assets would be so invested.
For additional information on the use, risks and costs of these policies and
practices see "Additional Investment Practices."

Alliance Worldwide Privatization Fund

Alliance Worldwide Privatization Fund, Inc. ("Worldwide Privatization Fund")
is a non-diversified investment company that seeks long-term capital
appreciation. As a fundamental policy, the Fund invests at least 65% of its
total assets in equity securities issued by enterprises that are undergoing,
or have undergone, privatization (as described below), although normally
significantly more of its assets will be invested in such securities. The
balance of its investments will include securities of companies believed by
Alliance to be beneficiaries of privatizations. The Fund is designed for
investors desiring to take advantage of investment opportunities,
historically inaccessible to U.S. individual investors, that are created by
privatizations of state enterprises in both established and developing
economies, including those in Western Europe and Scandinavia, Australia, New
Zealand, Latin America, Asia and Eastern and Central Europe and, to a lesser
degree, Canada and the United States.

The Fund's investments in enterprises undergoing privatization may comprise
three distinct situations. First, the Fund may invest in the initial offering
of publicly traded equity securities (an "initial equity offering") of a
government- or state-owned or controlled company or enterprise (a "state
enterprise"). Secondly, the Fund may purchase securities of a current or
former state enterprise following its initial equity offering. Finally, the
Fund may make privately negotiated purchases of stock or other equity
interests in a state enterprise that has not yet conducted an initial equity
offering. Alliance believes that substantial potential for capital
appreciation exists as privatizing enterprises rationalize their management
structures, operations and business strategies in order to compete
efficiently in a market economy, and the Fund will thus emphasize investments
in such enterprises.

The Fund diversifies its investments among a number of countries and normally
invests in issuers based in at least four, and usually considerably more,
countries. No more than 15% of the Fund's total assets, however, will be
invested in issuers in any one foreign country, except that the Fund may
invest up to 30% of its total assets in issuers in any one of France,
Germany, Great Britain, Italy and Japan. The Fund may invest all of its
assets within a single region of the world. To the extent that the Fund's
assets are invested within any one region, the Fund may be subject to any
special risks that may be associated with that region.

A major premise of the Fund's approach is that the equity securities of
privatized companies offer opportunities for significant capital
appreciation. In particular, because privatizations are integral to a
country's economic restructuring, securities sold in initial equity offerings
often are priced attractively so as to secure the issuer's successful
transition to private sector ownership. Additionally, these enterprises often
dominate their local markets and typically have the potential for significant
managerial and operational efficiency gains.

Although the Fund anticipates that it will not concentrate its investments in
any industry, it is permitted to invest more than 25% of its total assets in
issuers whose primary business activity is that of national commercial
banking. Prior to so concentrating, however, the Fund's Directors must
determine that its ability to achieve its investment objective would be
adversely affected if it were not permitted to concentrate. The staff of the
Commission is of the view that registered investment companies may not,
absent shareholder approval, change between concentration and
non-concentration in a single industry. The Fund disagrees with the staff's
position but has undertaken that it will not concentrate in the securities of
national commercial banks until, if ever, the issue is resolved. If the Fund
were to invest more than 25% of its total assets in national commercial
banks, the Fund's performance could be significantly influenced by events or
conditions affecting this industry, which is subject to, among other things,
increases in interest rates and deteriorations in general economic
conditions, and the Fund's investments may be subject to greater risk and
market fluctuation than if its portfolio represented a broader range of
investments.

The Fund may invest up to 35% of its total assets in debt securities and
convertible debt securities of issuers whose common stocks are eligible for
purchase by the Fund. The Fund may maintain not more than 5% of its net
assets in lower-rated securities. See "Risk Considerations-- Securities
Ratings" and "--Investment in Lower-Rated Fixed-Income Securities." The Fund
will not retain a non-convertible security that is downgraded below C or
determined by Alliance to have undergone similar credit quality deterioration
following purchase.

The Fund may also: (i) invest up to 20% of its total assets in rights or
warrants; (ii) write covered put and call options and purchase put and call
options on securities of the types in which it is permitted to invest and on
exchange-traded index options; (iii) enter into contracts for the purchase or
sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of U.S. Government
securities, foreign government securities, or common stock and may purchase
and write options on future contracts; (iv) purchase and write put and call
options on

20
<PAGE>

foreign currencies for hedging purposes; (v) purchase or sell forward
contracts; (vi) enter in forward commitments for the purchase or sale of
securities; (vii) enter into standby commitment agreements; (viii) enter into
currency swaps for hedging purposes; (ix) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (x) make short sales of
securities or maintain a short position; and (xi) make secured loans of its
portfolio securities not in excess of 30% of its total assets to entities
with which it can enter into repurchase agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices".

Alliance New Europe Fund

Alliance New Europe Fund, Inc. ("New Europe Fund") is a non-diversified
investment company that seeks long-term capital appreciation through
investment primarily in the equity securities of companies based in Europe.
The Fund intends to invest substantially all of its assets in the equity
securities of European companies and has a fundamental policy of normally
investing at least 65% of its total assets in such securities. Up to 35% of
its total assets may be invested in high-quality U.S. dollar or foreign
currency denominated fixed-income securities issued or guaranteed by European
governmental entities, or by European or multinational companies or
supranational organizations.

Alliance believes that the quickening pace of economic integration and
political change in Europe creates the potential for many European companies
to experience rapid growth and that the emergence of new market economies in
Europe and the broadening and strengthening of other European economies may
significantly accelerate economic development. The Fund will invest in
companies that Alliance believes possess rapid growth potential. Thus, the
Fund will emphasize investments in smaller, emerging companies, but will also
invest in larger, established companies in such growing economic sectors as
capital goods, telecommunications, pollution control and consumer services.

The Fund will emphasize investment in companies believed to be the likely
beneficiaries of a program, originally known as the "1992 Program," to remove
substantially all barriers to the free movement of goods, persons, services
and capital within the European Community. Alliance believes that the
beneficial effects of this program upon economies, sectors and companies may
be most pronounced in the decade following 1992. The European Community is a
Western European economic cooperative organization consisting of Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain and the United Kingdom.

In recent years, economic ties between the former "east bloc" countries of
Eastern Europe and certain other European countries have been strengthened.
Alliance believes that as this strengthening continues, some Western European
financial institutions and other companies will have special opportunities to
facilitate East-West transactions. The Fund will seek investment
opportunities among such companies and, as such become available, within the
former "east bloc," although the Fund will not invest more than 20% of its
total assets in issuers based therein, or more than 10% of its total assets
in issuers based in any one such country.

The Fund diversifies its investments among a number of European countries
and, under normal circumstances, will invest in companies based in at least
three such countries. Subject to the foregoing and to the limitation on
investment in any one former "east bloc" country, the Fund may invest without
limit in a single European country. While the Fund does not intend to
concentrate its investments in a single country, at times 25% or more of its
assets may be invested in issuers located in a single country. During such
times, the Fund would be subject to a correspondingly greater risk of loss
due to adverse political or regulatory developments, or an economic downturn,
within that country. At July 31, 1994, approximately 32% of the Fund's assets
were invested in securities of issuers in the United Kingdom.

The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants and rights to purchase equity securities of European companies; (iii)
invest in depositary receipts or other securities convertible into securities of
companies based in European countries, debt securities of supranational entities
denominated in the currency of any European country, debt securities denominated
in European Currency Units of an issuer in a European country (including
supranational issuers) and "semi-governmental securities"; (iv) purchase and
sell forward contracts; (v) write, sell and purchase exchange-traded put and
call options, including exchange-traded index options; (vi) enter into financial
futures contracts, including contracts for the purchase or sale for future
delivery of foreign currencies and futures contracts based on stock indices, and
purchase and write options on futures contracts; (vii) purchase and write put
options on foreign currencies traded on securities exchanges or boards of trade
or over-the-counter; (viii) make secured loans of portfolio securities not in
excess of 30% of its total assets to brokers, dealers and financial
institutions; (ix) enter into forward commitments for the purchase or sale of
securities; and (x) enter into standby commitment agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."

Alliance All-Asia Investment Fund

Alliance All-Asia Investment Fund, Inc. ("All-Asia Fund") is a non-diversified
investment company whose investment objective is to seek long-term capital
appreciation. In seeking to achieve its investment objective, the Fund will
invest at least 65% of its total assets in equity securities (for the purposes
of this investment policy, rights, warrants and options to purchase common
stocks are not deemed to be equity securities), preferred stocks and equity-
linked debt securities issued by Asian companies. The Fund may invest up to 35%
of its total assets in debt securities issued or guaranteed by Asian companies
or by Asian governments, their

21
<PAGE>

agencies or instrumentalities. The Fund may also invest in securities issued
by non-Asian issuers, provided that the Fund will invest at least 80% of its
total assets in securities issued by Asian companies and the Asian debt
securities referred to above. The Fund expects to invest, from time to time,
a significant portion, but less than 50%, of its assets in equity securities
of Japanese companies.

In the past decade, Asian countries generally have experienced a high level
of real economic growth due to political and economic changes, including
foreign investment and reduced government intervention in the economy.
Alliance believes that certain conditions exist in Asian countries which
create the potential for continued rapid economic growth. These conditions
include favorable demographics and competitive wage rates, increasing levels
of foreign direct investment, rising per capita incomes and consumer demand,
a high savings rate and numerous privatization programs. Asian countries are
also becoming more industrialized and are increasing their intra-Asian
exports while reducing their dependence on Western export demand. Alliance
believes that these conditions are important to the long-term economic growth
of Asian countries.

As the economies of many Asian countries move through the "emerging market"
stage, thus increasing the supply of goods, services and capital available to
less developed Asian markets and helping to spur economic growth in those
markets, the potential is created for many Asian companies to experience
rapid growth. In addition, many Asian companies the securities of which are
listed on exchanges in more developed Asian countries will be participants in
the rapid economic growth of the lesser developed countries. These companies
generally offer the advantages of more experienced management and more
developed market regulation.

As their economies have grown, the securities markets in Asian countries have
also expanded. New exchanges have been created and the number of listed
companies, annual trading volume and overall market capitalization have
increased significantly. Additionally, new markets continue to open to
foreign investments. For example, South Korea and India have recently relaxed
investment restrictions and Vietnamese direct investments have recently
become available to U.S. investors. The Fund also offers investors the
opportunity to access relatively restricted markets. Alliance believes that
investment opportunities in Asian countries will continue to expand.

The Fund will invest in companies believed to possess rapid growth potential.
Thus, the Fund will invest in smaller, emerging companies, but will also
invest in larger, more established companies in such growing economic sectors
as capital goods, telecommunications and consumer services.

The Fund will invest in investment grade debt securities, except that the
Fund may maintain not more than 5% of its net assets in lower-rated
securities and lower-rated loans and other lower-rated direct debt
instruments. See "Risk Considerations--Securities Ratings" and "--Investment
in Lower-Rated Fixed-Income Securities" and Appendix C in the Fund's
Statement of Additional Information for a description of such ratings. The
Fund will not retain a security that is downgraded below C or determined by
Alliance to have undergone similar credit quality deterioration following
purchase.

The Fund may also: (i) invest up to 25% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 20% of its net assets in rights or warrants; (iii)
invest in depositary receipts, instruments of supranational entities
denominated in the currency of any country, securities of multinational
companies and "semi-governmental securities;" (iv) invest up to 25% of its
net assets in equity-linked debt securities with the objective of realizing
capital appreciation; (v) invest up to 25% of its net assets in loans and
other direct debt instruments; (vi) write covered put and call options on
securities of the types in which it is permitted to invest and on
exchange-traded index options; (vii) enter into contracts for the purchase or
sale for future delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of U.S. Government
securities, securities issued by foreign government entities, or common stock
and may purchase and write options on future contracts; (viii) purchase and
write put and call options on foreign currencies for hedging purposes; (ix)
purchase or sell forward contracts; (x) enter into interest rate swaps and
purchase or sell interest rate caps and floors; (xi) enter into forward
commitments for the purchase or sale of securities; (xii) enter into standby
commitment agreements; (xiii) enter into currency swaps for hedging purposes;
(xiv) enter into repurchase agreements pertaining to U.S. Government
securities with member banks of the Federal Reserve System or primary dealers
in such securities; (xv) make short sales of securities or maintain a short
position, in each case only if "against the box;" and (xvi) make secured
loans of its portfolio securities not in excess of 30% of its total assets to
entities with which it can enter into repurchase agreements. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices".

Alliance Global Small Cap Fund

Alliance Global Small Cap Fund, Inc. ("Global Small Cap Fund") is a diversified
investment company that seeks long-term growth of capital through investment in
a global portfolio of the equity securities of selected companies with
relatively small market capitalization. The Fund's portfolio emphasizes
companies with market capitalizations that would have placed them (when
purchased) in about the smallest 20% by market capitalization of actively traded
U.S. companies, or market capitalizations of up to about $1 billion. Because the
Fund applies the U.S. size standard on a global basis, its foreign investments
might rank above the lowest 20%, and, in fact, might in some countries rank
among the largest, by market capitalization in local markets. Normally, the Fund
invests at least 65% of its assets in equity securities of these smaller
capitalization issuers, and these issuers are located in at least three
countries, one of which may be the U.S. Up to 35% of the Fund's total assets may
be invested in securities of

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<PAGE>

companies whose market capitalizations exceed the Fund's size standard. The
Fund's portfolio securities may be listed on a U.S. or foreign exchange or
traded over-the-counter.

Alliance believes that smaller capitalization issuers often have sales and
earnings growth rates exceeding those of larger companies, and that these
growth rates tend to cause more rapid share price appreciation. Investing in
smaller capitalization stocks, however, involves greater risk than is
associated with larger, more established companies. For example, smaller
capitalization companies often have limited product lines, markets, or
financial resources. They may be dependent for management on one or a few key
persons, and can be more susceptible to losses and risks of bankruptcy. Their
securities may be thinly traded (and therefore have to be sold at a discount
from current market prices or sold in small lots over an extended period of
time), may be followed by fewer investment research analysts and may be
subject to wider price swings and thus may create a greater chance of loss
than when investing in securities of larger capitalization companies.
Transaction costs in small capitalization stocks may be higher than in those
of larger capitalization companies.

The Fund may also: (i) invest up to 10% of its total assets in securities for
which there is no ready market; (ii) invest up to 20% of its total assets in
warrants to purchase equity securities; (iii) invest in depositary receipts
or other securities representing securities of companies based in countries
other than the U.S.; (iv) purchase or sell forward foreign currency
contracts; (v) write and purchase exchange-traded call options and purchase
exchange-traded put options, including put options on market indices; and
(vi) make secured loans of portfolio securities not in excess of 30% of its
total assets to brokers, dealers and financial institutions. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."

Total Return Funds

The Total Return Funds have been designed to provide a range of investment
alternatives to investors seeking both growth of capital and current income.

Alliance Strategic Balanced Fund

Alliance Strategic Balanced Fund ("Strategic Balanced Fund") is a diversified
investment company that seeks a high long-term total return by investing in a
combination of equity and debt securities. The portion of the Fund's assets
invested in each type of security varies in accordance with economic
conditions, the general level of common stock prices, interest rates and
other relevant considerations, including the risks associated with each
investment medium. The Fund's investment objective is not fundamental.

The Fund's equity securities will generally consist of dividend-paying common
stocks and other equity securities of companies with favorable earnings outlooks
and long-term growth rates that Alliance expects will exceed that of the U.S.
economy. The Fund's debt securities may include U.S. Government securities and
securities issued by private corporations. The Fund may also invest in mortgage-
backed securities, adjustable rate securities, asset-backed securities and so-
called "zero-coupon" bonds and "payment-in-kind" bonds.

As a fundamental policy, the Fund will invest at least 25% of its total
assets in fixed-income securities, which for this purpose include debt
securities, preferred stocks and that portion of the value of convertible
securities that is attributable to the fixed-income characteristics of those
securities.

The Fund's debt securities will generally be of investment grade. See "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." In the event that the rating of any debt securities
held by the Fund falls below investment grade, the Fund will not be obligated
to dispose of such obligations and may continue to hold them if considered
appropriate under the circumstances.

The Fund may also: (i) invest in foreign securities, although the Fund will
not generally invest more than 15% of its total assets in foreign securities;
(ii) invest, without regard to this 15% limit, in Eurodollar CDs, which are
dollar-denominated certificates of deposit issued by foreign branches of U.S.
banks that are not insured by any agency or instrumentality of the U.S.
Government; (iii) write covered call and put options on securities it owns or
in which it may invest; (iv) buy and sell put and call options and buy and
sell combinations of put and call options on the same underlying securities;
(v) lend portfolio securities amounting to not more than 25% of its total
assets; (vi) enter into repurchase agreements on up to 25% of its total
assets; (vii) purchase and sell securities on a forward commitment basis;
(viii) buy or sell foreign currencies, options on foreign currencies, foreign
currency futures contracts (and related options) and deal in forward foreign
exchange contracts; (ix) buy and sell stock index futures contracts and buy
and sell options on those contracts and on stock indices; (x) purchase and
sell futures contracts, options thereon and options with respect to U.S.
Treasury securities; and (xi) invest in securities that are not publicly
traded, including Rule 144A securities. For additional information on the
use, risks and costs of these policies and practices see "Additional Investment
Practices."

Alliance Balanced Shares

Alliance Balanced Shares, Inc. ("Balanced Shares") is a diversified investment
company that seeks a high return through a combination of current income and
capital appreciation. Although the Fund's investment objective is not
fundamental, the Fund is a "balanced fund" as a matter of fundamental policy.
The Fund will not purchase a security if as a result less than 25% of its total
assets will be in fixed-income senior securities (including short- and long-term
debt securities, preferred stocks, and convertible debt securities and
convertible preferred stocks to the extent that their values are attributable to
their fixed-income characteristics). Subject to these restrictions, the
percentage of the Fund's assets invested in each type of security will vary. The
Fund's assets are invested in U.S. Government securities,

23
<PAGE>

bonds, senior debt securities and preferred and common stocks in such
proportions and of such type as are deemed best adapted to the current
economic and market outlooks. The Fund may invest up to 15% of the value of
its total assets in foreign equity and fixed-income securities eligible for
purchase by the Fund under its investment policies described above. See
"Risk Considerations--Foreign Investment."

The Fund may also: (i) enter into contracts for the purchase or sale for
future delivery of foreign currencies; and (ii) purchase and write put and
call options on foreign currencies and enter into forward foreign currency
exchange contracts for hedging purposes. Subject to market conditions, the
Fund may also seek to realize income by writing covered call options listed
on a domestic exchange. For additional information on the use, risks and
costs of these policies and practices see "Additional Investment Practices."

Alliance Income Builder Fund

Alliance Income Builder Fund, Inc. ("Income Builder Fund") is a non-diversified
investment company that seeks an attractive level of current income and long-
term growth of income and capital by investing principally in fixed-income
securities and dividend-paying common stocks. Its investments in equity
securities emphasize common stocks of companies with a historical or projected
pattern of paying rising dividends. Normally, at least 65% of the Fund's total
assets are invested in income-producing securities. The Fund may vary the
percentage of assets invested in any one type of security based upon Alliance's
evaluation as to the appropriate portfolio structure for achieving the Fund's
investment objective, although Alliance currently maintains approximately 60% of
the Fund's net assets in fixed-income securities and 40% in equity securities.

The Fund may invest in fixed-income securities of domestic and foreign issuers,
including U.S. Government securities and repurchase agreements pertaining
thereto, corporate fixed-income securities of U.S. issuers, qualifying bank
deposits and prime commercial paper.

The Fund may maintain up to 35% of its net assets in lower-rated securities. See
"Risk Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." The Fund will not retain a non-convertible security
that is downgraded below CCC or determined by Alliance to have undergone similar
credit quality deterioration following purchase.

Foreign securities in which the Fund invests may include fixed-income
securities of foreign corporate and governmental issuers, denominated in U.S.
Dollars, and equity securities of foreign corporate issuers, denominated in
foreign currencies or in U.S. Dollars. The Fund will not invest more than 10%
of its net assets in equity securities of foreign issuers nor more than 15%
of its total assets in issuers of any one foreign country. See "Risk
Considerations--Foreign Investment."

The Fund may also: (i) invest up to 5% of its net assets in rights or
warrants; (ii) invest in depositary receipts and U.S. Dollar denominated
securities issued by supranational entities: (iii) write covered put and call
options and purchase put and call options on securities of the types in which
it is permitted to invest that are exchange-traded; (iv) purchase and sell
exchange-traded options on any securities index composed of the types of
securities in which it may invest; (v) enter into contracts for the purchase
or sale for future delivery of fixed-income securities or foreign currencies,
or contracts based on financial indices, including any index of U.S.
Government securities, foreign government securities, corporate fixed income
securities, or common stock, and purchase and write options on future
contracts; (vi) purchase and write put and call options on foreign currencies
and enter into forward contracts for hedging purposes; (vii) enter into
interest rate swaps and purchase or sell interest rate caps and floors;
(viii) enter into forward commitments for the purchase or sale of securities;
(ix) enter into standby commitment agreements; (x) enter into repurchase
agreements pertaining to U.S. Government securities with member banks of the
Federal Reserve System or primary dealers in such securities; (xi) make short
sales of securities or maintain a short position as described below under
"Additional Investment Policies and Practices--Short Sales;" and (xii) make
secured loans of its portfolio securities not in excess of 20% of its total
assets to brokers, dealers and financial institutions. For additional
information on the use, risks and costs of these policies and practices see
"Additional Investment Practices."

Alliance Utility Income Fund

Alliance Utility Income Fund, Inc. ("Utility Income Fund") is a diversified
investment company that seeks current income and capital appreciation by
investing primarily in equity and fixed-income securities of companies in the
utilities industry. The Fund may invest in securities of both U.S. and
foreign issuers, although no more than 15% of the Fund's total assets will be
invested in issuers in any one foreign country. The utilities industry
consists of companies engaged in (i) the manufacture, production, generation,
provision, transmission, sale and distribution of gas and electric energy,
and communications equipment and services, including telephone, telegraph,
satellite, microwave and other companies providing communication facilities
for the public, or (ii) the provision of other utility or utility-related
goods and services, including, but not limited to, entities engaged in water
provision, cogeneration, waste disposal system provision, solid waste
electric generation, independent power producers and non-utility
generators. The Fund is designed to take advantage of the characteristics and
historical performance of securities of utility companies, many of which pay
regular dividends and increase their common stock dividends over time. As a
fundamental policy, the Fund normally invests at least 65% of its total
assets in securities of companies in the utilities industry. The Fund
considers a company to be in the utilities industry if, during the most
recent twelve-month period, at

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<PAGE>

least 50% of the company's gross revenues, on a consolidated basis, were
derived from its utilities activities.

At least 65% of the Fund's total assets are invested in income-producing
securities, but there is otherwise no limit on the allocation of the Fund's
investments between equity securities and fixed-income securities. The Fund
may maintain up to 35% of its net assets in lower-rated securities. See "Risk
Considerations--Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities." The Fund will not retain a security that is
downgraded below B or determined by Alliance to have undergone similar credit
quality deterioration following purchase.

The United States utilities industry has experienced significant changes in
recent years. Electric utility companies in general have been favorably
affected by lower fuel costs, the full or near completion of major
construction programs and lower financing costs. In addition, many utility
companies have generated cash flows in excess of current operating expenses
and construction expenditures, permitting some degree of diversification into
unregulated businesses. Regulatory changes with respect to nuclear and
conventionally fueled generating facilities, however, could increase costs or
impair the ability of such electric utilities to operate such facilities,
thus reducing their ability to service dividend payments with respect to the
securities they issue. Furthermore, rates of return of utility companies
generally are subject to review and limitation by state public utilities
commissions and tend to fluctuate with marginal financing costs. Rate
changes, however, ordinarily lag behind the changes in financing costs, and
thus can favorably or unfavorably affect the earnings or dividend pay-outs on
utilities stocks depending upon whether such rates and costs are declining or
rising.

Gas transmission companies, gas distribution companies and telecommunications
companies are also undergoing significant changes. Gas utilities have been
adversely affected by declines in the prices of alternative fuels, and have
also been affected by oversupply conditions and competition. Telephone
utilities are still experiencing the effects of the break-up of American
Telephone & Telegraph Company, including increased competition and rapidly
developing technologies with which traditional telephone companies now
compete. Although there can be no assurance that increased competition and
other structural changes will not adversely affect the profitability of such
utilities, or that other negative factors will not develop in the future, in
Alliance's opinion, increased competition and change may provide better
positioned utility companies with opportunities for enhanced profitability.

Utility companies historically have been subject to the risks of increases in
fuel and other operating costs, high interest costs, costs associated with
compliance with environmental and nuclear safety regulations, service
interruptions, economic slowdowns, surplus capacity, competition and
regulatory changes. There can also be no assurance that regulatory policies
or accounting standards changes will not negatively affect utility companies'
earnings or dividends. Utility companies are subject to regulation by various
authorities and may be affected by the imposition of special tariffs and
changes in tax laws. To the extent that rates are established or reviewed by
governmental authorities, utility companies are subject to the risk that such
authorities will not authorize increased rates. Because of the Fund's policy
of concentrating its investments in utility companies, the Fund is more
susceptible than most other mutual funds to economic, political or regulatory
occurrences affecting the utilities industry.

Foreign utility companies, like those in the U.S., are generally subject to
regulation, although such regulations may or may not be comparable to
domestic regulations. Foreign utility companies in certain countries may be
more heavily regulated by their respective governments than utility companies
located in the U.S. and, as in the U.S., generally are required to seek
government approval for rate increases. In addition, because many foreign
utility companies use fuels that cause more pollution than those used in the
U.S. such utilities may yet be required to invest in pollution control
equipment. Foreign utility regulatory systems vary from country to country
and may evolve in ways different from regulation in the U.S. The percentage
of the Fund's assets invested in issuers of particular countries will vary.
See "Risk Considerations-- Foreign Investments."

The Fund may invest up to 35% of its total assets in equity and fixed-income
securities of domestic and foreign corporate and governmental issuers other
than utility companies, including U.S. Government securities and repurchase
agreements pertaining thereto, foreign government securities, corporate
fixed-income securities of domestic issuers, corporate fixed-income
securities of foreign issuers denominated in foreign currencies or in U.S.
dollars (in each case including fixed-income securities of an issuer in one
country denominated in the currency of another country), qualifying bank
deposits and prime commercial paper.

The Fund may also: (i) invest up to 30% of its net assets in the convertible
securities of companies whose common stocks are eligible for purchase by the
Fund; (ii) invest up to 5% of its net assets in rights or warrants; (iii)
invest in depositary receipts, securities of supranational entities denominated
in the currency of any country, securities denominated in European Currency
Units and "semi-governmental securities;" (iv) write covered put and call
options and purchase put and call options on securities of the types in which
it is permitted to invest that are exchange-traded and over-the-counter; (v)
purchase and sell exchange-traded options on any securities index composed of
the types of securities in which it may invest; (vi) enter into contracts for
the purchase or sale for future delivery of fixed-income securities or
foreign currencies, or contracts based on financial indices, including an
index of U.S. Government securities, foreign government securities, corporate
fixed-income securities, or common stock, and may purchase and write options
on futures contracts; (vii) purchase and write put and call options on
foreign currencies traded on U.S. and foreign exchanges or over-the-counter
for hedging purposes; (viii) purchase or sell forward contracts; (ix) enter
into interest

25
<PAGE>

rate swaps and purchase or sell interest rate caps and floors; (x) enter in
forward commitments for the purchase or sale of securities; (xi) enter into
standby commitment agreements; (xii) enter into repurchase agreements
pertaining to U.S. Government securities with member banks of the Federal
Reserve System or primary dealers in such securities; (xiii) make short sales
of securities or maintain a short position as described below under
"Additional Investment Practices--Short Sales;" and (xiv) make secured loans
of its portfolio securities not in excess of 20% of its total assets to
brokers, dealers and financial institutions. For additional information on
the use, risk and costs of these policies and practices see "Additional
Investment Practices."

Alliance Growth and Income Fund

Alliance Growth and Income Fund, Inc. ("Growth and Income Fund") is a
diversified investment company that seeks appreciation through investments
primarily in dividend-paying common stocks of good quality, although it is
permitted to invest in fixed-income securities and convertible securities.

The Fund may also try to realize income by writing covered call options
listed on domestic securities exchanges. See "Additional Investment Practices
- --Options." The Fund also invests in foreign securities. Since the purchase of
foreign securities entails certain political and economic risks, the Fund has
restricted its investments in securities in this category to issues of high
quality. See "Risk Considerations--Foreign Investment."

ADDITIONAL INVESTMENT PRACTICES

Some or all of the Funds may engage in the following investment practices to
the extent described above.

Convertible Securities. Prior to conversion, convertible securities have the
same general characteristics as non-convertible debt securities, which
provide a stable stream of income with generally higher yields than those of
equity securities of the same or similar issuers. The price of a convertible
security will normally vary with changes in the price of the underlying
stock, although the higher yield tends to make the convertible security less
volatile than the underlying common stock. As with debt securities, the
market value of convertible securities tends to decline as interest rates
increase and increase as interest rates decline. While convertible securities
generally offer lower interest or dividend yields than non-convertible debt
securities of similar quality, they enable investors to benefit from
increases in the market price of the underlying common stock. Convertible
debt securities that are rated Baa or lower by Moody's or BBB or lower by
S&P, Duff & Phelps or Fitch and comparable unrated securities as determined
by Alliance may share some or all of the risks of non-convertible debt
securities with those ratings. For a description of these risks, see "Risk
Considerations-- Securities Ratings" and "--Investment in Lower-Rated
Fixed-Income Securities."

Rights and Warrants. A Fund will invest in rights or warrants only if the
underlying equity securities themselves are deemed appropriate by Alliance
for inclusion in the Fund's portfolio. Rights and warrants entitle the holder
to buy equity securities at a specific price for a specific period of time.
Rights are similar to warrants except that they have a substantially shorter
duration. Rights and warrants may be considered more speculative than certain
other types of investments in that they do not entitle a holder to dividends
or voting rights with respect to the underlying securities nor do they
represent any rights in the assets of the issuing company. The value of a
right or warrant does not necessarily change with the value of the underlying
security, although the value of a right or warrant may decline because of a
decrease in the value of the underlying security, the passage of time or a
change in perception as to the potential of the underlying security, or any
combination thereof. If the market price of the underlying security is below
the exercise price set forth in the warrant on the expiration date, the
warrant will expire worthless. Moreover, a right or warrant ceases to have
value if it is not exercised prior to the expiration date.

Depositary Receipts and Securities of Supranational Entities. Depositary
receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. In addition, the
issuers of the stock of unsponsored depositary receipts are not obligated to
disclose material information in the United States and, therefore, there may
not be a correlation between such information and the market value of the
depositary receipts. ADRs are depositary receipts typically issued by a U.S.
bank or trust company that evidence ownership of underlying securities issued
by a foreign corporation. GDRs and other types of depositary receipts are
typically issued by foreign banks or trust companies and evidence ownership
of underlying securities issued by either a foreign or a U.S. company.
Generally, depositary receipts in registered form are designed for use in the
U.S. securities markets, and depositary receipts in bearer form are designed for
use in foreign securities markets. The investments of Growth Fund, Strategic
Balanced Fund and Income Builder Fund in ADRs are deemed to be investments in
securities issued by U.S. issuers and those in GDRs and other types of
depositary receipts are deemed to be investments in the underlying securities.
The investments of All-Asia Fund in depositary receipts are deemed to be
investments in the underlying securities.

A supranational entity is an entity designated or supported by the national
government of one or more countries to promote economic reconstruction or
development. Examples of supranational entities include, among others, the World
Bank (International Bank for Reconstruction and Development) and the European
Investment Bank. A European Currency Unit is a basket of specified amounts of
the currencies of the member states of the European Economic Community. "Semi-
governmental securities" are securities issued by entities owned by either a
national, state or equivalent government or are obligations of one of such
government jurisdictions which are not backed by its full faith and credit and
general taxing powers.

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<PAGE>

Mortgage-Backed Securities. Interest and principal payments (including
prepayments) on the mortgages underlying mortgage-backed securities are
passed through to the holders of the securities. As a result of the
pass-through of prepayments of principal on the underlying securities,
mortgage-backed securities are often subject to more rapid prepayment of
principal than their stated maturity would indicate. Prepayments occur when
the mortgagor on a mortgage prepays the remaining principal before the
mortgage's scheduled maturity date. Because the prepayment characteristics of
the underlying mortgages vary, it is impossible to predict accurately the
realized yield or average life of a particular issue of pass-through
certificates. Prepayments are important because of their effect on the yield
and price of the mortgage-backed securities. During periods of declining
interest rates, prepayments can be expected to accelerate and a Fund
investing in such securities would be required to reinvest the proceeds at
the lower interest rates then available. In addition, prepayments of
mortgages underlying securities purchased at a premium could result in
capital losses.

Adjustable Rate Securities. Adjustable rate securities have interest rates
that are reset at periodic intervals, usually by reference to some interest
rate index or market interest rate. Some adjustable rate securities are
backed by pools of mortgage loans. Although the rate-adjustment feature may
reduce sharp changes in the value of adjustable rate securities, these
securities can change in value based on changes in market interest rates or
the issuer's creditworthiness. Changes in the interest rate on adjustable
rate securities may lag behind changes in prevailing market interest rates.
Also, some adjustable rate securities (or the underlying mortgages) are
subject to caps or floors that limit the maximum change in interest rate.

Asset-Backed Securities. Asset-backed securities (unrelated to first mortgage
loans) represent fractional interests in pools of leases, retail installment
loans, revolving credit receivables and other payment obligations, both
secured and unsecured. These assets are generally held by a trust and
payments of principal and interest or interest only are passed through
monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.

Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which
may reduce the overall return to certificate holders. Certificate holders may
also experience delays in payment on the certificates if the full amounts due
on underlying sales contracts or receivables are not realized by the trust
because of unanticipated legal or administrative costs of enforcing the
contracts or because of depreciation or damage to the collateral (usually
automobiles) securing certain contracts, or other factors.

Zero-Coupon and Payment-in-Kind Bonds. Zero-coupon bonds are issued at a
significant discount from their principal amount in lieu of paying interest
periodically. Payment-in-kind bonds allow the issuer to make current interest
payments on the bonds in additional bonds. Because zero-coupon bonds and
payment-in-kind bonds do not pay current interest in cash, their value is
generally subject to greater fluctuation in response to changes in market
interest rates than bonds that pay interest in cash currently. Both
zero-coupon and payment-in-kind bonds allow an issuer to avoid the need to
generate cash to meet current interest payments. Accordingly, such bonds may
involve greater credit risks than bonds paying interest currently. Even
though such bonds do not pay current interest in cash, a Fund is nonetheless
required to accrue interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, a Fund could be required at
times to liquidate other investments in order to satisfy its dividend
requirements.

Equity-Linked Debt Securities. Equity-linked debt securities are securities
with respect to which the amount of interest and/or principal that the issuer
thereof is obligated to pay is linked to the performance of a specified index
of equity securities. Such amount may be significantly greater or less than
payment obligations in respect of other types of debt securities. Adverse
changes in equity securities indices and other adverse changes in the
securities markets may reduce payments made under, and/or the principal of,
equity-linked debt securities held by the Fund. Furthermore, as with any debt
securities, the values of equity-linked debt securities will generally vary
inversely with changes in interest rates. The Fund's ability to dispose of
equity-linked debt securities will depend on the availability of liquid
markets for such securities. Investment in equity-linked debt securities may
be considered to be speculative. As with other securities, the Fund could
lose its entire investment in equity-linked debt securities.

Loans and Other Direct Debt Instruments. Loans and other direct debt
instruments are interests in amounts owned by a corporate, governmental or
other borrower to another party. They may represent amounts owed to lenders
or lending syndicates (loans and loan participations), to suppliers of goods
or services (trade claims or other receivables), or to other creditors.
Direct debt instruments involve the risk of loss in case of default or
insolvency of the borrower and may offer less legal protection to the Fund in
the event of fraud or misrepresentation than debt securities. In addition,
loan participations involve a risk of insolvency of the lending bank or other
financial intermediary. Direct debt instruments may also include standby
financing commitments that obligate the Fund to supply additional cash to the
borrower on demand. Loans and other direct debt instruments are generally
illiquid and may be transferred only through individually negotiated private
transactions.

Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If the Fund does not receive scheduled interest or principal payments
on such indebtedness, the Fund's share price and yield could

27
<PAGE>

be adversely affected. Loans that are fully secured offer the Fund more
protection than unsecured loans in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation of
collateral from a secured loan would satisfy the borrower's obligation, or
that the collateral can be liquidated. Indebtedness of borrowers whose
creditworthiness is poor may involve substantial risks, and may be highly
speculative.

Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of Asian countries will also involve a risk that the
governmental entities responsible for the repayment of the debt may be
unable, or unwilling, to pay interest and repay principal when due.

Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the Fund.
For example, if a loan is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning
and disposing of the collateral. Direct debt instruments may also involve a
risk of insolvency of the lending bank or other intermediary.

A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan,
as specified on the loan agreement. Unless, under the terms of the loan or
other indebtedness, the Fund has direct recourse against the borrower, it may
have to rely on the agent to apply appropriate credit remedies against a
borrower. If assets held by the agent for the benefit of the Fund were
determined to be subject to the claims of the agent's general creditors, the
Fund might incur certain costs and delays in realizing payment on the loan or
loan participation and could suffer a loss of principal or interest.

Direct indebtedness purchased by the Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments
obligating the Fund to pay additional cash on demand. These commitments may
have the effect of requiring the Fund to increase its investment in a
borrower at a time when it would not otherwise have done so, even if the
borrower's condition makes it unlikely that the amount will ever by repaid.
The Fund will set aside appropriate liquid assets in a segregated custodial
account to cover its potential obligations under standby financing commitments.

Illiquid Securities. Subject to any more restrictive applicable fundamental
investment policy, none of the Funds will maintain more than 15% of its net
assets in illiquid securities. Illiquid securities generally include (i)
direct placements or other securities that are subject to legal or contractual
restrictions on resale or for which there is no readily available market
(e.g., when trading in the security is suspended or, in the case of unlisted
securities, when market makers do not exist or will not entertain bids or
offers), including many individually negotiated currency swaps and any assets
used to cover currency swaps and most privately negotiated investments in
state enterprises that have not yet conducted an initial equity offering,
(ii) over-the-counter options and assets used to cover over-the-counter
options, and (iii) repurchase agreements not terminable within seven days.

Because of the absence of a trading market for illiquid securities, a Fund
may not be able to realize their full value upon sale. With respect to each
Fund that may invest in such securities, Alliance will monitor their
illiquidity under the supervision of the Directors of the Fund. To the extent
permitted by applicable law, Rule 144A securities will not be treated as
"illiquid" for purposes of the foregoing restriction so long as such
securities meet liquidity guidelines established by a Fund's Directors.
Investment in non-publicly traded securities by each of Growth Fund and
Strategic Balanced Fund is restricted to 5% of its total assets (not including
for these purposes Rule 144A securities, to the extent permitted by applicable
law) and is also subject to the 15% restriction on investment in illiquid
securities described above.

A Fund that invests in securities for which there is no ready market may
therefore not be able to readily sell such securities. To the extent that
these securities are foreign securities, there is no law in many of the
countries in which a Fund may invest similar to the Securities Act requiring
an issuer to register the sale of securities with a governmental agency or
imposing legal restrictions on resales of securities, either as to length of
time the securities may be held or manner of resale. However, there may be
contractual restrictions on resale of securities.

Options. An option gives the purchaser of the option, upon payment of a
premium, the right to deliver to (in the case of a put) or receive from (in
the case of a call) the writer a specified amount of a security on or before
a fixed date at a predetermined price. A call option written by a Fund is
"covered" if the Fund owns the underlying security, has an absolute and
immediate right to acquire that security upon conversion or exchange of
another security it holds, or holds a call option on the underlying security
with an exercise price equal to or less than that of the call option it has
written. A put option written by a Fund is covered if the Fund holds a put
option on the underlying securities with an exercise price equal to or
greater than that of the put option it has written.

A call option is for cross-hedging purposes if a Fund does not own the
underlying security, and is designed to provide a hedge against a decline in
value in another security which the Fund owns or has the right to acquire.
Worldwide Privatization Fund, All-Asia Fund, Income Builder Fund and Utility
Income Fund each may write call options for cross-hedging purposes. A Fund
would write a call option for cross-hedging purposes, instead of
writing a covered call option, when the premium to be received from the
cross-hedge transaction would exceed that which would be received from
writing a covered call option, while at the same time achieving the desired
hedge. In such circumstances, the Fund collateralizes its obligation under
the option by maintaining segregated account assets in an amount not less
than the market value of the underlying security, marked to market daily.

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In purchasing a call option, a Fund would be in a position to realize a gain
if, during the option period, the price of the underlying security increased
(in the case of a call) or decreased (in the case of a put) by an amount in
excess of the premium paid; otherwise the Fund would experience a loss equal
to the premium paid for the option.

If an option written by a Fund were exercised, the Fund would be obligated to
purchase (in the case of a put) or sell (in the case of a call) the
underlying security at the exercise price. The risk involved in writing an
option is that, if the option were exercised, the underlying security would
then be purchased or sold by the Fund at a disadvantageous price. These risks
could be reduced by entering into a closing transaction (i.e., by disposing
of the option prior to its exercise). A Fund retains the premium received
from writing a put or call option whether or not the option is exercised. The
writing of covered call options could result in increases in a Fund's
portfolio turnover rate, especially during periods when market prices of the
underlying securities appreciate.

Technology Fund, Quasar Fund, International Fund, New Europe Fund and Global
Small Cap Fund will not write uncovered call options. Technology Fund and
Global Small Cap Fund will not write a call option if the premium to be received
by the Fund in doing so would not produce an annualized return of at least 15%
of the then current market value of the securities subject to the option
(without giving effect to commissions, stock transfer taxes and other expenses
that are deducted from premium receipts). Technology Fund, Quasar Fund and
Global Small Cap Fund will not write a call option if, as a result, the
aggregate of the Fund's portfolio securities subject to outstanding call options
(valued at the lower of the option price or market value of such securities)
would exceed 15% of the Fund's total assets or more than 10% of the Fund's
assets would be committed to call options that at the time of sale have a
remaining term of more than 100 days. The aggregate cost of all outstanding
options purchased and held by each of Premier Growth Fund, Technology Fund,
Quasar Fund and Global Small Cap Fund will at no time exceed 10% of the Fund's
total assets. Neither International Fund nor New Europe Fund will write
uncovered put options.

A Fund that purchases or writes options on securities in privately negotiated
(i.e., over-the-counter) transactions will effect such transactions only with
investment dealers and other financial institutions (such as commercial banks
or savings and loan institutions) deemed creditworthy by Alliance, and
Alliance has adopted procedures for monitoring the creditworthiness of such
entities. Options purchased or written by a Fund in negotiated transactions
are illiquid and it may not be possible for the Fund to effect a closing
transaction at an advantageous time. See "Illiquid Securities."

Options on Securities Indices. An option on a securities index is similar to
an option on a security except that, rather than the right to take or make
delivery of a security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the option, an amount
of cash if the closing level of the chosen index is greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option.

Futures Contracts and Options on Futures Contracts. A "sale" of a futures
contract means the acquisition of a contractual obligation to deliver the
securities or foreign currencies or other commodity called for by the
contract at a specified price on a specified date. A "purchase" of a futures
contract means the incurring of an obligation to acquire the securities,
foreign currencies or other commodity called for by the contract at a
specified price on a specified date. The purchaser of a futures contract on
an index agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of the index on
the expiration date of the contract ("current contract value") and the price
at which the contract was originally struck. No physical delivery of the
securities underlying the index is made.

Options on futures contracts written or purchased by a Fund will be traded on
U.S. or foreign exchanges or over-the-counter. These investment techniques
will be used only to hedge against anticipated future changes in market
conditions and interest or exchange rates which otherwise might either
adversely affect the value of the Fund's portfolio securities or adversely
affect the prices of securities which the Fund intends to purchase at a later
date.

No Fund will enter into any futures contracts or options on futures contracts
if immediately thereafter the market values of the outstanding futures
contracts of the Fund and the currencies and futures contracts subject to
outstanding options written by the Fund would exceed 50% of its total assets
and Income Builder Fund will also not do so if immediately thereafter the
aggregate of initial margin deposits on all the outstanding futures contracts
of the Fund and premiums paid on outstanding options on futures contracts
would exceed 5% of the market value of the total assets of the Fund. Neither
Premier Growth Fund nor Counterpoint Fund may purchase or sell a stock index
future if immediately thereafter more than 30% of its total assets would be
hedged by stock index futures. In connection with the purchase of stock index
futures contracts, a Fund will deposit in a segregated account with its
custodian an amount of cash, U.S. Government securities or other liquid
high-quality debt securities equal to the market value of the futures
contracts less any amounts maintained in a margin account with the Fund's
broker. Premier Growth Fund and Counterpoint Fund may not purchase or sell a
stock index future if, immediately thereafter, the sum of the amount of
margin deposits on the Fund's existing futures positions would exceed 5% of
the market value of the Fund's total assets.

Options on Foreign Currencies. As in the case of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge,
up to the amount of the premium received, and a Fund could be required to
purchase or

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sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event
of rate movements adverse to a Fund's position, it may forfeit the entire
amount of the premium plus related transaction costs. See the Statement of
Additional Information of each Fund that may invest in options on foreign
currencies for further discussion of the use, risks and costs of options on
foreign currencies.

Forward Foreign Currency Exchange Contracts. A Fund purchases or sells
forward contracts to minimize the risk to it from adverse changes in the
relationship between the U.S. dollar and other currencies. A forward contract
is an obligation to purchase or sell a specific currency for an agreed price
at a future date, and is individually negotiated and privately traded.

A Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of the security
("transaction hedge"). A Fund will not engage in transaction hedges with
respect to the currency of a particular country to an extent greater than the
aggregate amount of the Fund's transactions in that currency. When a Fund
believes that a foreign currency may suffer a substantial decline against the
U.S. dollar, it may enter into a forward sale contract to sell an amount of
that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency, or when the Fund
believes that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract to buy that
foreign currency for a fixed dollar amount ("position hedge"). A Fund will
not position hedge with respect to the currency of a particular country to an
extent greater than the aggregate market value (at the time of making such
sale) of the securities held in its portfolio denominated or quoted in that
particular foreign currency. Instead of entering into a position hedge, a
Fund may, in the alternative, enter into a forward contract to sell a
different foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold pursuant to
the forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund are
denominated ("cross-hedge"). To the extent required by applicable law, each
Fund's custodian will place cash not available for investment, U.S.
Government securities or other liquid high-grade debt securities in a
segregated account of the Fund having a value equal to the aggregate amount
of the Fund's commitments under forward contracts entered into with respect
to transaction and position hedges and cross-hedges. If the value of the
securities placed in a segregated account declines, additional cash or
securities will be placed in the account on a daily basis so that the value
of the account will equal the amount of the Fund's commitments with respect
to such contracts. As an alternative to maintaining all or part of the
segregated account, a Fund may purchase a call option permitting the Fund to
purchase the amount of foreign currency being hedged by a forward sale
contract at a price no higher than the forward contract price or the Fund may
purchase a put option permitting the Fund to sell the amount of foreign
currency subject to a forward purchase contract at a price as high or higher
than the forward contract price. In addition, the Fund may use such other
methods of "cover" as are permitted by applicable law. Unanticipated changes
in currency prices may result in poorer overall performance for the Fund than
if it had not entered into such forward contracts.

Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise.
Moreover, it may not be possible for a Fund to hedge against a devaluation
that is so generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it anticipates.
International Fund, New Europe Fund and Global Small Cap Fund will not enter
into a forward contract with a term of more than one year or if, as a result,
more than 50% of its total assets would be committed to such contracts. The
dealings of International Fund, New Europe Fund and Global Small Cap Fund in
forward contracts will be limited to hedging involving either specific
transactions or portfolio positions.

Growth Fund and Strategic Balanced Fund may also purchase and sell foreign
currency on a spot basis.

Forward Commitments. Forward commitments for the purchase or sale of
securities may include purchases on a "when-issued" basis or purchases or
sales on a "delayed delivery" basis. In some cases, a forward commitment may
be conditioned upon the occurrence of a subsequent event, such as approval
and consummation of a merger, corporate reorganization or debt restructuring
(i.e., a "when, as and if issued" trade).

When forward commitment transactions are negotiated, the price is fixed at
the time the commitment is made, but delivery and payment for the securities
take place at a later date. Normally, the settlement date occurs within two
months after the transaction, but settlements beyond two months may be
negotiated. Securities purchased or sold under a forward commitment are
subject to market fluctuation, and no interest or dividends accrue to the
purchaser prior to the settlement date. At the time a Fund intends to enter
into a forward commitment, it records the transaction and thereafter reflects
the value of the security purchased or, if a sale, the proceeds to be
received, in determining its net asset value. Any unrealized appreciation or
depreciation reflected in such valuation of a "when, as and if issued"
security would be canceled in the event that the required conditions did not
occur and the trade was canceled.

The use of forward commitments enables a Fund to protect against anticipated
changes in interest rates and prices. For instance, in periods of rising
interest rates and falling bond prices, a Fund might sell securities in its
portfolio on a forward commitment basis to limit its exposure to falling
prices. In periods of falling interest rates and rising bond prices, a Fund
might sell a security in its portfolio and purchase the same or

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<PAGE>

a similar security on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields. However, if Alliance
were to forecast incorrectly the direction of interest rate movements, a Fund
might be required to complete such when-issued or forward transactions at
prices inferior to the then current market values. When-issued securities and
forward commitments may be sold prior to the settlement date, but a Fund
enters into when-issued and forward commitments only with the intention of
actually receiving securities or delivering them, as the case may be. If a
Fund chooses to dispose of the right to acquire a when-issued security prior
to its acquisition or dispose of its right to deliver or receive against a
forward commitment, it may incur a gain or loss. Any significant commitment
of Fund assets to the purchase of securities on a "when, as and if issued"
basis may increase the volatility of the Fund's net asset value. No forward
commitments will be made by New Europe Fund, All-Asia Fund, Worldwide
Privatization Fund, Income Builder Fund or Utility Income Fund if, as a
result, the Fund's aggregate commitments under such transactions would be
more than 30% of the Fund's total assets. To facilitate these transactions,
each Fund's custodian maintains in a segregated account of the Fund cash
and/or liquid high grade debt securities, denominated in U.S. dollars (or
non-U.S. currencies in the case of New Europe Fund) having a value equal to,
or greater than, any commitments to purchase securities on a forward
commitment basis and, with respect to forward commitments to sell portfolio
securities, the portfolio securities themselves. In the event the other party
to a forward commitment transaction were to default, a Fund might lose the
opportunity to invest money at favorable rates or to dispose of securities at
favorable prices.

Standby Commitment Agreements. Standby commitment agreements commit a Fund,
for a stated period of time, to purchase a stated amount of a security that
may be issued and sold to the Fund at the option of the issuer. The price and
coupon of the security are fixed at the time of the commitment. At the time
of entering into the agreement the Fund is paid a commitment fee, regardless
of whether the security ultimately is issued, typically equal to
approximately 0.5% of the aggregate purchase price of the security the Fund
has committed to purchase. A Fund will enter into such agreements only for
the purpose of investing in the security underlying the commitment at a yield
and price considered advantageous to the Fund and unavailable on a firm
commitment basis. Each Fund, other than Income Builder Fund, will not enter
into a standby commitment with a remaining term in excess of 45 days and will
limit its investment in such commitments so that the aggregate purchase price
of the securities subject to the commitments will not exceed 25% with respect
to New Europe Fund, 50% with respect to Worldwide Privatization Fund and
All-Asia Fund, and 20% with respect to Utility Income Fund, of its assets
taken at the time of making the commitment. Each Fund at all times maintains
a segregated account with its custodian of cash and/or liquid high grade debt
securities, denominated in U.S. dollars (or non-U.S. currencies in the case
of New Europe Fund and Utility Income Fund) in an aggregate amount equal to
the purchase price of the securities underlying the commitment.

There is no guarantee that the securities subject to a standby commitment
will be issued and the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the
security underlying the commitment is at the option of the issuer, a Fund
will bear the risk of capital loss in the event the value of the security
declines and may not benefit from an appreciation in the value of the
security during the commitment period if the issuer decides not to issue and
sell the security to the Fund.

Currency Swaps. Currency swaps involve the individually negotiated exchange
by a Fund with another party of a series of payments in specified currencies.
A currency swap may involve the delivery at the end of the exchange period of
a substantial amount of one designated currency in exchange for the other
designated currency. Therefore the entire principal value of a currency swap
is subject to the risk that the other party to the swap will default on its
contractual delivery obligations. The net amount of the excess, if any, of a
Fund's obligations over its entitlements with respect to each currency swap
will be accrued on a daily basis and, to the extent required by applicable
law, an amount of cash or high-grade liquid debt securities having an
aggregate value at least equal to the accrued excess will be maintained in a
segregated account by the Fund's custodian. A Fund will not enter into any
currency swap unless the credit quality of the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in the highest
rating category of at least one nationally recognized rating organization at
the time of entering into the transaction. If there is a default by the other
party to such a transaction, such Fund will have contractual remedies pursuant
to the agreements related to the transactions.

Interest Rate Transactions. Each Fund that may enter into interest rate
transactions expects to do so primarily to preserve a return or spread on a
particular investment or portion of its portfolio or to protect against any
increase in the price of securities the Fund anticipates purchasing at a
later date. The Funds do not intend to use these transactions in a
speculative manner.

Interest rate swaps involve the exchange by a Fund with another party of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments). Interest rate swaps are entered on a net
basis (i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments). With
respect to All-Asia Fund and Utility Income Fund, the exchange commitments can
involve payments in the same currency or in different currencies. The purchase
of an interest rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payments of interest on
a contractually-based principal amount from the party selling such interest rate
cap. The purchase of an interest rate floor entitles the purchaser, to the
extent that a

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specified index falls below a predetermined interest rate, to receive
payments of interest on an agreed principal amount from the party selling the
interest rate floor.

A Fund may enter into interest rate swaps, caps and floors on either an
asset-based or liability-based basis, depending upon whether it is hedging
its assets or liabilities. The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each interest rate swap,
cap and floor is accrued daily, and an amount of cash or liquid high-grade
debt securities having an aggregate value at least equal to the accrued
excess is maintained in a segregated account by the Fund's custodian. A Fund
will not enter into an interest rate swap, cap or floor transaction unless
the unsecured senior debt or the claims-paying ability of the other party
thereto is then rated in the highest rating category of at least one
nationally recognized rating organization. Alliance will monitor the
creditworthiness of counterparties on an ongoing basis. The swap market has
grown substantially in recent years, with a large number of banks and
investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been developed and, accordingly, they
are less liquid than swaps. To the extent a Fund sells (i.e., writes) caps
and floors it will maintain segregated account assets having an aggregate
value at least equal to the full amount, accrued daily, of the Fund's
obligations with respect to any caps or floors.

The use of interest rate transactions is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. If Alliance incorrectly
forecasted market values, interest rates and other applicable factors, the
investment performance of a Fund would be adversely affected by the use of
these investment techniques. Moreover, even if Alliance is correct in its
forecasts, there is a risk that the transaction position may correlate
imperfectly with the price of the asset or liability being hedged. There is
no limit on the amount of interest rate transactions that may be entered into
by a Fund that is permitted to enter into such transactions. These
transactions do not involve the delivery of securities or other underlying
assets or principal. Accordingly, the risk of loss with respect to interest
rate transactions is limited to the net amount of interest payments that a
Fund is contractually obligated to make. If the other party to an interest
rate transaction defaults, a Fund's risk of loss consists of the net amount
of interest payments that the Fund contractually is entitled to receive.

Repurchase Agreements. A repurchase agreement arises when a buyer purchases a
security and simultaneously agrees to resell it to the vendor at an
agreed-upon future date, normally a day or a few days later. The resale price
is greater than the purchase price, reflecting an agreed-upon interest rate
for the period the buyer's money is invested in the security. Such agreements
permit a Fund to keep all of its assets at work while retaining "overnight"
flexibility in pursuit of investments of a longer-term nature. A Fund requires
continual maintenance by its custodian of collateral in an amount equal to,
or in excess of, the resale price. If a vendor defaults on its repurchase
obligation, a Fund would suffer a loss to the extent that the proceeds from
the sale of the collateral were less than the repurchase price. If a vendor
goes bankrupt, a Fund might be delayed in, or prevented from, selling the
collateral for its benefit. Alliance monitors the creditworthiness of the
vendors with which the Fund enters into repurchase agreements. There is no
percentage restriction on a Fund's ability to enter into repurchase
agreements, other than as indicated under "Investment Objectives and Policies."

Short Sales. A short sale is effected by selling a security that a Fund does
not own, or if the Fund does own such security, it is not to be delivered
upon consummation of the sale. A short sale is "against the box" to the
extent that a Fund contemporaneously owns or has the right to obtain
securities identical to those sold short without payment. Worldwide
Privatization Fund, All-Asia Fund, Income Builder Fund and Utility Income
Fund each may make short sales of securities or maintain short positions only
for the purpose of deferring realization of gain or loss for U.S. federal
income tax purposes, provided that at all times when a short position is open
the Fund owns an equal amount of securities of the same issue as, and equal
in amount to, the securities sold short. In addition, each of those Funds may
not make a short sale if as a result more than 10% of the Fund's net assets
would be held as collateral for short sales, except that All-Asia Fund may
not make a short sale if as a result more than 25% of the Fund's net assets
would be held as collateral for short sales. If the price of the security
sold short increases between the time of the short sale and the time a Fund
replaces the borrowed security, the Fund will incur a loss; conversely, if
the price declines, the Fund will realize a capital gain. See "Certain
Fundamental Investment Policies." Certain special federal income tax
considerations may apply to short sales entered into by a Fund. See
"Dividends, Distributions and Taxes" in the relevant Fund's Statement of
Additional Information.

Loans of Portfolio Securities. The risks in lending portfolio securities, as
with other extensions of credit, consist of possible loss of rights in the
collateral should the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all relevant facts
and circumstances, including the creditworthiness of the borrower. While
securities are on loan, the borrower will pay the Fund any income earned thereon
and the Fund may invest any cash collateral in portfolio securities, thereby
earning additional income, or receive an agreed upon amount of income from a
borrower who has delivered equivalent collateral. Each Fund will have the right
to regain record ownership of loaned securities to exercise beneficial rights
such as voting rights, subscription rights and rights to dividends, interest or

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distributions. A Fund may pay reasonable finders', administrative and
custodial fees in connection with a loan. A Fund will not lend its portfolio
securities to any officer, director, employee or affiliate of the Fund or
Alliance.

General. The successful use of the foregoing investment practices draws upon
Alliance's special skills and experience with respect to such instruments and
usually depends on Alliance's ability to forecast price movements, interest
rates or currency exchange rate movements correctly. Should interest rates,
prices or exchange rates move unexpectedly, a Fund may not achieve the
anticipated benefits of the transactions or may realize losses and thus be in
a worse position than if such strategies had not been used. Unlike many
exchange-traded futures contracts and options on futures contracts, there are
no daily price fluctuation limits with respect to certain options and forward
contracts, and adverse market movements could therefore continue to an
unlimited extent over a period of time. In addition, the correlation between
movements in the prices of futures contracts, options and forward contracts
and movements in the prices of the securities and currencies hedged or used
for cover will not be perfect and could produce unanticipated losses.

A Fund's ability to dispose of its position in futures contracts, options and
forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types
of securities and currencies are relatively new and still developing, and
there is no public market for forward contracts. It is impossible to predict
the amount of trading interest that may exist in various types of futures
contracts, options and forward contracts. If a secondary market does not
exist with respect to an option purchased or written by a Fund, it might not
be possible to effect a closing transaction in the option (i.e., dispose of
the option) with the result that (i) an option purchased by the Fund would
have to be exercised in order for the Fund to realize any profit and (ii) the
Fund may not be able to sell currencies or portfolio securities covering an
option written by the Fund until the option expires or it delivers the
underlying security, futures contract or currency upon exercise. Therefore,
no assurance can be given that the Funds will be able to utilize these
instruments effectively for the purposes set forth above. Furthermore, a
Fund's ability to engage in options and futures transactions may be limited
by tax considerations. See "Dividends, Distributions and Taxes" in the
Statement of Additional Information of each Fund that invests in options and
futures.

Future Developments. A Fund may, following written notice to its
shareholders, take advantage of other investment practices that are not
currently contemplated for use by the Fund or are not available but may yet
be developed, to the extent such investment practices are consistent with the
Fund's investment objective and legally permissible for the Fund. Such
investment practices, if they arise, may involve risks that exceed those
involved in the activities described above.

Defensive Position. For temporary defensive purposes, each Fund may invest in
certain types of short-term, liquid, high-grade or high quality (depending on
the Fund) debt securities. These securities may include U.S. Government
securities, qualifying bank deposits, money market instruments, prime
commercial paper and other types of short-term debt securities including
notes and bonds. For Funds that may invest in foreign countries, such
securities may also include short-term, foreign-currency denominated
securities of the type mentioned above issued by foreign governmental
entities, companies and supranational organizations. For a complete
description of the types of securities each Fund may invest in while in a
temporary defensive position, please see such Fund's Statement of Additional
Information.

Portfolio Turnover. A 100%, 150%, 200% and 300% annual turnover rate would
occur, for example, when all of the securities in a Fund's portfolio are
replaced once, one and one-half times, twice and three times, respectively,
in a period of one year. A 100% portfolio turnover rate is greater than that
of most other investment companies, including those which emphasize capital
appreciation as a basic policy. A high rate of portfolio turnover involves
correspondingly greater brokerage and other expenses than a lower rate, which
must be borne by the Fund and its shareholders. High portfolio turnover also
may result in the realization of substantial net short-term capital gains.
See "Dividends, Distributions and Taxes" in each Fund's Statement of
Additional Information.

CERTAIN FUNDAMENTAL INVESTMENT POLICIES

Each Fund has adopted certain fundamental investment policies listed below,
which may not be changed without the approval of its shareholders. Additional
investment restrictions with respect to a Fund are set forth in its Statement
of Additional Information.

Alliance Fund may not: (i) invest more than 5% of its total assets in the
securities of any one issuer (other than the U.S. Government); (ii) acquire
more than 10% of the voting or other securities of any one issuer; or (iii)
buy securities of any company that (including its predecessors) has not been in
business at least three continuous years. Pursuant to investment policies
which are not fundamental, the Fund does not invest (i) in puts or calls
(except as discussed above); (ii) in straddles, spreads, or any combination
thereof; (iii) in oil, gas or other mineral exploration or development
programs; or (iv) more than 5% of its gross assets in securities the
disposition of which would be subject to restrictions under the federal
securities laws.

Growth Fund and Strategic Balanced Fund may not: (i) invest more than 5% of its
total assets in the securities of any one issuer (other than U.S. Government
securities and repurchase agreements relating thereto), although up to 25% of
the Fund's total assets may be invested without regard to this restriction;

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or (ii) invest 25% or more of its total assets in the securities of any one
industry.

Premier Growth Fund may not: (i) purchase more than 10% of the outstanding
voting securities of any one issuer; (ii) invest 25% or more of the value of
its total assets in the same industry; (iii) borrow money or issue senior
securities except for temporary or emergency purposes in an amount not
exceeding 5% of the value of its total assets at the time the borrowing is
made; (iv) pledge, mortgage, hypothecate or otherwise encumber any of its
assets except in connection with the writing of call options and except to
secure permitted borrowings; or (v) invest in the securities of any issuer
that has a record of less than three years of continuous operation (including
the operation of any predecessor) if as a result more than 10% of the value
of the total assets of the Fund would be invested in the securities of such
issuer or issuers.

Counterpoint Fund may not: (i) purchase the securities of any one issuer,
other than the U.S. Government or any of its agencies or instrumentalities,
if as a result more than 5% of the value of its total assets would be
invested in such issuer or the Fund would own more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the
Fund's total assets may be invested without regard to these 5% and 10%
limitations; (ii) invest 25% or more of its total assets in a particular
industry; (iii) borrow money except for temporary or emergency purposes,
including meeting redemption requests which might require the untimely
disposition of securities; borrowing in the aggregate may not exceed 15%, and
borrowing for purposes other than meeting redemptions may not exceed 5% of
its total assets at the time the borrowing is made; (iv) invest more than 10%
of its net assets in the aggregate in restricted and not readily marketable
securities; (v) invest more than 10% of its total assets in the securities of
any issuer that has a record of less than three years of continuous operation
(including the operation of any predecessor); or (vi) invest more than 10% of
the value of its total assets in the aggregate in illiquid securities or
repurchase agreements not terminable within seven days.

Technology Fund may not: (i) with respect to 75% of its total assets, have
such assets represented by other than: (a) cash and cash items, (b) U.S.
Government securities, or (c) securities of any one issuer (other than the
U.S. Government and its agencies or instrumentalities) not greater in value
than 5% of the Fund's total assets, and not more than 10% of the outstanding
voting securities of such issuer; (ii) purchase the securities of any one
issuer, other than the U.S. Government and its agencies or instrumentalities,
if as a result (a) the value of the holdings of the Fund in the securities of
such issuer exceeds 25% of its total assets, or (b) the Fund owns more than
25% of the outstanding securities of any one class of securities of such
issuer; (iii) concentrate its investments in any one industry, but the Fund
has reserved the right to invest up to 25% of its total assets in a
particular industry; and (iv) invest in the securities of any issuer which
has a record of less than three years of continuous operation (including the
operation of any predecessor) if such purchase would cause 10% or more of its
total assets to be invested in the securities of such issuers.

Quasar Fund may not: (i) purchase the securities of any one issuer, other
than the U.S. Government or any of its agencies or instrumentalities, if as a
result more than 5% of its total assets would be invested in such issuer or
the Fund would own more than 10% of the outstanding voting securities of such
issuer, except that up to 25% of its total assets may be invested without
regard to these 5% and 10% limitations; (ii) invest more than 25% of its
total assets in any particular industry; (iii) borrow money except for
temporary or emergency purposes in an amount not exceeding 5% of its total
assets at the time the borrowing is made; or (iv) invest more than 10% of its
assets in restricted securities.

International Fund may not: (i) invest more than 5% of the value of its total
assets in securities of a single issuer (including repurchase agreements with
any one entity), except U.S. Government securities or foreign government
securities; provided, however, that the Fund may not, with respect to 75% of
its total assets, invest more than 5% of its total assets in securities of
any one foreign government issuer; (ii) own more than 10% of the outstanding
securities of any class of any issuer (for this purpose, all preferred stocks
of an issuer shall be deemed a single class, and all indebtedness of an
issuer shall be deemed a single class), except U.S. Government securities;
(iii) invest more than 25% of the value of its total assets in securities of
issuers having their principal business activities in the same industry;
provided, that this limitation does not apply to U.S. Government securities
or foreign government securities; (iv) invest more than 5% of the value of
its total assets in the securities of any issuer that has a record of less
than three years of continuous operation (including the operation of any
predecessor or unconditional guarantor), except U.S. Government securities or
foreign government securities; (v) invest more than 5% of the value of its
total assets in securities with legal or contractual restrictions on resale,
other than repurchase agreements, or more than 10% of the value of its total
assets in securities that are not readily marketable (including restricted
securities and repurchase agreements not terminable within seven business
days); and (vi) borrow money, except as a temporary measure for extraordinary
or emergency purposes, and then only from banks in amounts not exceeding 5%
of its total assets.

Worldwide Privatization Fund may not: (i) invest 25% or more of its total assets
in securities of issuers conducting their principal business activities in the
same industry, except that this restriction does not apply to (a) U.S.
Government securities, or (b) the purchase of securities of issuers whose
primary business activity is in the national commercial banking industry, so
long as the Fund's Directors determine, on the basis of factors such as
liquidity, availability of investments and anticipated returns, that the Fund's
ability to achieve its investment objective would be adversely affected if the
Fund were not permitted to invest more than 25% of its total assets

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<PAGE>

in those securities, and so long as the Fund notifies its shareholders of
any decision by the Directors to permit or cease to permit the Fund to invest
more than 25% of its total assets in those securities, such notice to include
a discussion of any increased investment risks to which the Fund may be
subjected as a result of the Directors' determination; (ii) borrow money
except from banks for temporary or emergency purposes, including the meeting
of redemption requests that might require the untimely disposition of
securities; borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5%, of the Fund's
total assets (including the amount borrowed) less liabilities (not including
the amount borrowed) at the time the borrowing is made; outstanding
borrowings in excess of 5% of the value of the Fund's total assets will be
repaid before any investments are made; or (iii) pledge, hypothecate,
mortgage or otherwise encumber its assets, except to secure permitted
borrowings. The exception contained in clause (i)(b) above is subject to the
operating policy regarding concentration described in this Prospectus.

New Europe Fund may not: (i) purchase more than 10% of the outstanding voting
securities of any one issuer; (ii) invest more than 15% of its total assets
in the securities of any one issuer or 25% or more of its total assets in the
same industry, provided, however, that the foregoing restriction shall not be
deemed to prohibit the Fund from purchasing the securities of any issuer
pursuant to the exercise of rights distributed to the Fund by the issuer,
except that no such purchase may be made if as a result the Fund will fail to
meet the diversification requirements of the Code and any such acquisition in
excess of the foregoing 15% or 25% limits will be sold by the Fund as soon as
reasonably practicable (this restriction does not apply to U.S. Government
securities, but will apply to foreign government securities unless the
Commission permits their exclusion); (iii) borrow money except from banks for
temporary or emergency purposes, including the meeting of redemption requests
that might require the untimely disposition of securities; borrowing in the
aggregate may not exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5%, of the Fund's total assets (including the
amount borrowed) less liabilities (not including the amount borrowed) at the
time the borrowing is made; outstanding borrowings in excess of 5% of the
Fund's total assets will be repaid before any subsequent investments are
made; or (iv) purchase a security (unless the security is acquired pursuant
to a plan of reorganization or an offer of exchange) if, as a result, the
Fund would own any securities of an open-end investment company or more than
3% of the total outstanding voting stock of any closed-end investment
company, or more than 5% of the value of the Fund's total assets would be
invested in securities of any closed-end investment company, or more than 10%
of such value in closed-end investment companies in general.

All-Asia Fund may not: (i) invest 25% or more of its total assets in
securities of issuers conducting their principal business activities in the
same industry; (ii) borrow money except from banks for temporary or emergency
purposes, including the meeting of redemption requests that might require the
untimely disposition of securities; borrowing in the aggregate may not exceed
15%, and borrowing for purposes other than meeting redemptions may not exceed
5%, of the Fund's total assets (including the amount borrowed) less
liabilities (not including the amount borrowed) at the time the borrowing is
made; outstanding borrowings in excess of 5% of the value of the Fund's total
assets will be repaid before any investments are made; or (iii) pledge,
hypothecate, mortgage or otherwise encumber its assets, except to secure
permitted borrowings.

Global Small Cap Fund may not: (i) purchase the securities of any one issuer,
other than the U.S. Government or any of its agencies or instrumentalities,
if immediately after such purchase more than 5% of the value of its total
assets would be invested in such issuer or the Fund would own more than 10%
of the outstanding voting securities of such issuer, except that up to 25% of
the Fund's total assets may be invested without regard to these 5% and 10%
limitations; (ii) invest 25% or more of its total assets in the same
industry; this restriction does not apply to U.S. Government securities, but
will apply to foreign government securities unless the Commission permits
their exclusion; (iii) borrow money except from banks for emergency or
temporary purposes in an amount not exceeding 5% of the total assets of the
Fund; or (iv) make short sales of securities or maintain a short position,
unless at all times when a short position is open it owns an equal amount of
such securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and
equal in amount to, the securities sold short and unless not more than 5% of
the Fund's net assets is held as collateral for such sales at any one time.

Balanced Shares may not: (i) invest more than 5% of its total assets in the
securities of any one issuer, except U.S. Government securities; or (ii) own
more than 10% of the outstanding voting securities of any one issuer.

Income Builder Fund may not: (i) invest 25% or more of its total assets in
securities of companies engaged principally in any one industry, except that
this restriction does not apply to U.S. Government securities; (ii) borrow
money except from banks for temporary or emergency purposes, including the
meeting of redemption requests that might require the untimely disposition of
securities; borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5%, of the Fund's
total assets (including the amount borrowed) less liabilities (not including
the amount borrowed) at the time borrowing is made; securities will not be
purchased while borrowings in excess of 5% of the Fund's total assets are
outstanding; or (iii) pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings.

Utility Income Fund may not: (i) invest more than 5% of its total assets in
the securities of any one issuer except the U.S. Government, although with
respect to 25% of its total assets it

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may invest in any number of issuers; (ii) invest 25% or more of its total
assets in the securities of issuers conducting their principal business
activities in any one industry, other than the utilities industry, except
that this restriction does not apply to U.S. Government securities; (iii)
purchase more than 10% of any class of the voting securities of any one issuer;
(iv) borrow money except from banks for temporary or emergency purposes,
including the meeting of redemption requests that might require the untimely
disposition of securities; borrowing in the aggregate may not exceed 15%, and
borrowing for purposes other than meeting redemptions may not exceed 5%, of
the Fund's total assets (including the amount borrowed) less liabilities (not
including the amount borrowed) at the time the borrowing is made; outstanding
borrowings in excess of 5% of the Fund's total assets will be repaid before
any subsequent investments are made; or (v) purchase a security if, as a
result (unless the security is acquired pursuant to a plan of reorganization
or an offer of exchange), the Fund would own any securities of an open-end
investment company or more than 3% of the total outstanding voting stock of
any closed-end investment company or more than 5% of the value of the Fund's
net assets would be invested in securities of any one or more closed-end
investment companies.

Growth and Income Fund may not (i) invest more than 5% of its net assets in
the security of any one issuer, except U.S. Government obligations or (ii)
own more than 10% of the outstanding voting securities of any issuer.

RISK CONSIDERATIONS

Investment in certain of the Funds involves the special risk considerations
described below. These risks may be heightened when investing in emerging
markets.

Investment in Privatized Enterprises by Worldwide Privatization Fund. In
certain jurisdictions, the ability of foreign entities, such as the Fund, to
participate in privatizations may be limited by local law, or the price or
terms on which the Fund may be able to participate may be less advantageous
than for local investors. Moreover, there can be no assurance that
governments that have embarked on privatization programs will continue to
divest their ownership of state enterprises, that proposed privatizations
will be successful or that governments will not re-nationalize enterprises
that have been privatized. Furthermore, in the case of certain of the
enterprises in which the Fund may invest, large blocks of the stock of those
enterprises may be held by a small group of stockholders, even after the
initial equity offerings by those enterprises. The sale of some portion or
all of those blocks could have an adverse effect on the price of the stock of
any such enterprise.

Most state enterprises or former state enterprises go through an internal
reorganization of management prior to conducting an initial equity offering
in an attempt to better enable these enterprises to compete in the private
sector. However, certain reorganizations could result in a management team
that does not function as well as the enterprise's prior management and may
have a negative effect on such enterprise. After making an initial equity
offering, enterprises that may have enjoyed preferential treatment from the
respective state or government that owned or controlled them may no longer
receive such preferential treatment and may become subject to market
competition from which they were previously protected. Some of these
enterprises may not be able to effectively operate in a competitive market
and may suffer losses or experience bankruptcy due to such competition. In
addition, the privatization of an enterprise by its government may occur over
a number of years, with the government continuing to hold a controlling
position in the enterprise even after the initial equity offering for the
enterprise.

Currency Considerations. Substantially all of the assets of International
Fund, New Europe Fund, All-Asia Fund, Global Small Cap Fund and Worldwide
Privatization Fund will be invested in securities denominated in foreign
currencies, and a corresponding portion of these Funds' revenues will be
received in such currencies. Therefore, the dollar equivalent of their net
assets, distributions and income will be adversely affected by reductions in
the value of certain foreign currencies relative to the U.S. dollar. If the
value of the foreign currencies in which a Fund receives its income falls
relative to the U.S. dollar between receipt of the income and the making of
Fund distributions, the Fund may be required to liquidate securities in order
to make distributions if it has insufficient cash in U.S. dollars to meet
distribution requirements that the Fund must satisfy to qualify as a
regulated investment company for federal income tax purposes. Similarly, if
an exchange rate declines between the time a Fund incurs expenses in U.S.
dollars and the time cash expenses are paid, the amount of the currency
required to be converted into U.S. dollars in order to pay expenses in U.S.
dollars could be greater than the equivalent amount of such expenses in the
currency at the time they were incurred. In light of these risks, a Fund may
engage in certain currency hedging transactions, which themselves involve
certain special risks. See "Additional Investment Practices" above.

Foreign Investment. The securities markets of many foreign countries are
relatively small, with the majority of market capitalization and trading
volume concentrated in a limited number of companies representing a small
number of industries. Consequently, a Fund whose investment portfolio
includes such securities may experience greater price volatility and
significantly lower liquidity than a portfolio invested solely in equity
securities of United States companies. These markets may be subject to
greater influence by adverse events generally affecting the market, and by
large investors trading significant blocks of securities, than is usual in
the United States. Securities settlements may in some instances be subject
to delays and related administrative uncertainties. These problems are
particularly severe in India, where settlement is through physical delivery,
and, where, currently, a severe shortage of vault capacity exists among
custodial banks, although efforts are

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<PAGE>

being undertaken to alleviate the shortage. Certain foreign countries require
governmental approval prior to investments by foreign persons or limit
investment by foreign persons to only a specified percentage of an issuer's
outstanding securities or a specific class of securities which may have less
advantageous terms (including price) than securities of the company available
for purchase by nationals. These restrictions or controls may at times limit
or preclude investment in certain securities and may increase the costs and
expenses of a Fund. In addition, the repatriation of investment income,
capital or the proceeds of sales of securities from certain of the countries
is controlled under regulations, including in some cases the need for certain
advance government notification or authority, and if a deterioration occurs
in a country's balance of payments, the country could impose temporary
restrictions on foreign capital remittances.

A Fund could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
to it of other restrictions on investment. Investing in local markets may
require a Fund to adopt special procedures, which may involve additional costs
to a Fund. The liquidity of a Fund's investments in any country in which any of
these factors exists could be affected and Alliance will monitor the effect of
any such factor or factors on a Fund's investments. Furthermore, transaction
costs including brokerage commissions for transactions both on and off the
securities exchanges in many foreign countries are generally higher than in
the U.S.

The economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross
domestic product or gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Nationalization, expropriation or confiscatory taxation, currency blockage,
political changes, government regulation, political or social instability or
diplomatic developments could affect adversely the economy of a foreign
country or the Fund's investments in such country. In the event of
expropriation, nationalization or other confiscation, a Fund could lose its
entire investment in the country involved. In addition, laws in foreign
countries governing business organizations, bankruptcy and insolvency may
provide less protection to security holders such as the Fund than that
provided by U.S. laws.

Investment in United Kingdom Issuers by New Europe Fund. Investment in
securities of United Kingdom issuers involves certain considerations not
present with investment in securities of U.S. issuers. As with any investment
not denominated in the U.S. dollar, the U.S. dollar value of the Fund's
investment denominated in the british pound sterling will fluctuate with
pound sterling--dollar exchange rate movements. Since 1972, when the pound
sterling was allowed to float against other currencies, it has generally
depreciated against most major currencies, including the U.S. dollar. From
1988 through 1993, the pound sterling declined at an average annual rate of
approximately 15% against the U.S. dollar. Between September and December
1992, after the United Kingdom's exit from the Exchange Rate Mechanism of the
European Monetary System, the value of the pound sterling fell by almost 20%
against the U.S. dollar. The pound sterling continued to fall in early 1993,
but recovered due to interest rate cuts throughout Europe and an upturn in
the economy of the United Kingdom.

The United Kingdom's largest stock exchange is the International Stock
Exchange of the United Kingdom and the Republic of Ireland (The London Stock
Exchange), which is the third largest exchange in the world. As measured by
the FT-SE 100 index, the performance of the 100 largest companies in the
United Kingdom reached a record high of 3462.0 on December 29, 1993, up 20%
from the end of 1992. At the end of the second quarter of 1994, the FT-SE 100
was down approximately 16% from its all-time high. As of December 30, 1994,
the FT-SE 100 had risen approximately 5% from the end of the second quarter
of 1994.

The public sector borrowing requirement, a mandated measure of the amount
required to balance the budget, is not expected to be exceeded this fiscal
year. This should have the effect of lowering the requirement for the next
fiscal year. This prospect, coupled with political infighting, has led to the
repeal of the scheduled second stage of a value-added tax ("VAT") on domestic
fuel. This repeal will force the government to generate revenues from other
sources.

Since 1979, the Conservative Party has controlled Parliament. However, in
recent years, this dominance has been called into question. In 1990, due to
an internal challenge for leadership the Conservative Party chose John Major
to replace Margaret Thatcher as Prime Minister. Although Mr. Major generally
has the support of his party, there remains the possibility that he could
face a challenge for leadership of the Conservative Party. Unless the
Conservative Party calls for an earlier election, the next general election
will take place in April 1997. For further information regarding the United
Kingdom, see the Fund's Statement of Additional Information.

Investment in Japanese Issuers by All-Asia Fund and International Fund.
Investment in securities of Japanese issuers involves certain considerations not
present with investment in securities of U.S. issuers. As with any investment
not denominated in the U.S. dollar, the U.S. dollar value of each Fund's
investments denominated in the Japanese yen will fluctuate with yen-dollar
exchange rate movements. The Japanese yen has generally been appreciating
against the U.S. dollar for the past decade and is currently trading at or about
a post-World War II high against the U.S. dollar.

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Japan's largest stock exchange is the Tokyo Stock Exchange, the First Section
of which is reserved for larger, established companies. As measured by the
TOPIX, a capitalization-weighted composite index of all common stocks listed
in the First Section, the performance of the First Section reached a peak in
1989. Thereafter, the TOPIX declined approximately 46% through the beginning
of 1993. In 1993, the TOPIX increased by approximately 9% from the end of
1992, and by the end of the third quarter of 1994 increased by approximately
8% from the end of 1993. Certain valuation measures, such as price-to-book
value and price-to-cash flow ratios, indicate that the Japanese stock market
is near its lowest level in the last twenty years relative to other world
markets. The average price/earnings ratio of Japanese companies, however, are
high in comparison with other major stock markets.

In recent years, Japan has consistently recorded large current account trade
surpluses with the U.S. that have caused difficulties in the relations
between the two countries. On October 1, 1994, the U.S. and Japan reached an
agreement that may lead to more open Japanese markets with respect to trade
in certain goods and services. The two countries failed to agree, however,
with respect to Japanese imports of American automobiles and automotive
parts. In response to this failure, the U.S. has initiated the process of
imposing limited trade sanctions on Japan. It is unlikely that any such
sanctions will be imposed before late 1995, and it is expected that the
continuing friction between the U.S. and Japan with respect to trade issues
will thus continue for the foreseeable future.

Each Fund's investments in Japanese issuers also will be subject to
uncertainty resulting from the instability of recent Japanese ruling
coalitions. From 1955 to 1993, Japan's government was controlled by a single
political party. In August 1993, following a split in that party, a coalition
government was formed. That coalition government collapsed in April 1994, and
was replaced by a minority coalition that, in turn, collapsed in June 1994.
The stability of the current ruling coalition, the third since 1993, and the
first in 47 years led by a socialist, is not assured. For further information
regarding Japan, see each Fund's Statement of Additional Information.

Investment in Smaller, Emerging Companies. The Funds may invest in smaller,
emerging companies. Global Small Cap Fund and New Europe Fund will emphasize
investment in, and All-Asia Fund may emphasize investment in, smaller,
emerging companies. Investment in such companies involves greater risks than
is customarily associated with securities of more established companies. The
securities of smaller companies may have relatively limited marketability and
may be subject to more abrupt or erratic market movements than securities of
larger companies or broad market indices.

U.S. and Foreign Taxes. Foreign taxes paid by a Fund may be creditable or
deductible by U.S. shareholders for U.S. income tax purposes. No assurance
can be given that applicable tax laws and interpretations will not change in
the future. Moreover, non-U.S. investors may not be able to credit or deduct
such foreign taxes. Investors should review carefully the information
discussed under the heading "Dividends, Distributions and Taxes" and should
discuss with their tax advisers the specific tax consequences of investing in
a Fund.

Fixed-Income Securities. The value of each Fund's shares will fluctuate with
the value of its investments. The value of each Fund's investments in
fixed-income securities will change as the general level of interest rates
fluctuates. During periods of falling interest rates, the values of
fixed-income securities generally rise. Conversely, during periods of rising
interest rates, the values of fixed-income securities generally decline.

Under normal market conditions, the average dollar-weighted maturity of a
Fund's portfolio of debt or other fixed-income securities is expected to vary
between five and 30 years in the case of All-Asia Fund, between eight and 15
years in the case of Income Builder Fund, between five and 25 years in the
case of Utility Income Fund and between one year or less and 30 years in the
case of all other Funds that invest in such securities.

Securities Ratings. The ratings of securities by S&P, Moody's, Duff & Phelps
and Fitch are a generally accepted barometer of credit risk. They are,
however, subject to certain limitations from an investor's standpoint. The
rating of an issuer is heavily weighted by past developments and does not
necessarily reflect probable future conditions. There is frequently a lag
between the time a rating is assigned and the time it is updated. In
addition, there may be varying degrees of difference in credit risk of
securities within each rating category.

Securities rated Aaa by Moody's and AAA by S&P, Duff & Phelps and Fitch are
considered to be of the highest quality; capacity to pay interest and repay
principal is extremely strong. Securities rated Aa by Moody's and AA by S&P,
Duff & Phelps and Fitch are considered to be high quality; capacity to repay
principal is considered very strong, although elements may exist that make
risks appear somewhat larger than exist with securities rated Aaa or AAA.
Securities rated A are considered by Moody's to possess adequate factors
giving security to principal and interest. S&P, Duff & Phelps and Fitch
consider such securities to have a strong capacity to pay interest and repay
principal. Such securities are more susceptible to adverse changes in
economic conditions and circumstances than higher-rated securities.

Securities rated Baa by Moody's and BBB by S&P, Duff & Phelps and Fitch are
considered to have an adequate capacity to pay interest and repay principal.
Such securities are considered to have speculative characteristics and share
some of the same characteristics as lower-rated securities. Sustained periods
of deteriorating economic conditions or of rising interest rates are more
likely to lead to a weakening in the issuer's capacity to pay interest and
repay principal than in the case of higher-rated securities.
Securities rated Ba by Moody's and BB by S&P, Duff & Phelps and Fitch are
considered to have speculative characteristics with respect to capacity to
pay interest and repay principal over time; their future cannot be considered
as well-assured. Securities rated B by Moody's, S&P, Duff & Phelps and Fitch
are considered to have highly speculative characteristics with respect to
capacity to pay interest and repay principal. Assurance of interest and
principal

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payments or of maintenance of other terms of the contract over any long
period of time may be small.

Securities rated Caa by Moody's and CCC by S&P, Duff & Phelps and Fitch are
of poor standing and there is a present danger with respect to payment of
principal or interest. Securities rated Ca by Moody's and CC by S&P and Fitch
are minimally protected, and default in payment of principal or interest is
probable. Securities rated C by Moody's, S&P and Fitch are in imminent
default in payment of principal or interest and have extremely poor prospects
of ever attaining any real investment standing. Securities rated D by S&P and
Fitch are in default. The issuer of securities rated DD by Duff & Phelps is
under an order of liquidation.

Investment in Lower-Rated Fixed-Income Securities. Lower-rated securities,
i.e., those rated Ba and lower by Moody's or BB and lower by S&P, Duff &
Phelps or Fitch, are subject to greater risk of loss of principal and
interest than higher-rated securities. They are also generally considered to
be subject to greater market risk than higher-rated securities, and the
capacity of issuers of lower-rated securities to pay interest and repay
principal is more likely to weaken than is that of issuers of higher-rated
securities in times of deteriorating economic conditions or rising interest
rates. In addition, lower-rated securities may be more susceptible to real or
perceived adverse economic conditions than investment grade securities,
although the market values of securities rated below investment grade and
comparable unrated securities tend to react less to fluctuations in interest
rate levels than do those of higher-rated securities.

The market for lower-rated securities may be thinner and less active than
that for higher-rated securities, which can adversely affect the prices at
which these securities can be sold. To the extent that there is no
established secondary market for lower-rated securities, a Fund may
experience difficulty in valuing such securities and, in turn, the Fund's
assets. In addition, adverse publicity and investor perceptions about
lower-rated securities, whether or not factual, may tend to impair their
market value and liquidity.

Alliance will try to reduce the risk inherent in investment in lower-rated
securities through credit analysis, diversification and attention to current
developments and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will not occur.
Since the risk of default is higher for lower-rated securities, Alliance's
research and credit analysis are a correspondingly more important aspect of
its program for managing a Fund's securities than would be the case if a Fund
did not invest in lower-rated securities.

In seeking to achieve a Fund's investment objective, there will be times,
such as during periods of rising interest rates, when depreciation and
realization of capital losses on securities in a Fund's portfolio will be
unavoidable. Moreover, medium- and lower-rated securities and non-rated
securities of comparable quality may be subject to wider fluctuations in
yield and market values than higher-rated securities under certain market
conditions. Such fluctuations after a security is acquired do not affect the
cash income received from that security but are reflected in the net asset
value of a Fund. See the Statement of Additional Information for each Fund
that invests in lower-rated securities for a description of the bond ratings
of Moody's, S&P, Duff & Phelps and Fitch.

Certain lower-rated securities in which Growth Fund, Income Builder Fund and
Utility Income Fund may invest may contain call or buy-back features that
permit the issuers thereof to call or repurchase such securities. Such
securities may present risks based on prepayment expectations. If an issuer
exercises such a provision, a Fund may have to replace the called security
with a lower yielding security, resulting in a decreased rate of return to
the Fund.

Non-Diversified Status. Each of Premier Growth Fund, Worldwide Privatization
Fund, New Europe Fund, All-Asia Fund and Income Builder Fund is a
"non-diversified" investment company, which means the Fund is not limited in
the proportion of its assets that may be invested in the securities of a
single issuer. However, each Fund intends to conduct its operations so as to
qualify to be taxed as a "regulated investment company" for purposes of the
Code, which will relieve the Fund of any liability for federal income tax to
the extent its earnings are distributed to shareholders. See "Dividends,
Distributions and Taxes" in each Fund's Statement of Additional Information.
To so qualify, among other requirements, the Fund will limit its investments
so that, at the close of each quarter of the taxable year, (i) not more than
25% of the Fund's total assets will be invested in the securities of a single
issuer, and (ii) with respect to 50% of its total assets, not more than 5% of
its total assets will be invested in the securities of a single issuer and
the Fund will not own more than 10% of the outstanding voting securities of a
single issuer. A Fund's investments in U.S. Government securities are not
subject to these limitations. Because Premier Growth Fund, Worldwide
Privatization Fund, New Europe Fund, All-Asia Fund and Income Builder Fund is
each a non-diversified investment company, it may invest in a smaller number
of individual issuers than a diversified investment company, and an
investment in such Fund may, under certain circumstances, present greater
risk to an investor than an investment in a diversified investment company.

Foreign government securities are not treated like U.S. Government securities
for purposes of the diversification tests described in the preceding
paragraph, but instead are subject to these tests in the same manner as the
securities of non-governmental issuers.

- --------------------------------------------------------------------------------
Purchase And Sale
- --------------------------------------------------------------------------------
Of Shares
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

You can purchase shares of any of the Funds through broker-dealers, banks or
other financial intermediaries, or directly through Alliance Fund
Distributors ("AFD"), each Fund's principal underwriter. The minimum initial
investment in each Fund is $250. The minimum for subsequent investments in
each Fund is

39
<PAGE>

$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.

Each Fund offers three classes of shares, Class A, Class B and Class C.

Class A Shares--Initial Sales Charge Alternative

You can purchase Class A shares at net asset value plus an initial sales
charge, as follows:

<TABLE>
<CAPTION>
Initial Sales Charge
as % of Commission to
Net Amount as % of Dealer/Agent as %
Amount Purchased Invested Offering Price of Offering Price
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
Less than $100,000 4.44% 4.25% 4.00%
- -------------------------------------------------------------------------------------
$100,000 to
less than $250,000 3.36 3.25 3.00
- -------------------------------------------------------------------------------------
$250,000 to
less than $500,000 2.30 2.25 2.00
- -------------------------------------------------------------------------------------
$500,000 to
less than $1,000,000 1.78 1.75 1.50
- -------------------------------------------------------------------------------------
</TABLE>

On purchases of $1,000,000 or more, you pay no initial sales charge but may
pay a contingent deferred sales charge ("CDSC") equal to 1% of the lesser of
net asset value at the time of redemption or original cost if you redeem
within one year; Alliance may pay the dealer or agent a fee of up to 1% of
the dollar amount purchased. Certain purchases of Class A shares may qualify
for reduced or eliminated sales charges in accordance with a Fund's Combined
Purchase Privilege, Cumulative Quantity Discount, Statement of Intention,
Privilege for Certain Retirement Plans, Reinstatement Privilege and Sales at
Net Asset Value programs. Consult the Subscription Application and Statement
of Additional Information.

Class B Shares--Deferred Sales Charge Alternative

You can purchase Class B shares at net asset value without an initial sales
charge. However, you may pay a CDSC if you redeem shares within four years
after purchase. The amount of the CDSC (expressed as a percentage of the
lesser of the current net asset value or original cost) will vary according
to the number of years from the purchase of Class B shares until the
redemption of those shares.

The amount of the CDSC for each Fund is as set forth below. Class B shares of
a Fund purchased prior to the date of this Prospectus may be subject to a
different CDSC schedule, which was disclosed in the Fund's prospectus in use
at the time of purchase and is set forth in the Fund's current Statement of
Additional Information.

<TABLE>
<CAPTION>
Year Since Purchase CDSC
---------------------------------------------------------------
<S> <C>
First 4.0%
Second 3.0%
Third 2.0%
Fourth 1.0%
Fifth None
</TABLE>

Class B shares are subject to higher distribution fees than Class A shares
for a period (after which they convert to Class A shares) of eight years, or
six years with respect to Premier Growth Fund. The higher fees mean a higher
expense ratio, so Class B shares pay correspondingly lower dividends and may
have a lower net asset value than Class A shares.

Class C Shares--Asset-Based Sales Charge Alternative

You can purchase Class C shares without any initial sales charge or a CDSC. A
Fund will thus receive the full amount of your purchase, and you will receive
the entire net asset value of your shares upon redemption. Class C shares
incur higher distribution fees than Class A shares and do not convert to any
other class of shares of the Fund. The higher fees mean a higher expense
ratio, so Class C shares pay correspondingly lower dividends and may have a
lower net asset value than Class A shares.

Application of the CDSC

Shares obtained from dividend or distribution reinvestment are not subject to
the CDSC on Class A and Class B shares. The CDSC is deducted from the amount
of the redemption and is paid to AFD. The CDSC will be waived on redemptions
of shares following the death or disability of a shareholder or to meet the
requirements of certain qualified retirement plans. See the Statements of
Additional Information.

How the Funds Value Their Shares

The net asset value of each Class of shares of a Fund is calculated by
dividing the value of the Fund's net assets allocable to that Class by the
outstanding shares of that Class. Shares are valued each day the New York
Stock Exchange (the "Exchange") is open as of the close of regular trading
(currently 4:00 p.m. Eastern time). The securities in a Fund are valued at
their current market value determined on the basis of market quotations or,
if such quotations are not readily available, such other methods as the
Fund's Directors believe would accurately reflect fair market value.

General

The decision as to which Class of shares is more beneficial to you depends on
the amount and intended length of your investment. If you are making a large
investment, thus qualifying for a reduced sales charge, you might consider
Class A shares. If you are making a smaller investment, you might consider
Class B shares because 100% of your purchase is invested immediately. If you
are unsure of the length of your investment, you might consider Class C
shares because there are no initial or contingent deferred sales charges.
Consult your financial agent. Dealers and agents may receive differing
compensation for selling Class A, Class B or Class C shares. There is no size
limit on purchases of Class A shares. The maximum purchase of Class C shares
is $5,000,000. The maximum purchase of Class B shares is $250,000. The Funds
may refuse any order to purchase shares.

In addition to the discount or commission paid to dealers or agents, AFD from
time to time pays additional cash or other incentive to dealers or agents,
including Equico Securities, Inc., an affiliate of AFD, in connection with
the sale of shares of the Funds. Such additional amounts may be utilized, in
whole or in part, in some cases together with other revenues

40
<PAGE>

of such dealers or agents, to provide additional compensation to registered
representatives who sell shares of the Funds. On some occasions, such cash or
other incentives will be conditioned upon the sale of a specified minimum
dollar amount of the shares of a Fund and/or other Alliance Mutual Funds
during a specific period of time. Such incentives may take the form of
payment for attendance at seminars, meals, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer or agent and their
immediate family members to urban or resort locations within or outside the
United States. Such dealer or agent may elect to receive cash incentives of
equivalent amount in lieu of such payments.

HOW TO SELL SHARES

You may "redeem", i.e., sell your shares in a Fund to the Fund on any day the
Exchange is open, either directly or through your financial intermediary. The
price you will receive is the net asset value (less any applicable CDSC for
Class A and Class B shares) next calculated after the Fund receives your
request in proper form. Proceeds generally will be sent to you within seven
days. However, for shares recently purchased by check or electronic funds
transfer, a Fund will not send proceeds until it is reasonably satisfied that
the check or electronic funds transfer has been collected (which may take up
to 15 days).

Selling Shares Through Your Broker

A Fund must receive your broker's request before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class
A and Class B shares). Your broker is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service.

Selling Shares Directly To A Fund

Send a signed letter of instruction or stock power form to Alliance Fund
Services ("AFS"), each Fund's registrar, transfer agent and
dividend-disbursing agent, along with certificates, if any, that represent
the shares you want to sell. For your protection, signatures must be
guaranteed by a bank, a member firm of a national stock exchange or other
eligible guarantor institution. Stock power forms are available from your
financial intermediary, AFS, and many commercial banks. Additional
documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. For details contact:

Alliance Fund Services
P.O. Box 1520
Secaucus, NJ 07096-1520
1-800-221-5672

Alternatively, a request for redemption of shares for which no stock
certificates have been issued can also be made by telephone to 800-221-5672
by a shareholder who has completed the Subscription Application or an
"Autosell" application obtained from AFS. Telephone redemption requests must
be for at least $500 and may not exceed $100,000, and must be made between 9
a.m. and 4 p.m. New York time on a Fund business day. Proceeds of telephone
redemptions will be sent by electronic funds transfer. Proceeds of telephone
redemptions also may be sent by check to a shareholder's address of record,
but only once in any 30-day period and in amount not exceeding $25,000.
Telephone redemption by check is not available for shares purchased within 15
calendar days prior to the redemption request, shares held in nominee or
"street name" accounts or retirement plan accounts or shares held by a
shareholder who has changed his or her address of record within the previous
30 calendar days.

General

The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, a Fund may suspend redemptions or postpone payment for
up to seven days or longer, as permitted by federal securities law. The Funds
reserve the right to close an account that through redemption has remained
below $200 for 90 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed.

During drastic economic or market developments, you might have difficulty
reaching AFS by telephone, in which event you should issue written
instructions to AFS. AFS is not responsible for the authenticity of
telephonic requests to purchase, sell or exchange shares. AFS will employ
reasonable procedures to verify that telephone requests are genuine, and
could be liable for losses resulting from unauthorized transactions if it
failed to do so. Dealers and agents may charge a commission for handling
telephonic requests. The telephone service may be suspended or terminated at
any time without notice.

SHAREHOLDER SERVICES

AFS offers a variety of shareholder services. For more information about
these services or your account, call AFS's toll-free number, 800-221-5672.
Some services are described in the attached Application. A shareholder's
manual explaining all available services will be provided upon request. To
request a shareholder manual, call 800-227-4618.

HOW TO EXCHANGE SHARES

You may exchange your shares of any Fund for shares of the same class of
other Alliance Mutual Funds (which include AFD Exchange Reserves, a money
market fund managed by Alliance). Exchanges of shares are made at the net
asset values next determined, without sales or service charges. Exchanges may
be made by telephone or written request.

Class A and Class B shares will continue to age without regard to exchanges
for purposes of determining the CDSC, if any, upon redemption and, in the
case of Class B shares, for the purposes of conversion to Class A shares.
After an exchange, your Class B shares will automatically convert to Class A
shares in accordance with the conversion schedule applicable to the Class B
shares of the Alliance Mutual Fund you originally purchased for cash
("original shares"). When redemption occurs, the CDSC applicable to the
original shares is applied.

41
<PAGE>

Please read carefully the Prospectus of the mutual fund into which you are
exchanging before submitting the request. Call AFS at 800-221-5672 to
exchange uncertificated shares. An exchange is a taxable capital transaction
for federal tax purposes. The exchange service may be changed, suspended, or
terminated on 60 days' written notice.

- --------------------------------------------------------------------------------
Management Of The Funds
- --------------------------------------------------------------------------------

ADVISER

Alliance, which is a Delaware limited partnership with principal offices at
1345 Avenue of the Americas, New York, New York 10105, has been retained
under an advisory agreement (the "Advisory Agreement") to provide investment
advice and, in general, to conduct the management and investment program of
each Fund, subject to the general supervision and control of the Directors of
the Fund.

The following table lists the person or persons who are primarily responsible
for the day-to-day management of each Fund's portfolio, the length of time
that each person has been primarily responsible, and each person's principal
occupation during the past five years.

<TABLE>
<CAPTION>
Principal occupation
during the past
Fund Employee; year; title five years
- ------------------------------------------------------------------------------
<S> <C> <C>
Alliance Fund Alfred Harrison since 1989-- Associated with
Vice Chairman of Alliance Capital Alliance
Management Corporation
("ACMC")*

Paul H. Jenkel since 1985-- Associated with
Senior Vice President of ACMC Alliance

Growth Fund Tyler Smith since inception-- Associated with
Senior Vice President of ACMC Alliance since
July 1993; prior
thereto,
associated with
Equitable Capital
Management
Corporation
("Equitable
Capital")**

Premier Growth Fund Alfred Harrison since inception-- (see above)
(see above)

Counterpoint Fund Jon H. Outcalt since inception-- Associated with
Senior Vice President of ACMC Alliance

David P. Handke, Jr. since Associated with
inception--Vice President of ACMC Alliance

Technology Fund Peter Anastos since 1992-- Associated with
Senior Vice President of ACMC Alliance

Gerald T. Malone since 1992-- Associated with
Vice President of ACMC Alliance since
1992; prior
thereto
associated with
College
Retirement
Equities Fund

Quasar Fund Alden M. Stewart since 1994-- Associated with
Executive Vice President of ACMC Alliance since
1993; prior
thereto,
associated with
Equitable Capital

Randall E. Haase since 1994 -- Associated with
Vice President of ACMC Alliance since July
1993; prior
thereto,
associated with
Equitable Capital

International Fund A. Rama Krishna since 1993 -- Associated with
Senior Vice President of ACMC Alliance since
1993, prior
thereto,
Chief Investment
Strategist and
Director of Equity
Research for First
Boston
Corporation

Worldwide
Privatization Mark H. Breedon since inception--- Associated with
Vice President of ACMC and Alliance
Director and Vice President of
Alliance Capital Limited ("ACL")***

New Europe Fund Eric N. Perkins since 1992 -- Associated with
Senior Vice President of ACMC Alliance

All-Asia Fund A. Rama Krishna since (see above)
inception (see above)

Global Small Cap Ronald L. Simcoe since 1993-- Associated with
Fund Vice President of ACMC Alliance since
1993; prior thereto,
associated with
Equitable Capital

Alden Stewart since 1994-- (see above)
(see above)

Randall E. Haase since 1994-- (see above)
(see above)

Strategic Balanced Judith Taylor since inception-- Associated with
Fund Senior Vice President of ACMC Alliance since
July 1993; prior
thereto,
associated with
Equitable Capital

Balanced Shares Bruce W. Calvert since 1990-- Associated with
Vice Chairman and the Chief Alliance
Investment Officer of ACMC

Income Builder Fund Andrew M. Aran since 1994-- Associated with
Senior Vice President of ACMC Alliance since
March 1991; prior
thereto, a Vice
President of
PaineWebber, Inc.
since June 1990
and a Vice
President of
Citicorp since
prior to 1990

Utility Income Fund Alan Levi since 1994-- Associated with
Senior Vice President and Alliance
Director of Research of ACMC

Growth and Income Paul Rissman since 1995-- Associated with
Fund Vice President of ACMC Alliance
</TABLE>

- --------------------------------------------------------------------------------

* The sole general partner of Alliance.

** Equitable Capital was, prior to Alliance's acquisition of it, a management
firm under common control with Alliance.

*** An indirect wholly-owned subsidiary of Alliance.

42
<PAGE>

Alliance is a leading international investment manager supervising client
accounts with assets as of September 30, 1994 totaling more than $123 billion
(of which approximately $40 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 50 registered investment companies managed by
Alliance comprising 102 separate investment portfolios currently have over
one million shareholders. As of September 30, 1994, Alliance was retained as
an investment manager for 28 of the Fortune 100 companies.

ACMC, the sole general partner of, and the owner of a 1% general partnership
interest in, Alliance, is an indirect wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States ("Equitable"), one of
the largest life insurance companies in the United States, which is a
wholly-owned subsidiary of The Equitable Companies Incorporated, a holding
company controlled by AXA, a French insurance holding company. Certain
information concerning the ownership and control of Equitable by AXA is set
forth in each Fund's Statement of Additional Information under "Management of
the Fund."

ADMINISTRATOR AND CONSULTANT TO ALL-ASIA FUND

Alliance has been retained by All-Asia Fund under an administration agreement
(the "Administration Agreement") to perform administrative services necessary
for the operation of the Fund. For a description of such services, see the
Statement of Additional Information of the Fund.

In connection with its provision of advisory services to All-Asia Fund,
Alliance has retained at its expense OCBC Asset Management Limited ("OAM") as
a consultant to provide to Alliance such statistical and other factual
information, research and assistance with respect to economic, financial,
political, technological and social conditions and trends in Asian countries,
including information on markets and industries, as Alliance shall from time
to time request. OAM will not furnish investment advice or make
recommendations regarding the purchase or sale of securities by the Fund nor
will it be responsible for making investment decisions involving Fund assets.

OAM is one of the largest Singapore-based investment management companies
specializing in investment in Asia-Pacific markets. OAM provides consulting
and advisory services to institutions and individuals, including mutual
funds. As of June 30, 1994, OAM had approximately $1 billion in assets under
management.

OAM is a wholly-owned subsidiary of Oversea-Chinese Banking Corporation
Limited ("OCBC Bank"), which is based in Singapore. The OCBC Bank Group has
an extensive network of banking offices in the Asian Pacific region. The OCBC
Bank Group engages in a wide variety of activities including commercial
banking, investment banking, and property and hotel investment and
management. OCBC Bank is the third largest company listed on the Stock
Exchange of Singapore with a market capitalization as of June 30, 1994 of
$6.3 billion.

EXPENSES OF WORLDWIDE PRIVATIZATION FUND AND ALL-ASIA FUND

In addition to the payments to Alliance under the Advisory Agreement with
Worldwide Privatization Fund and the Advisory Agreement and Administration
Agreement with All-Asia Fund, all as described above, each such Fund pays
certain other costs, including (i) custody, transfer and dividend disbursing
expenses, (ii) fees of the Directors who are not affiliated with Alliance,
(iii) legal and auditing expenses (iv) clerical, accounting and other office
costs, (v) costs of printing each Fund's prospectuses and shareholder
reports, (vi) costs of maintaining each Fund's existence, (vii) interest
charges, taxes, brokerage fees and commissions, (viii) costs of stationery
and supplies, (ix) expenses and fees related to registration and filings with
the Commission and with state regulatory authorities, (x) upon the approval
of the Board of Directors, costs of personnel of Alliance or its affiliates
rendering clerical, accounting and other office services, and (xi) such
promotional expenses as may be contemplated by the Distribution Services
Agreement, described below.

DISTRIBUTION SERVICES AGREEMENTS

Rule 12b-1 adopted by the Commission under the 1940 Act permits an investment
company to pay expenses associated with the distribution of its shares in
accordance with a duly adopted plan. Each Fund has adopted one or more "Rule
12b-1 plans" (for each Fund, a "Plan") and has entered into a Distribution
Services Agreement (the "Agreement") with AFD. Pursuant to its Plan, a Fund
pays to AFD a Rule 12b-1 distribution services fee, which may not exceed an
annual rate of .30% (.50% with respect to Growth Fund, Premier Growth Fund
and Strategic Balanced Fund) of the Fund's aggregate average daily net assets
attributable to the Class A shares, 1.00% of the Fund's aggregate average
daily net assets attributable to the Class B shares and 1.00% of the Fund's
aggregate average daily net assets attributable to the Class C shares, for
distribution expenses. The Directors of Growth Fund and Strategic Balanced
Fund currently limit payments with respect to Class A shares under the Plan
to .30% of each Fund's aggregate average daily net assets attributable to
Class A shares. The Plans provide that a portion of the distribution services
fee in an amount not to exceed .25% of the aggregate average daily net assets
of each Fund attributable to each class of shares constitutes a service fee
used for personal service and/or the maintenance of shareholder accounts.

The Plans provide that AFD will use the distribution services fee received
from a Fund in its entirety for payments (i) to compensate broker-dealers or
other persons for providing distribution assistance, (ii) to otherwise
promote the sale of shares of the Fund, and (iii) to compensate
broker-dealers, depository institutions and other financial intermediaries
for providing administrative, accounting and other services with respect to
the Fund's shareholders. In this regard, some payments under the Plans are
used to compensate financial intermediaries with trail or maintenance
commissions in an amount equal to .25%, annualized, with respect to Class A
shares and Class B shares, and 1.00%, annualized, with

43
<PAGE>

respect to Class C shares, of the assets maintained in a Fund by their
customers. Distribution services fees received from the Funds, except Growth
Fund and Strategic Balanced Fund, with respect to Class A shares will not be
used to pay any interest expenses, carrying charges or other financing costs
or allocation of overhead of AFD. Distribution services fees received from
the Funds, with respect to Class B and Class C shares, may be used for these
purposes. The Plans also provide that Alliance may use its own resources to
finance the distribution of each Fund's shares.

The Funds are not obligated under the Plans to pay any distribution services
fee in excess of the amounts set forth above. Except as noted below for
Growth Fund and Strategic Balanced Fund, with respect to Class A shares of each
Fund, distribution expenses accrued by AFD in one fiscal year may not be paid
from distribution services fees received from the Fund in subsequent fiscal
years. Except as noted below for Growth Fund and Strategic Balanced Fund,
AFD's compensation with respect to Class B and Class C shares under the Plans of
the other Funds is directly tied to its expenses incurred. Actual
distribution expenses for such Class B and Class C shares for any given year,
however, will probably exceed the distribution services fees payable under
the applicable Plan with respect to the class involved and, in the case of
Class B shares, payments received from CDSCs. The excess will be carried
forward by AFD and reimbursed from distribution services fees payable under
the Plan with respect to the class involved and, in the case of Class B
shares, payments subsequently received through CDSCs, so long as the Plan and
the Agreement are in effect. Since AFD's compensation under the Plans of
Growth Fund and Strategic Balanced Fund is not directly tied to the expenses
incurred by AFD, the amount of compensation received by it under the
applicable Plan during any year may be more or less than its actual expenses.

Unreimbursed distribution expenses incurred as of the end of each Fund's most
recently completed fiscal period, and carried over for reimbursement in
future years in respect of the Class B and Class C shares for all Funds
(except Growth Fund and Strategic Balanced Fund) were, as of that time, as
follows:

<TABLE>
<CAPTION>
Amount of Unreimbursed Distribution Expenses
(as % of Net Assets of Class)
-------------------------------------------------------
Class B Class C
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Fund............................................. $ 1,442,425 (7.95%) $ 399,204 (6.41%)
Growth Fund............................................... $24,134,216 (3.21%) $ 529,804 (0.46%)
Premier Growth Fund....................................... $ 3,230,541 (2.31%) $ 165,741 (2.26%)
Counterpoint Fund......................................... $ 119,047 (22.58%) $ 125,891 (30.08%)
Technology Fund........................................... $ 698,886 (3.80%) $ 221,888 (2.97%)
Quasar Fund............................................... $ 557,782 (4.01%) $ 87,823 (7.20%)
International Fund........................................ $ 1,043,557 (3.49%) $ 251,661 (1.86%)
Worldwide Privatization Fund.............................. $ 994,925 (4.35%) ** **
New Europe Fund........................................... $ 1,373,204 (4.37%) $ 225,921 (1.90%)
All-Asia Fund............................................. * * * *
Global Small Cap Fund..................................... $ 642,361 (16.52%) $ 201,251 (15.13%)
Income Builder Fund....................................... $ 224,734 (11.25%) $1,507,457 (2.35%)
Strategic Balanced Fund................................... $ 523,532 (1.20%) $ 127,615 (2.96%)
Balanced Shares........................................... $ 844,835 (5.89%) $ 180,501 (2.89%)
Utility Income Fund....................................... $ 248,868 (10.58%) $ 236,172 (8.91%)
Growth and Income Fund.................................... $ 2,607,181 (2.54%) $ 355,256 (1.83%)
</TABLE>

- --------------------------------------------------------------------------------

* This Fund has not yet completed a fiscal period.

** No Class C shares were outstanding during this Fund's fiscal period.

The Plans are in compliance with rules of the National Association of Securities
Dealers, Inc. which effectively limit the annual asset-based sales charges and
service fees that a mutual fund may pay on a class of shares to .75% and .25%,
respectively, of the average annual net assets attributable to that class. The
rules also limit the aggregate of all front-end, deferred and asset-based sales
charges imposed with respect to a class of shares by a mutual fund that also
charges a service fee to 6.25% of cumulative gross sales of shares of that
class, plus interest at the prime rate plus 1% per annum.

The Glass-Steagall Act and other applicable laws may limit the ability of a
bank or other depository institution to become an underwriter or distributor
of securities. However, in the opinion of the Funds' management, based on the
advice of counsel, these laws do not prohibit such depository institutions
from providing services for investment companies such as the administrative,
accounting and other services referred to in the Agreements. In the event
that a change in these laws prevented a bank from providing such services, it
is expected that other services arrangements would be made and that
shareholders would not be adversely affected. The State of Texas requires
that shares of a Fund may be sold in that state only by dealers or other
financial institutions that are registered there as broker-dealers.

- --------------------------------------------------------------------------------
Dividends, Distributions
- --------------------------------------------------------------------------------
And Taxes
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

If you receive an income dividend or capital gains distribution in cash you
may, within 30 days following the date of its payment, reinvest the dividend
or distribution in additional shares of that Fund without charge by returning
to Alliance, with appropriate instructions, the check representing such
dividend or distribution. Thereafter, unless you otherwise specify, you will
be deemed to have elected to reinvest all subsequent dividends and
distributions in shares of that Fund.

Each income dividend and capital gains distribution, if any, declared by a
Fund on its outstanding shares will, at the election of each shareholder, be
paid in cash or in additional shares of the same class of shares of that Fund
having an aggregate net asset value as of the payment date of such dividend
or distribution equal to the cash amount of such income dividend or
distribution. Election to receive dividends and distributions in cash or
shares is made at the time shares are initially purchased and may be changed
at any time prior to the record date for a particular dividend or
distribution. Cash dividends can be paid by check or, if the shareholder so
elects, electronically via the ACH network. There is no sales or other charge
in connection with the reinvestment of dividends and capital gains
distributions. Dividends paid by a Fund, if any, with respect to Class A,
Class B and Class C shares will be calculated in the same manner at the same
time on the

44
<PAGE>

same day and will be in the same amount, except that the higher distribution
services fees applicable to Class B and C shares, and any incremental transfer
agency costs relating to Class B shares, will be borne exclusively by the class
to which they relate.

While it is the intention of each Fund to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any such dividend or distribution must
necessarily depend upon the realization by such Fund of income and capital gains
from investments. There is no fixed dividend rate, and there can be no assurance
that a Fund will pay any dividends or realize any capital gains.

If you buy shares just before a Fund deducts a distribution from its net
asset value, you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.

FOREIGN INCOME TAXES

Investment income received by a Fund from sources within foreign countries
may be subject to foreign income taxes withheld at the source. To the extent
that any Fund is liable for foreign income taxes withheld at the source, each
Fund intends, if possible, to operate so as to meet the requirements of the
Code to "pass through" to the Fund's shareholders credits for foreign income
taxes paid, but there can be no assurance that any Fund will be able to do so.

U.S. FEDERAL INCOME TAXES

Each Fund intends to qualify to be taxed as a "regulated investment company"
under the Code. To the extent that a Fund distributes its taxable income and
net capital gain to its shareholders, qualification as a regulated investment
company relieves that Fund of federal income and excise taxes on that part of
its taxable income including net capital gains which it pays out to its
shareholders. Dividends out of net ordinary income and distributions of net
short-term capital gains are taxable to the recipient shareholders as
ordinary income. In the case of corporate shareholders, such dividends may be
eligible for the dividends-received deduction, except that the amount
eligible for the deduction is limited to the amount of qualifying dividends
received by the Fund. A corporation's dividends-received deduction will be
disallowed unless the corporation holds shares in the Fund at least 46 days.
Furthermore, the dividends-received deduction will be disallowed to the
extent a corporation's investment in shares of a Fund is financed with
indebtedness.

The excess of net long-term capital gains over the net short-term capital
losses realized and distributed by each Fund to its shareholders as capital
gains distributions is taxable to the shareholders as long-term capital
gains, irrespective of the length of time a shareholder may have held his or
her stock. Long-term capital gains distributions are not eligible for the
dividends-received deduction referred to above.

Under the current federal tax law the amount of an income dividend or capital
gains distribution declared by a Fund during October, November or December of
a year to shareholders of record as of a specified date in such a month that
is paid during January of the following year is includable in the prior
year's taxable income of shareholders that are calendar year taxpayers.

Any dividend or distribution received by a shareholder on shares of a Fund
will have the effect of reducing the net asset value of such shares by the
amount of such dividend or distribution. Furthermore, a dividend or
distribution made shortly after the purchase of such shares by a shareholder,
although in effect a return of capital to that particular shareholder, would
be taxable to him or her as described above. If a shareholder held shares six
months or less and during that period received a distribution taxable to such
shareholder as long-term capital gain, any loss realized on the sale of such
shares during such six-month period would be a long-term capital loss to the
extent of such distribution.

A dividend or capital gains distribution with respect to shares of a Fund
held by a tax-deferred or qualified plan, such as an individual retirement
account, 403(b)(7) retirement plan or corporate pension or profit-sharing
plan, will not be taxable to the plan. Distributions from such plans will be
taxable to individual participants under applicable tax rules without regard
to the character of the income earned by the qualified plan.

Distributions by a Fund may be subject to state and local taxes. Alliance
Fund, Premier Growth Fund, Technology Fund, Quasar Fund, New Europe Fund,
Balanced Shares and Growth and Income Fund are qualified to do business in
the Commonwealth of Pennsylvania and, therefore, are subject to the
Pennsylvania foreign franchise and corporate net income tax in respect of
their business activities in Pennsylvania. Accordingly, shares of such Funds
are exempt from Pennsylvania personal property taxes. These Funds anticipate
continuing such business activities but reserve the right to suspend them at
any time, resulting in the termination of the exemptions.

A Fund will be required to withhold 31% of any payments made to a shareholder
if the shareholder has not provided a certified taxpayer identification
number to the Fund, or the Secretary of the Treasury notifies a Fund that a
shareholder has not reported all interest and dividend income required to be
shown on the shareholder's Federal income tax return.

Shareholders will be advised annually as to the federal tax status of
dividends and capital gains distributions made by a Fund for the preceding
year. Shareholders are urged to consult their tax advisers regarding their
own tax situation.

45
<PAGE>

- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------

PORTFOLIO TRANSACTIONS

Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, a
Fund may consider sales of its shares as a factor in the selection of dealers
to enter into portfolio transactions with the Fund.

ORGANIZATION

Each of the following Funds is a Maryland corporation organized in the year
indicated: The Alliance Fund, Inc. (1938), Alliance Balanced Shares, Inc.
(1932), Alliance Premier Growth Fund, Inc. (1992), Alliance Technology Fund,
Inc. (1980), Alliance Quasar Fund, Inc. (1989), Alliance Worldwide
Privatization Fund, Inc. (1994), Alliance New Europe Fund, Inc. (1990),
Alliance All-Asia Investment Fund, Inc. (1994), Alliance Global Small Cap Fund,
Inc. (1966), Alliance Income Builder Fund, Inc. (1991), Alliance Utility
Income Fund, Inc. (1993), and Alliance Growth and Income Fund, Inc. (1932).
Each of the following Funds is either a Massachusetts business trust or a
series of a Massachusetts business trust organized in the year indicated:
Alliance Growth Fund and Alliance Strategic Balanced Fund (each a series of The
Alliance Portfolios) (1987), Alliance Counterpoint Fund (1984) and Alliance
International Fund (1980). Prior to August 2, 1993, The Alliance Portfolios
was known as The Equitable Funds, Growth Fund was known as The Equitable
Growth Fund and Strategic Balanced Fund was known as The Equitable Balanced
Fund. Prior to March 22, 1994, Income Builder Fund was known as Alliance
Multi-Market Income and Growth Trust, Inc.

It is anticipated that annual shareholder meetings will not be held;
shareholder meetings will be held only when required by federal, or in the
case of the Funds organized as Maryland corporations, state law. Shareholders
have available certain procedures for the removal of Directors.

A shareholder in a Fund will be entitled to his or her pro rata share of all
dividends and distributions arising from the Fund's assets and, upon
redeeming shares, will receive the then current net asset value of the Fund
represented by the redeemed shares less any applicable CDSC. The Funds are
empowered to establish, without shareholder approval, additional portfolios,
which may have different investment objectives, and additional classes of
shares. If an additional portfolio or class were established in a Fund, each
share of the portfolio or class would normally be entitled to one vote for
all purposes. Generally, shares of each portfolio and class would vote
together as a single class on matters, such as the election of Directors,
that affect each portfolio and class in substantially the same manner. Class
A, B and C shares have identical voting, dividend, liquidation and other
rights, except that each class bears its own distribution and transfer agency
expenses. Each class of shares votes separately with respect to a Fund's Rule
12b-1 distribution plan and other matters for which separate class voting is
appropriate under applicable law. Shares are freely transferable, are
entitled to dividends as determined by the Directors and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund. Since this
Prospectus sets forth information about all the Funds, it is theoretically
possible that a Fund might be liable for any materially inaccurate or
incomplete disclosure in this Prospectus concerning another Fund. Based on
the advice of counsel, however, the Funds believe that the potential
liability of each Fund with respect to the disclosure in this Prospectus
extends only to the disclosure relating to that Fund. Certain additional
matters relating to a Fund's organization are discussed in its Statement of
Additional Information.

REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT

AFS, an indirect wholly-owned subsidiary of Alliance, located at 500 Plaza
Drive, Secaucus, New Jersey 07094, acts as each Fund's registrar, transfer
agent and dividend-disbursing agent for a fee based upon the number of
shareholder accounts maintained for the Funds. The transfer agency fee with
respect to the Class B shares will be higher than the transfer agency fee
with respect to the Class A shares or Class C shares.

PRINCIPAL UNDERWRITER

AFD, an indirect wholly-owned subsidiary of Alliance, located at 1345 Avenue
of the Americas, New York, New York 10105, is the principal underwriter of
shares of the Funds.

PERFORMANCE INFORMATION

From time to time, the Funds advertise their "total return," which is
computed separately for Class A, Class B and Class C shares. Such
advertisements disclose a Fund's average annual compounded total return for
the periods prescribed by the Commission. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Commission, the average annual compounded rate of return over the period that
would equate an assumed initial amount invested to the value of the
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of a Fund are
assumed to have been reinvested when paid and the maximum sales charges
applicable to purchases and redemptions of a Fund's shares are assumed to
have been paid.

Balanced Fund, Growth and Income Fund, Income Builder Fund, Strategic
Balanced Fund and Utility Income Fund may also advertise their "yield," which
is also computed separately for Class A, Class B and Class C shares. A Fund's
yield for any 30-day (or one-month) period is computed by dividing the net
investment income per share earned during such period by the maximum public
offering price per share on the last day of the

46
<PAGE>

period, and then annualizing such 30-day (or one-month) yield in accordance
with a formula prescribed by the Commission which provides for compounding on
a semi-annual basis.

Strategic Balanced Fund, Balanced Shares, Income Builder Fund, Utility Income
Fund and Growth and Income Fund may also state in sales literature an "actual
distribution rate" for each class which is computed in the same manner as
yield except that actual income dividends declared per share during the
period in question are substituted for net investment income per share. The
actual distribution rate is computed separately for Class A, Class B and
Class C shares.

A Fund will include performance data for each class of shares in any
advertisement or sales literature using performance data of that Fund. These
advertisements may quote performance rankings or ratings of a Fund by
financial publications or independent organizations such as Lipper Analytical
Services, Inc. and Morningstar, Inc. or compare a Fund's performance to
various indices.

ADDITIONAL INFORMATION

This Prospectus and the Statements of Additional Information, which have been
incorporated by reference herein, do not contain all the information set
forth in the Registration Statements filed by the Funds with the Commission
under the Securities Act. Copies of the Registration Statements may be
obtained at a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington, D.C.

This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.

This prospectus is intended to constitute an offer by each Fund only of the
securities of which it is the issuer and is not intended to constitute an offer
by any Fund of the securities of any other Fund whose securities are also
offered by this prospectus. No Fund intends to make any representation as to the
accuracy or completeness of the disclosure in this prospectus relating to any
other Fund. See "General Information--Organization."

47
<PAGE>

- --------------------------------------------------------------------------------
Subscription Application
- --------------------------------------------------------------------------------

Alliance Stock Funds

(see instructions at the front of the application)

- --------------------------------------------------------------------------------
1. Your Account Registration (Please Print)
- --------------------------------------------------------------------------------

[ ] Individual or Joint Account

- --------------------------------------------------------------------------------
Owner's Name (First Name) (MI) (Last Name)

- -
- -------------------------------------------------
Social Security Number (Required to open account)

- --------------------------------------------------------------------------------
Joint Owner's Name* (First Name) (MI) (Last Name)
*Joint Tenants with right of survivorship unless otherwise indicated

[ ] Gift/Transfer To A Minor

- --------------------------------------------------------------------------------
Custodian - One Name Only (First Name) (MI) (Last Name)

- --------------------------------------------------------------------------------
Minor (First Name) (MI) (Last Name)

- -
- ---------------------------------------------------------
Minor's Social Security Number (Required to open account)

Under the State of ___ (Minor's Residence) Uniform Gifts/Transfer to Minor's Act

[ ] Trust Account

- --------------------------------------------------------------------------------
Name of Trustee

- --------------------------------------------------------------------------------
Name of Trust

- --------------------------------------------------------------------------------
Name of Trust (cont'd)

- ------------------ -----------------------------------------------------------
Trust Dated Tax ID or Social Security Number (Required to open account)

[ ] Other

- --------------------------------------------------------------------------------
Name of Corporation, Partnership or other Entity

- --------------------------
Tax ID Number

- --------------------------------------------------------------------------------
2. Address
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Street

- --------------------------------------------------------------------------------
City State Zip Code

- --------------------------------------------------------------------------------
If Non-U.S., Specify Country

- - - -
- --------------------------------------------------------------------------------
Daytime Phone Evening Phone

I am a: [ ] U.S. Citizen [ ] Non-Resident Alien [ ] Resident Alien [ ] Other

- -- --

For Alliance Use Only

- -- --
<PAGE>

- --------------------------------------------------------------------------------
3. Initial Investment
- --------------------------------------------------------------------------------

Minimum: $250; Maximum: Class B only - $250,000; Class C only - $5,000,000.
Make all checks payable to The Alliance Stock Fund in which you are investing.

I hereby subscribe for shares of the following Alliance Stock Fund(s):

<TABLE>
<CAPTION>
Class A Class B Class C
(Initial Dollar (Contingent Deferred Dollar (Asset-based Sales Dollar
Sales Charge) Amount Sales Charge) Amount Charge) Amount
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
[ ] Alliance Fund [ ](44) ---------- [ ] (43) ---------- [ ] (344) ----------
[ ] Growth Fund [ ](31) ---------- [ ] (01) ---------- [ ] (331) ----------
[ ] Premier Growth Fund [ ](78) ---------- [ ] (79) ---------- [ ] (378) ----------
[ ] Counterpoint Fund [ ](19) ---------- [ ] (219) ---------- [ ] (319) ----------
[ ] Technology Fund [ ](82) ---------- [ ] (282) ---------- [ ] (382) ----------
[ ] Quasar Fund [ ](26) ---------- [ ] (29) ---------- [ ] (326) ----------
[ ] International Fund [ ](40) ---------- [ ] (41) ---------- [ ] (340) ----------
[ ] Worldwide Privatization Fund [ ](112) ---------- [ ] (212) ---------- [ ] (312) ----------
[ ] New Europe Fund [ ](62) ---------- [ ] (58) ---------- [ ] (362) ----------
[ ] All-Asia Fund [ ](118) ---------- [ ] (218) ---------- [ ] (318) ----------
[ ] Global Small Cap Fund [ ](45) ---------- [ ] (48) ---------- [ ] (345) ----------
[ ] Strategic Balanced Fund [ ](32) ---------- [ ] (02) ---------- [ ] (332) ----------
[ ] Balanced Shares [ ](96) ---------- [ ] (75) ---------- [ ] (396) ----------
[ ] Income Builder Fund [ ](111) ---------- [ ] (211) ---------- [ ] (311) ----------
[ ] Utility Income Fund [ ](9) ---------- [ ] (209) ---------- [ ] (309) ----------
[ ] Growth & Income Fund [ ](94) ---------- [ ] (74) ---------- [ ] (394) ----------
</TABLE>

to be purchased with the enclosed check or draft for $_______________

-------------------------
Dealer Use Only
Wire Confirm No.:
-------------------------

- --------------------------------------------------------------------------------
4. Reduced Charges (Class A Only)
- --------------------------------------------------------------------------------

If you, your spouse or minor children own shares in other Alliance funds, you
may be eligible for a reduced sales charge. Please list below any existing
accounts to be considered and complete the Right of Accumulation section or
the Statement of Intent section.

- --------------------------------------------------------------------------------
Fund Account Number Fund Account Number

A. Right of Accumulation
[ ] Please link the accounts listed above for Right of Accumulation privileges,
so that this and future purchases will receive any discount for which they
are eligible.

B. Statement of Intent
[ ] I want to reduce my sales charge by agreeing to invest the following amount
over a 13-month period:
[ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000

If the full amount indicated is not purchased within 13 months, I understand
an additional sales charge must be paid from my account.

- --------------------------------------------------------------------------------
Name on Account Account Number Name on Account Account Number

- --------------------------------------------------------------------------------
5. Distribution Options
- --------------------------------------------------------------------------------

If no box is checked, all distributions will be reinvested in
additional shares of the Fund

Income Dividends: (elect one) [ ] Reinvest dividends
[ ] Pay dividends in cash
[ ] Use Dividend Direction Plan

Capital Gains Distribution: (elect one) [ ] Reinvest capital gains
[ ] Pay capital gains in cash
[ ] Use Dividend Direction Plan

If you elect to receive your income dividends or capital gains distributions
in cash, please enclose a preprinted voided check from the bank account you
wish to have your dividends deposited into.**

If you wish to utilize the Dividend Direction Plan, please designate the
Alliance account you wish to have your dividends reinvested in:

- --------------------------------------------------------------------------------
Fund Name Existing Account No.

Special Distribution Instructions:

[ ] Please pay my distributions via check and send to the address
indicated in Section 2.

[ ] Please mail my distributions to the person and/or address designated below:

- --------------------------------------------------------------------------------
Name Address

- --------------------------------------------------------------------------------
City State Zip

- --------------------------------------------------------------------------------
6. Shareholder Options
- --------------------------------------------------------------------------------

A. Automatic Investment Program (AIP) **

I hereby authorize Alliance Fund Services, Inc. to draw on my bank account,
on or about the ______ day of each month for a monthly investment in my Fund
account in the amount of $____________ (minimum $25 per month). Please attach
a preprinted voided check from the bank account you wish to use.
NOTE: If your bank is not a member of the NACHA, your Alliance account will
be credited on or about the 20th of each month.

The Fund requires signatures of bank account owners exactly as they
appear on bank records.

- --------------------------------------------------------------------------------
Individual Account Date Joint Account Date

** Your bank must be a member of the National Automated Clearing House
Association (NACHA).
<PAGE>

B. Telephone Transactions

You can call our toll-free number 1-800-221-5672 and instruct Alliance Fund
Services, Inc. in a recorded conversation to purchase, redeem or exchange
shares for your account. Purchase and redemption requests will be processed
via electronic funds transfer (EFT) to and from your bank account.

Instructions: * Review the information in the Prospectus about telephone
transaction services.

* Check the box next to the telephone transaction service(s)
you desire.

* If you select the telephone purchase or redemption
privilege, you must write "VOID" across the face of a check
from the bank account you wish to use and attach it to this
application.

Purchases and Redemptions via EFT**

[ ] I hereby authorize Alliance Fund Services, Inc. to effect the purchase
and/or redemption of Fund shares for my account according to my telephone
instructions or telephone instructions from my Broker/Agent, and to
withdraw money or credit money for such shares via EFT from the bank
account I have selected.

The fund requires signatures of bank account owners exactly as they
appear on bank records.

- --------------------------------------------------------------------------------
Individual Account Owner Date Joint Account Owner Date

Telephone Exchanges and Redemptions by Check

Unless I have checked one or both boxes below, these privileges will
automatically apply, and by signing this application, I hereby authorize
Alliance Fund Services, Inc. to act on my telephone instructions, or on
telephone instructions from any person representing himself to be an
authorized employee of an investment dealer or agent requesting a redemption
or exchange on my behalf. (NOTE: Telephone exchanges may only be processed
between accounts that have identical registrations.) Telephone redemption
checks will only be mailed to the name and address of record; and the address
must have no change within the last 30 days. The maximum telephone redemption
amount is $25,000. This service can be enacted once every 30 days.

[ ] I do not elect the telephone exchange service.
---
[ ] I do not elect the telephone redemption by check service.
---
C. Systematic Withdrawal Plan (SWP) **

In order to establish a SWP, an investor must own or purchase shares of
the Fund having a current net asset value of at least:

* $10,000 for monthly payments;
* $5,000 for bi-monthly payments;
* $4,000 for quarterly or less frequent payments

[ ] I authorize this service to begin in _________ , 19__ , for the amount
Month
of $_______________ ($50.00 minimum)

Frequency: (Please select one)
[ ] Monthly
[ ] Bi-Monthly
[ ] Quarterly
[ ] Annually
[ ] In the months circled: J F M A M J J A S O N D

Please send payments to: (please select one)

[ ] My checking account. Select the date of the month on or about which
you wish the EFT payments to be made: _______________. Please enclose a
preprinted voided check to ensure accuracy. EFT not available to Class B
shareowners other than retirement plans.

[ ] My address of record designated in Section 2.

[ ] The payee and address specified below:

- --------------------------------------------------------------------------------
Name of Payee Address

- --------------------------------------------------------------------------------
City State Zip

D. Auto Exchange

[ ] I authorize Alliance Fund Services, Inc. to initiate a monthly exchange
for $____________ ($25.00 minimum) on the _________ day of the month,
into the Alliance Fund noted below:

Fund Name: ___________________________________________________

[ ] Existing account number:______________________________________

[ ] New account

Shares exchanged will be redeemed at net asset value computed on the date
of the month selected. (If the date selected is not a fund business day
the transaction will be processed on the prior fund business day.)
Certificates must remain unissued.

- --------------------------------------------------------------------------------
7. Shareholder Authorization This section MUST be completed
- --------------------------------------------------------------------------------

I certify under penalty of perjury that the number shown in Section 1 of this
form is my correct tax identification number or social security number and
that I have not been notified that this account is subject to backup
withholding.

By selecting any of the above telephone privileges, I agree that neither the
Fund nor Alliance, Alliance Fund Distributors, Inc., Alliance Fund Services,
Inc. or other Fund Agent will be liable for any loss, injury, damage or
expense as a result of acting upon telephone instructions purporting to be on
my behalf, that the Fund reasonably believes to be genuine, and that neither
the Fund nor any such party will be responsible for the authenticity of such
telephone instructions. I understand that any or all of these privileges may
be discontinued by me or the Fund at any time. I understand and agree that
the Fund reserves the right to refuse any telephone instructions and that my
investment dealer or agent reserves the right to refuse to issue any telephone
instructions I may request.

For non-residents only: Under penalties of perjury, I certify that to the
best of my knowledge and belief, I qualify as a foreign person as indicated
in Section 2.

I am of legal age and capacity and have received and read the Prospectus and
agree to its terms.

- --------------------------------------------------------------------------------
Signature Date

- --------------------------------------------------------------------------------
Acceptance Date:

- --------------------------------------------------------------------------------
Dealer/Agent Authorization For selected Dealers or Agents ONLY.
- --------------------------------------------------------------------------------

We hereby authorize Alliance Fund Services, Inc. to act as our agent in
connection with transactions under this authorization form; and we guarantee
the signature(s) set forth in Section 7, as well as the legal capacity of the
shareholder.

Dealer/Agent Firm Authorized Signature
---------------------------- -----------

Representative First Name MI Last Name
--------------- ---- ----------------------

Representative Number
-----------------------------------------------------------

Branch Office Address
-----------------------------------------------------------

City State Zip Code
-------------------------------- ------------- -----------

Branch Number Branch Phone ( )
-------------------------------- ---------------------

** Your bank must be a member of the National Automated
Clearing House Association (NACHA). 50074GEN-EQTYApp
<PAGE>

- --------------------------------------------------------------------------------
Alliance Subscription Application
- --------------------------------------------------------------------------------

The Alliance Stock Funds

Alliance Fund
Growth Fund
Premier Growth Fund
Counterpoint Fund
Technology Fund
Quasar Fund
International Fund
Worldwide Privatization Fund
New Europe Fund
All-Asia Fund
Global Small Cap Fund
Strategic Balanced Fund
Balanced Shares
Income Builder Fund
Utility Income Fund
Growth & Income Fund

- --------------------------------------------------------------------------------
Information And Instructions
- --------------------------------------------------------------------------------

To Open Your New Alliance Account

Please complete the application and mail it to:

Alliance Fund Services, Inc., P.O. Box 1520, Secaucus, New Jersey 07096-1520

Signatures - Please Be Sure To Sign the Application (Section 7)

If shares are registered in the name of:

. an individual, the individual should sign.

. joint tenants, both should sign.

. a custodian for a minor, the custodian should sign.

. a corporation or other organization, an authorized officer should sign
(please indicate corporate office or title).

. a trustee or other fiduciary, the fiduciary or fiduciaries should sign
(please indicate capacity).

Registration

To ensure proper tax reporting to the IRS:

. Individuals, Joint Tenants and Gift/Transfer to a Minor:
- Indicate your name exactly as it appears on your social security card.

. Trust/Other:

- Indicate the name of the entity exactly as it appeared on the
notice you received from the IRS when your Employer Identification number
was assigned.

Please Note:

. Certain legal documents will be required from corporations or other
organizations, executors and trustees, or if a redemption is requested by
anyone other than the shareholder of record. If you have any questions
concerning a redemption, contact the Fund at the number below.

. In the case of redemptions or repurchases of shares recently purchased by
check, redemption proceeds will not be made available until the Fund is
reasonably assured that the check has cleared, normally up to 15 calendar
days following the purchase date.

If We Can Assist You In Any Way, Please Do Not Hesitate To Call Us At:
1-(800) 221-5672.

<PAGE>

This is filed pursuant to Rule 497(c).
File Nos. 33-76598 and 811-08426.

<PAGE>

(LOGO) (R)

ALLIANCE WORLDWIDE
PRIVATIZATION 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
February 1, 1995 (amended June 1, 1995)

This Statement of Additional Information is not a prospectus but
supplements and should be read in conjunction with the current
Prospectus for the Fund. Copies of such Prospectus may be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown above.

TABLE OF CONTENTS Page

Description of the Fund 2

Management of the Fund 29

Expenses of the Fund 37

Purchase of Shares 40

Redemption and Repurchase of Shares 54

Shareholder Services 58

Net Asset Value 64

Dividends, Distributions and Taxes 65

Brokerage and Portfolio Transactions 73

General Information 75

<PAGE>

Report of Independent Accountants and Financial
Statements 80

Appendix A: Options A-1

Appendix B: Stock Index Futures B-1

Appendix C: Bond Ratings C-1

(R): This registered service mark used under license from the
owner, Alliance Capital Management L.P.

<PAGE>

DESCRIPTION OF THE FUND

Except as otherwise indicated, the investment policies of
Alliance Worldwide Privatization Fund, Inc. (the "Fund") are not
"fundamental policies" and may, therefore, be changed by the
Board of Directors without a shareholder vote. However, the Fund
will not change its investment policies without contemporaneous
written notice to its shareholders. The Fund's investment
objective may not be changed without shareholder approval. There
can be, of course, no assurance that the Fund will achieve its
investment objective.

Investment Objective

The Fund is a non-diversified, open-end management company
whose investment objective is to seek long term capital
appreciation. In seeking to achieve its investment objective, as
a fundamental policy, the Fund will invest at least 65% of its
total assets in equity securities that are issued by enterprises
that are undergoing, or that have undergone, privatization as
described below, although normally, significantly more of the
Fund's total assets will be invested in such securities. The
balance of the Fund's investment portfolio will include
securities of companies that are believed by Alliance Capital
Management L.P., the Fund's Adviser (the "Adviser") be
beneficiaries of the privatization process. Equity securities
include common stock, preferred stock, rights or warrants to
subscribe for or purchase common or preferred stock, securities
(including debt securities) convertible into common or preferred
stock and securities that give the holder the right to acquire
common or preferred stock.

How The Fund Pursues Its Objective

Investment in Privatizations. The Fund is designed for
investors desiring to take advantage of investment opportunities,
historically inaccessible to U.S. individual investors, that are
created by privatizations of state enterprises in both
established and developing economies, including those in Western
Europe and Scandinavia, Australia, New Zealand, Latin America,
Asia and Eastern and Central Europe and, to a lesser degree,
Canada and the United States.

The Fund's investments in the securities of enterprises
undergoing privatization may comprise three distinct situations.
First, the Fund may invest in the initial offering of equity
securities of a government- or state-owned or controlled company
or enterprise (a "state enterprise") that are traded in a

<PAGE>

recognized national or international securities market
(an"initial equity offering"). Secondly, the Fund may invest in
the securities of a current or former state enterprise following
its initial equity offering, including the purchase of securities
in any secondary offerings. Finally, the Fund may make privately
negotiated investments in a state enterprise that has not yet
conducted an initial equity offering. Investments of this type
may be structured, for example, as privately negotiated sales of
stock or other equity interests in joint ventures, cooperatives
or partnerships. In the opinion of the Adviser, substantial
potential for appreciation in the value of equity securities of
an enterprise undergoing or following privatization exists as the
enterprise rationalizes its management structure, operations and
business strategy to position itself to compete efficiently in a
market economy, and the Fund will seek to emphasize investments
in the equity securities of such enterprises.

The Adviser believes that the Fund is currently well
diversified, with positions in more 100 issues from 35 countries
and 37 industry subsets as of August 31, 1994. The top ten
countries in which the Fund was invested as of August 31, 1994
are Brazil (7%), Mexico (6%), the United Kingdom (6%), France
(5%), Japan (4%), Argentina (4%), The Netherlands (4%), The
Philippines (4%), Germany (3%) and Italy (3%). As of that date
the Fund was invested in ten other countries comprising 27% of
its assets, and the remaining 27% was cash. The ten largest
investments of the Fund as of August 31, 1994 were East Japan
Railway, Nippon Telegraph & Telephone Corp., Koninklijke PPT
Nederland, Va Technologie AG Beaver, Ugine AG, Telefonos de
Mexico, S.A., INA Instituto Naz Delle, Northern Ireland
Electricity, Rautaruukki Oy and Societe Nationale Elf Aquitaine.
The Fund will continue to invest in a broad range of industries
and stocks, with approximately 70% allocated to established
markets and 30% to developing markets. The Adviser believes that
the outlook with regard to privatizations and their continued
growth over the next few years is increasingly optimistic.

The Fund intends to spread its portfolio investments among
the capital markets of a number of countries and, under normal
market conditions, will invest in the equity securities of
issuers based in at least four, and normally considerably more,
countries. The percentage of the Fund's assets invested in
equity securities of companies based in a particular country will
vary in accordance with the Adviser's assessment of the
appreciation potential of such securities. Notwithstanding the
foregoing, no more than 15% of the Fund's total assets will be
invested in securities of issuers in any one foreign country,
except that the Fund may invest up to 30% of its total assets in
securities of issuers in any one of France, Germany, Great
Britain, Italy and Japan.

<PAGE>

Privatization is a process through which the ownership and
control of companies or assets changes in whole or in part from
the public sector to the private sector. Through privatization a
government or state divests or transfers all or a portion of its
interest in a state enterprise to some form of private ownership.
In contrast, nationalization is the process through which a
government or state assumes control of a privately owned
enterprise. Privatizations may take the form of individually
negotiated transactions, including trade sales or management buy-
outs, or an offering of equity securities. Governments and
states with established economies, including, among others,
France, Great Britain, Germany and Italy, and those with
developing economies, including, among others, Argentina, Mexico,
Chile, Indonesia, Malaysia, Poland and Hungary, are currently
engaged in privatizations. The Fund will invest in the
securities of enterprises, in any country, that in the Adviser's
opinion present attractive investment opportunities, and the
countries in which the Fund invests will change from time to
time. It is the Adviser's intention initially to invest
approximately 70% of the Fund's total assets in securities of
enterprises located in countries with established economies and
the remainder of the Fund's assets in securities of enterprises
located in countries with developing economies.

The trend toward privatization of state enterprises is a
global phenomenon that the Adviser expects will continue into the
next century. In addition, the Adviser believes that a global
portfolio of equity securities of state enterprises that are
undergoing privatization offers investors the opportunity for
significant capital appreciation relative to local and regional
stock market indices.

A major premise of the Fund's investment approach is that,
because of the particular characteristics of privatized
companies, their equity securities offer investors opportunities
for significant capital appreciation. In particular, because
privatization programs are an important part of a country's
economic restructuring, equity securities that are brought to the
market by means of initial equity offerings frequently are priced
to attract investment in order to secure the issuer's successful
transition to private sector ownership. In addition, these
enterprises generally tend to enjoy dominant market positions in
their local markets. Because of the relaxation of government
controls upon privatization, these enterprises typically have the
potential for significant managerial and operational efficiency
gains, which, among other factors, can increase their earnings
due to the restructuring that accompanies privatization and the
incentives management frequently receives.

Individual regions and countries have different histories of
involvement in the privatization process. For example, the

<PAGE>

countries that formerly constituted the Soviet Union and the
Eastern Bloc are currently exploring privatization partly as a
means of integrating into the international community, while
certain Western European and Latin American countries have had
privatization programs in place for more than ten years. The
cumulative gross proceeds from major privatizations worldwide
increased from $39.5 billion in 1988 to $240 billion in 1993.

Privatization programs are established to address a range of
economic, political or social needs. Privatization is generally
viewed as a means to achieve increased efficiency and improve the
competitiveness of state enterprises. Western European countries
are currently engaged in privatization programs partly as a means
of increasing government revenues, thereby reducing budget
deficits. The reduction of budget deficits recently has become
an important objective as Western European countries attempt to
meet the directives of the European Commission regarding debt and
achieve the target budget deficit levels established by the
Maastricht Treaty. In developing market countries, including
many of those in Latin America and Asia, privatization is viewed
as an integral part of broad economic measures that are designed
to reduce external debt and control inflation as these countries
attempt to meet the directives of the International Bank for
Reconstruction and Development (the World Bank) and the
International Monetary Fund regarding desirable debt levels.
Within Eastern and Central Europe, privatization is also being
used as a means of achieving structural economic changes that
will enable Eastern and Central European countries to develop
market economies and compete in the world markets.

The privatization of state enterprises is achieved through
various methods. A gradual approach is commonly taken at the
early stages of privatization within a country. Oftentimes, the
government will transfer partial ownership of the enterprise to a
corporation or similar entity and occasionally also broaden
ownership to employees and citizens while retaining an interest.
Occasionally, a few selected foreign minority shareholders are
permitted to make private investments at this stage. After the
new corporation has operated under this form of ownership for a
few years, the government may divest itself completely by means
of an equity offering in national and international securities
markets. Another approach is the formation of an investment fund
owned by employees and citizens that, with the assistance of
international managers, operates one or many state enterprises
for a set term, after which the government may divest itself of
its remaining interest. Foreign investors are often permitted to
become minority shareholders of these investment funds. In less
gradual privatizations, state enterprises are auctioned to
qualified investors through competitive bidding processes in
private transactions. Alternatively, equity offerings may be

<PAGE>

made directly through the local and international securities
markets.

Although the Fund anticipates that it generally will not
concentrate its investments in any industry, it is
permitted,under certain conditions, to invest more than 25% of
its total assets in the securities of issuers whose primary
business activity is that of national commercial banking. Prior
to concentrating in the securities of national commercial banks,
the Fund's Board of Directors would have to determine, based on
factors in existence at the time of the determination, such as
liquidity, availability of investments and anticipated returns,
that the Fund's ability to achieve its investment objective would
be adversely affected if the Fund were not permitted to invest
more than 25% of its total assets in those securities. The
Adviser anticipates that such circumstances could include periods
during which returns on or market liquidity of investments in
national commercial banks substantially exceed those available on
investments in other industries. The staff of the Securities and
Exchange Commission has indicated that, in its view, registered
investment companies may not, absent shareholder approval, change
between concentration and non-concentration in the securities of
issuers in a single industry. The Fund disagrees with the
staff's position but has undertaken that it will not concentrate
in the securities of national commercial banks until final
resolution of the issue. There can be no assurance that the
issue will be resolved so as to permit the Fund to change between
concentration and non-concentration in the manner described above
in this paragraph. To the extent that the Fund invests more than
25% of its total assets in the national commercial banks, the
Fund's performance could be significantly influenced by events or
conditions affecting this industry and the Fund's investments may
be subject to greater risk and market fluctuation than those of a
fund that has in its portfolio securities representing a broader
range of investment alternatives. The national commercial
banking industry is subject to, among other things, increases in
interest rates and deteriorations in general economic conditions.

Except as otherwise noted, the Fund's investment policies
described below are not designated "fundamental policies" within
the meaning of the Investment Company Act of 1940 (the "1940
Act") and, therefore, may be changed by the Directors of the Fund
without a shareholder vote. However, the Fund will not change
its investment policies without contemporaneous written notice to
shareholders.

Warrants. The Fund may invest up to 20% of its total assets
in rights or warrants which entitle the holder to buy equity
securities at a specific price for a specific period of time, but
will do so only if the equity securities themselves are deemed
appropriate by the Adviser for inclusion in the Fund's portfolio;

<PAGE>

however, the Fund does not presently intend to invest more than
10% of its total assets in such warrants. 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 securities which may be
purchased nor do they represent any rights in the assets of the
issuing company. Also, the value of a right or warrant does not
necessarily change with the value of the underlying securities
and a right or warrant ceases to have value if it is not
exercised prior to the expiration date.

Debt Securities and Convertible Debt Securities. The Fund
may invest up to 35% of its total assets in debt securities and
convertible debt securities of issuers whose common stocks are
eligible for purchase by the Fund under the investment policies
described above. Debt securities include bonds, debentures,
corporate notes and preferred stocks. Convertible debt
securities are such instruments that are convertible at a stated
exchange rate into common stock. Prior to their conversion,
convertible securities have the same general characteristics as
non-convertible debt securities which provide a stable stream of
income with generally higher yields than those of equity
securities of the same or similar issuers. The market value of
debt securities and convertible debt securities tends to decline
as interest rates increase and, conversely, to increase as
interest rates decline. While convertible securities generally
offer lower interest yields than non-convertible debt securities
of similar quality, they do enable the investor to benefit from
increases in the market price of the underlying common stock.

When the market price of the common stock underlying a
convertible security increases, the price of the convertible
security increasingly reflects the value of the underlying common
stock and may rise accordingly. As the market price of the
underlying common stock declines, the convertible security tends
to trade increasingly on a yield basis, and thus may not
depreciate to the same extent as the underlying common stock.
Convertible securities rank senior to common stocks in an
issuer's capital structure. They are consequently of higher
quality and entail less risk than the issuer's common stock,
although the extent to which such risk is reduced depends in
large measure upon the degree to which the convertible security
sells above its value as a fixed income security.

The Fund may maintain not more than 5% of its net assets in
debt securities rated below Baa by Moody's Investors Service,
Inc. ("Moody's") and BBB by Standard and Poor's Corporation
("S&P"), or, if not rated, determined by Alliance to be of
equivalent quality. The Fund will not purchase a debt security
that, at the time of purchase, is rated below B by Moody's and
S&P, or determined by the Adviser to be of equivalent quality,

<PAGE>

but may retain a debt security the rating of which drops below B.
See "Certain Risk Considerations--Securities Ratings."

Defensive Position. For temporary defensive purposes, the
Fund may vary from its fundamental investment policy during
periods in which conditions in securities markets or other
economic or political conditions warrant. 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, and short-term
foreign currency denominated debt securities rated A or higher by
S&P or Moody's or, if not so rated, of equivalent investment
quality as determined by the Adviser. For this purpose, the Fund
will limit its investments in foreign currency denominated debt
securities to securities that are denominated in currencies in
which the Fund anticipates its subsequent investments will be
denominated.

Subject to its policy of investing at least 65% of its total
assets in equity securities of enterprises undergoing
privatization, the Fund may also at any time temporarily invest
funds awaiting reinvestment or held as reserves for dividends and
other distributions to shareholders in money market instruments
referred to above.

Additional Investment Policies and Practices

Options. The Fund may write covered put and call options and
purchase put and call options on securities of the types in which
it is permitted to invest that are traded on U.S. and foreign
securities exchanges and over-the-counter, including options on
market indices. The Fund will only write "covered" put and call
options, unless such options are written for cross-hedging
purposes. There are no specific limitations on the Fund's
writing and purchasing of options.

A put option gives the purchaser of such option, upon payment
of a premium, the right to deliver a specified amount of a
security to the writer of the option on or before a fixed date at
a predetermined price. A call option gives the purchaser of the
option, upon payment of a premium, the right to call upon the
writer to deliver a specified amount of a security on or before a
fixed date at a predetermined price. A call option written by
the Fund is "covered" if the Fund owns the underlying security
covered by the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or
for additional cash consideration held in a segregated account by

<PAGE>

its custodian) upon conversion or exchange of other securities
held in its portfolio. A call option is also covered if the Fund
holds a call on the same security and in the same principal
amount as the call written where the exercise price of the call
held (i) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash and
liquid high-grade debt securities in a segregated account with
its custodian. A put option written by the Fund is "covered" if
the Fund maintains cash or liquid high-grade debt securities with
a value equal to the exercise price in a segregated account with
its custodian, or else holds a put on the same security and in
the same principal amount as the put written where the exercise
price of the put held is equal to or greater than the exercise
price of the put written. The premium paid by the purchaser of
an option will reflect, among other things, the relationship of
the exercise price to the market price and volatility of the
underlying security, the remaining term of the option, supply and
demand and interest rates. It would realize a loss if the price
of the underlying security increased or remained the same or did
not decrease during that period by more than the amount of the
premium. If a put or call option purchased by the Fund were
permitted to expire without being sold or exercised, its premium
would be lost by the Fund.

A call option is for cross-hedging purposes if the Fund does
not own the underlying security but seeks to provide a hedge
against a decline in value in another security which the Fund
owns or has the right to acquire. In such circumstances, the
Fund collateralizes its obligation under the option by
maintaining in a segregated account with the Fund's custodian
cash or liquid high-grade debt securities in an amount not less
than the market value of the underlying security, marked to
market daily. The Fund would write a call option for
cross-hedging purposes, instead of writing a covered call option,
when the premium to be received from the cross-hedge transaction
would exceed that which would be received from writing a covered
call option, while at the same time achieving the desired hedge.

In purchasing a call option, the Fund would be in a position
to realize a gain if, during the option period, the price of the
underlying security increased by an amount in excess of the
premium paid. It would realize a loss if the price of the
underlying security declined or remained the same or did not
increase during the period by more than the amount of the
premium. In purchasing a put option, the Fund would be in a
position to realize a gain if, during the option period, the
price of the underlying security declined by an amount in excess
of the premium paid. It would realize a loss if the price of the
underlying security increased or remained the same or did not
decrease during that period by more than the amount of the

<PAGE>

premium. If a put or call option purchased by the Fund were
permitted to expire without being sold or exercised, its premium
would be lost by the Fund.

If a put option written by the Fund were exercised, the Fund
would be obligated to purchase the underlying security at the
exercise price. If a call option written by the Fund were
exercised, the Fund would be obligated to sell the underlying
security at the exercise price. The risk involved in writing a
call option is that there could be an increase in the market
value of the underlying security caused by declining interest
rates or other factors. If this occurred, the option could be
exercised and the underlying security would then be sold by the
Fund at a lower price than its current market value. The risk
involved in writing a call option is that there could be an
increase in the market value of the underlying security caused by
declining interest rates or other factors. If this occurred, the
option could be exercised and the underlying security would then
be sold by the Fund at a lower price than its current market
value. These risks could be reduced by entering into a closing
transaction prior to the option expiration dates if a liquid
market is available. The Fund retains the premium received from
writing a put or call option whether or not the option is
exercised. For additional information on the use, risk and costs
of options, see Appendix A.

The Fund may purchase or write options on securities of the
types in which it is permitted to invest in privately negotiated
(i.e., over-the-counter) transactions. The Fund will effect such
transactions only with investment dealers and other financial
institutions (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Adviser, and the Adviser
has adopted procedures for monitoring the creditworthiness of
such entities. Options purchased or written by the Fund in
negotiated transactions are illiquid and it may not be possible
for the Fund to effect a closing transaction at a time when the
Adviser believes it would be advantageous to do so. See
"Illiquid Securities."

Options on Market Indices. An option on a securities index
is similar to an option on a security except that, rather than
the right to take or make delivery of a security at a specified
price, an option on a securities index gives the holder the right
to receive, upon exercises of the option, an amount of cash if
the closing level of the chosen index is greater than (in the
case of a call) or less than (in the case of a put) the exercise
price of the option. There are no specific limitations on the
Fund's purchasing and selling of options on securities indices.

Futures Contracts and Options on Futures Contracts. The Fund
may enter into contracts for the purchase or sale for future

<PAGE>

delivery of fixed-income securities or foreign currencies, or
contracts based on financial indices, including any index of U.S.
Government Securities, securities issued by foreign government
entities, or common stocks ("futures contracts") and may purchase
and write put and call options to buy or sell futures contracts
("options on futures contracts"). A "sale" of a futures contract
means the acquisition of a contractual obligation to deliver the
securities or foreign currencies called for by the contract at a
specified price on a specified date. A "purchase" of a futures
contract means the incurring of a contractual obligation to
acquire the securities or foreign currencies called for by the
contract at a specified price on a specified date. The purchaser
of a futures contract on an index agrees to take or make delivery
of an amount of cash equal to the difference between a specified
dollar multiple of the value of the index on the expiration date
of the contract ("current contract value") and the price at which
the contract was originally struck. No physical delivery of the
securities underlying the index is made.

Options on futures contracts written or purchased by 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 market conditions and interest or
exchange rates which otherwise might either adversely affect the
value of the Fund's portfolio securities or adversely affect the
prices of securities which the Fund intends to purchase at a
later date.

The Fund will not enter into any futures contracts or options
on futures contracts if immediately thereafter the aggregate of
the market value of the outstanding futures contracts of the Fund
and the market value of the currencies and futures contracts
subject to outstanding options written by the Fund would exceed
50% of the market value of the total assets of the Fund.

The successful use of such instrument draws upon the
Adviser's special skills and experience with respect to such
instruments and usually depends on the Adviser's ability to
forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an
unexpected manner, the Fund may not achieve the anticipated
benefits of futures contracts or options on futures contracts or
may realize losses and thus will be in a worse position than if
such strategies had not been used. In addition, the correlation
between movements in the price of futures contracts or options on
futures contracts and movements in the price of the securities
and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses. The Fund's Custodian will
place cash not available for investment or liquid high-grade debt
securities in a segregate account of the Fund having a value

<PAGE>

equal to the aggregate amount of the Fund's commitments under
futures contracts.

For additional information on the use, risks and costs of
futures contracts and options on futures contracts, see
Appendix B.

Options on Foreign Currencies. The Fund may purchase and
write put and call options on foreign currencies for the purpose
of protecting against declines in the U.S. Dollar value of
foreign currency-denominated portfolio securities and against
increases in the U.S. Dollar cost of such securities to be
acquired. As in the case of other kinds of options, however, 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. Options on foreign currencies to be written
or purchased by the Fund are traded on U.S. and foreign exchanges
or over-the-counter. There is no specific percentage limitation
on the Fund's investments in options on foreign currencies. For
additional information on the use, risks and costs of options on
foreign currencies, see Appendix B.

Forward Foreign Currency Exchange Contracts. The Fund may
purchase or sell forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund
from adverse changes in the relationship between the U.S Dollar
and foreign currencies. 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
by currency for an agreed price at a future date, and is
individually negotiated and privately traded by currency traders
and their customers. The Fund may enter into a forward contract,
for example, when it enters into a contract for the purchase or
sale of a security denominated in a foreign currency in order to
"lock in" the U.S Dollar price of the security ("transaction
hedge"). 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. Additionally, for example, 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

<PAGE>

currency, it may enter into a forward purchase contract to buy
that foreign currency for a fixed dollar amount ("position
hedge"). In this situation 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"). The Fund's
Custodian will place cash not available for investment, U.S.
Government Securities or other liquid high-grade debt securities
in a segregated account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward
contracts entered into with respect to position hedges and cross-
hedges. If the value of the securities placed in a segregated
account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account
will equal the amount of the Fund's commitments with respect to
such contracts. As an alternative to maintaining all or part of
the segregated account, the Fund may purchase a call option
permitting the Fund to purchase the amount of foreign currency
being hedged by a forward sale contract at a price no higher than
the forward contract price or the Fund may purchase a put option
permitting the Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or
higher than the forward contract price. Unanticipated changes in
currency prices may result in poorer overall performance for the
Fund than if it had not entered into such contracts.

While these contracts are not presently regulated by the
Commodity Futures Trading Commission ("CFTC"), the CFTC may in
the future assert authority to regulate forward contracts. In
such event the Fund's ability to utilize forward contracts in the
manner set forth in the Prospectus may be restricted. Forward
contracts will reduce the potential gain from a positive change
in the relationship between the U.S. Dollar and foreign
currencies. Unanticipated changes in currency prices may result
in poorer overall performance for the Fund than if it had not
entered into such contracts. The use of foreign currency forward
contracts will not eliminate fluctuations in the underlying U.S.
Dollar equivalent value of the proceeds of or rates of return on
the Fund's foreign currency-denominated portfolio securities and
the use of such techniques will subject the Fund to certain
risks.

The matching of the increase in value of a forward contract
and the decline in the U.S. Dollar equivalent value of the
foreign-currency denominated asset that is the subject of the
hedge generally will not be precise. In addition, the Fund may
not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's

<PAGE>

ability to use such contracts to hedge or cross-hedge its assets.
Also, with regard to the Fund's use of cross-hedges, there can be
no assurance that historical correlations between the movement of
certain foreign currencies relative to the U.S. Dollar will
continue. Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies
underlying the Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's
assets that are the subject of such cross-hedges are denominated.
For additional information on the use, risks and costs of forward
foreign currency exchange contracts, see Appendix B.

Forward Commitments. The Fund may enter into forward
commitments for the purchase or sale of securities. Such
transactions may include purchases on a "when-issued" basis or
purchases or sales on a "delayed delivery" basis. In some cases,
a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger,
corporate reorganization or debt restructuring (i.e., a "when, as
and if issued" trade).

When forward commitment transactions are negotiated, the
price, which generally is expressed in yield terms, is fixed at
the time the commitment is made, but delivery and payment for the
securities take place at a later date. Normally, the settlement
date occurs within two months after the transaction, but delayed
settlements beyond two months may be negotiated. Securities
purchased or sold under a forward commitment are subject to
market fluctuation, and no interest or dividends accrue to the
purchaser prior to the settlement date. At the time the Fund
intends to enter into a forward commitment, it will record the
transaction and thereafter reflect the value of the security
purchased or, if a sale, the proceeds to be received, in
determining its net asset value. Any unrealized appreciation or
depreciation reflected in such valuation of a "when, as and if
issued" security would be canceled in the event that the required
conditions did not occur and the trade was canceled.

The use of forward commitments enables the Fund to protect
against anticipated changes in interest rates and prices. For
instance, in periods of rising interest rates and falling bond
prices, the Fund might sell securities in its portfolio on a
forward commitment basis to limit its exposure to falling prices.
In periods of falling interest rates and rising bond prices, the
Fund might sell a security in its portfolio and purchase the same
or a similar security on a when-issued or forward commitment
basis, thereby obtaining the benefit of currently higher cash
yields. However, if the Adviser were to forecast incorrectly the
direction of interest rate movements, the Fund might be required
to complete such when-issued or forward transactions at prices
inferior to the then current market values. No forward

<PAGE>

commitments will be made by the Fund if, as a result, the Fund's
aggregate commitments under such transactions would be more than
30% of the then current value of the Fund's total assets.

The Fund's right to receive or deliver a security under a
forward commitment may be sold prior to the settlement date, but
the Fund will enter into forward commitments only with the
intention of actually receiving or delivering the securities, as
the case may be. To facilitate such transactions, the Fund's
custodian will maintain, in a segregated account of the Fund,
cash and/or liquid high-grade debt securities having value equal
to, or greater than, any commitments to purchase securities on a
forward commitment basis and, with respect to forward commitments
to sell portfolio securities of the Fund, the portfolio
securities themselves. If the Fund, however, chooses to dispose
of the right to receive or deliver a security subject to a
forward commitment prior to the settlement date of the
transaction, it may incur a gain or loss. In the event the other
party to a forward commitment transaction were to default, the
Fund might lose the opportunity to invest money at favorable
rates or to dispose of securities at favorable prices.

Standby Commitment Agreements. The Fund may from time to
time enter into standby commitment agreements. Such agreements
commit the Fund, for a stated period of time, to purchase a
stated amount of a security which may be issued and sold to the
Fund at the option of the issuer. The price and coupon of the
security are fixed at the time of the commitment. At the time of
entering into the agreement the Fund is paid a commitment fee,
regardless of whether or not the security ultimately is issued,
which is typically approximately 0.5% of the aggregate purchase
price of the security which the Fund has committed to purchase.
The Fund will enter into such agreements only for the purpose of
investing in the security underlying the commitment at a yield
and price which are considered advantageous to the Fund and which
are unavailable on a firm commitment basis. The Fund will not
enter into a standby commitment with a remaining term in excess
of 45 days and will limit its investment in such commitments so
that the aggregate purchase price of the securities subject to
the commitments will not exceed 50% of its assets taken at the
time of acquisition of such commitment. The Fund will at all
times maintain a segregated account with its custodian of cash
and/or liquid high-grade debt securities in an aggregate amount
equal to the purchase price of the securities underlying the
commitment.

There can be no assurance that the securities subject to a
standby commitment will be issued and the value of the security,
if issued, on the delivery date may be more or less than its
purchase price. Since the issuance of the security underlying
the commitment is at the option of the issuer, the Fund will bear

<PAGE>

the risk of capital loss in the event the value of the security
declines and may not benefit from an appreciation in the value of
the security during the commitment period if the issuer decides
not to issue and sell the security to the Fund.

The purchase of a security subject to a standby commitment
agreement and the related commitment fee will be recorded on the
date on which the security can reasonably be expected to be
issued and the value of the security will thereafter be reflected
in the calculation of the Fund's net asset value. The cost basis
of the security will be adjusted by the amount of the commitment
fee. In the event the security is not issued, the commitment fee
will be recorded as income on the expiration date of the standby
commitment.

Currency Swaps. The Fund may enter into currency swaps for
hedging purposes. Currency swaps involve the exchange by the
Fund with another party of a series of payments in specified
currencies. Since currency swaps are individually negotiated,
the Fund expects to achieve an acceptable degree of correlation
between its portfolio investments and its currency swaps
positions. 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 cash or high-grade liquid debt securities having
an aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated accounting 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
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.

Repurchase Agreements. The Fund may enter into repurchase
agreements pertaining to U.S. Government Securities with member
banks of the Federal Reserve System or "primary dealers" (as
designated by the Federal Reserve Bank of New York) in such
securities. There is no percentage restriction on the Fund's
ability to enter into repurchase agreements. Currently, the Fund
intends to enter into repurchase agreements only with its
custodian and such primary dealers. A repurchase agreement
arises when a buyer purchases a security and simultaneously
agrees to resell it to the vendor at an agreed-upon future date,

<PAGE>

normally one day or a few days later. The resale price is
greater than the purchase price, reflecting an agreed-upon
interest rate which is effective for the period of time the
buyer's money is invested in the security and which is related to
the current market rate rather than the coupon rate on the
purchased security. This results in a fixed rate of return
insulated from market fluctuations during such period. Such
agreements permit the Fund to keep all of its assets at work
while retaining "overnight" flexibility in pursuit of investments
of a longer-term nature. The Fund requires continual maintenance
by its Custodian for its account in the Federal Reserve/Treasury
Book Entry System of collateral in an amount equal to, or in
excess of, the resale price. In the event a vendor defaulted on
its repurchase obligation, the Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral were
less than the repurchase price. In the event of a vendor's
bankruptcy, the Fund might be delayed in, or prevented from,
selling the collateral for its benefit. The Fund's Board of
Directors has established procedures, which are periodically
reviewed by the Board, pursuant to which Alliance monitors the
creditworthiness of the dealers with which the Fund enters into
repurchase agreement transactions.

Illiquid Securities. The Fund will not invest in illiquid
securities if immediately after such investment more than 15% of
the Fund's net assets (taken at market value) would be invested
in such securities. For this purpose, illiquid securities
include, among others (a) direct placement or other securities
which are subject to legal or contractual restrictions on resale
or for which there is no readily available market (e.g., many
individually negotiated currency swaps and any assets used to
cover currency swaps, most privately negotiated investments in
state enterprises that have not yet conducted initial equity
offerings, 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), (b) over-the-counter options
and all assets used to cover over-the-counter options, and (c)
repurchase agreements not terminable within seven days. The
Adviser will monitor the illiquidity of such securities under the
supervision of the Board of Directors.

Securities Not Readily Marketable. The Fund may invest up to
15% of its net assets in illiquid securities which include, among
others, securities for which there is no readily available
market. The Fund may therefore not be able to readily sell such
securities. Such securities are unlike securities which are
traded in the open market and which can be expected to be sold
immediately if the market is adequate. The sale price of
securities not readily marketable may be lower or higher than the
Adviser's most recent estimate of their fair value. Generally,
less public information is available with respect to the issuers

<PAGE>

of such securities than with respect to companies whose
securities are traded on an exchange. Securities not readily
marketable are more likely to be issued by small businesses and
therefore subject to greater economic, business and market risks
than the listed securities of more well-established companies.
Adverse conditions in the public securities markets may at
certain times preclude a public offering of an issuer's
securities. To the extent that the Fund makes any privately
negotiated investments in state enterprises, such investments are
likely to be in securities that are not readily marketable. It
is the intention of the Fund to make such investments when the
Adviser believes there is a reasonable expectation that the Fund
would be able to dispose of its investment within three years.
There is no law in a number of the countries in which the Fund
may invest similar to the U.S. Securities Act of 1933 (the "1933
Act") requiring an issuer to register the public 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.
In addition, many countries do not have informational disclosure
requirements similar in scope to those required under the U.S.
Securities Exchange Act of 1934.

Short Sales. The Fund may make short sales of securities or
maintain a short position only for the purpose of deferring
realization of gain or loss for U.S. federal income tax purposes,
provided that at all times when a short position is open the Fund
owns an equal amount of such securities of the same issue as, and
equal in amount to, the securities sold short. In addition, the
Fund may not make a short sale if more than 10% of the Fund's net
assets (taken at market value) is held as collateral for short
sales at any one time. If the price of the security sold short
increases between the time of the short sale and the time the
Fund replaces the borrowed security, the Fund will incur a loss;
conversely, if the price declines, the Fund will realize a
capital gain. See "Investment Restrictions." Certain special
federal income tax considerations may apply to short sales which
are entered into by the Fund. See "Dividends, Distributions and
Taxes-United States Federal Income Taxation of the Fund-Tax
Straddles."

General. The successful use of the foregoing investment
practices draws upon the Adviser's special skills and experience
with respect to such instruments and usually depends on the
Adviser's ability to forecast price movements or currency
exchange rate movements correctly. Should exchange rates move in
an unexpected manner, the Fund may not achieve the anticipated
benefits of futures contracts, options or forward contracts or
may realize losses and thus be in a worse position than if such
strategies had not been used. Unlike many exchange-traded

<PAGE>

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 will depend 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 over-the-
counter, it might not be possible to effect a closing transaction
in the option (i.e., dispose of the option) with the result that
(i) an option purchased by the Fund would have to be exercised in
order for the Fund to realize any profit and (ii) the Fund may
not be able to sell currencies or portfolio securities covering
an option written by the Fund until the option expires or it
delivers the underlying 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--U.S.
Federal Income Taxes."

Additional Investment Policies

Loans of Portfolio Securities. The Fund may make secured
loans of its portfolio securities to entities with which it can
enter into repurchase agreements, provided that cash and/or
liquid high-grade debt securities equal to at least 100% of the
market value of the securities loaned are deposited and
maintained by the borrower with the Fund. See "Repurchase
Agreements" above. 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, the Adviser (subject to review by the Board of
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

<PAGE>

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 in excess of 30% of the value of its total assets, nor
will the Fund lend its portfolio securities to any officer,
director, employee or affiliate of the Fund or the Adviser. The
Board of Directors will monitor the Fund's lending of portfolio
securities.

Future Developments. The Fund may, following written notice
to its shareholders, take advantage of other investment practices
which are not at present contemplated for use by the Fund or
which currently are not available but which may be developed, to
the extent such investment practices are both consistent with the
Fund's investment objective and legally permissible for the Fund.
Such investment practices, if they arise, may involve risks which
exceed those involved in the activities described above.

Portfolio Turnover. Generally, the Fund's policy with
respect to portfolio turnover is to purchase securities with a
view to holding them for periods of time sufficient to assure
that the Fund will realize less than 30% of its gross income from
the sale or other disposition of securities held for less than
three months (see "Dividends, Distributions and Taxes-United
States Federal Income Taxation of Dividends and Distributions-
- -General" and to hold its securities for six months or longer.
However, it is also the Fund's policy to sell any security
whenever, in the judgment of the Adviser, its appreciation
possibilities have been substantially realized or the business or
market prospects for such security have deteriorated,
irrespective of the length of time that such security has been
held. The Adviser anticipates that the Fund's annual rate of
portfolio turnover will not exceed 200%. A 200% annual turnover
rate would occur if all the securities in the Fund's portfolio
were replaced twice within a period of one year. The turnover
rate has a direct effect on the transaction costs to be borne by
the Fund, and as portfolio turnover increases it is more likely
that the Fund will realize short-term capital gains. The
Portfolio turnover rate for the year ended June 30, 1994 was -0-
%.

Certain Risk Considerations

Investment in the Fund involves the special risk
considerations described below.

<PAGE>

Investment in Privatized Enterprises. The governments of
certain foreign countries have, to varying degrees, embarked on
privatization programs contemplating the sale of all or part of
their interests in state enterprises. In certain jurisdictions,
the ability of foreign entities, such as the Fund, to participate
in privatizations may be limited by local law, or the price or
terms on which the Fund may be able to participate may be less
advantageous than for local investors. Moreover, there can be no
assurance that governments that have embarked on privatization
programs will continue to divest their ownership of state
enterprises, that proposed privatizations will be successful or
that governments will not re-nationalize enterprises that have
been privatized. Furthermore, in the case of certain of the
enterprises in which the Fund may invest, large blocks of the
stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those
enterprises. The sale of some portion or all of those blocks
could have an adverse effect on the price of the stock of any
such enterprise.

Most state enterprises or former state enterprises go through
an internal reorganization of management prior to making an
initial equity offering in an attempt to better enable these
enterprises to compete in the private sector. However, certain
reorganizations could result in a management team that does not
function as well as the enterprise's prior management and may
have a negative effect on such enterprise. After making an
initial equity offering enterprises which may have enjoyed
preferential treatment from the respective state or government
that owned or controlled them may no longer receive such
preferential treatment and may become subject to market
competition from which they were previously protected. Some of
these enterprises may not be able to effectively operate in a
competitive market and may suffer losses or experience bankruptcy
due to such competition. In addition, the privatization of an
enterprise by its government may occur over a number of years,
with the government continuing to hold a controlling position in
the enterprise even after the initial equity offering for the
enterprise.

Currency Considerations. Because substantially all of the
Fund's assets will be invested in securities denominated in
foreign currencies and a corresponding portion of the Fund's
revenues will be received in such currencies, the dollar
equivalent of the Fund's net assets and distributions will be
adversely affected by reductions in the value of certain foreign
currencies relative to the U.S. dollar. Such changes will also
affect the Fund's income. The Fund will, however, have the
ability to attempt to protect itself against adverse changes in
the values of foreign currencies by engaging in certain of the
investment practices listed above. While the Fund has this

<PAGE>

ability, there is no certainty as to whether and to what extent
the Fund 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 the Fund
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.

Risk of 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's investment portfolio may
experience greater price volatility and significantly lower
liquidity than a portfolio invested in equity securities of U.S.
companies. These markets may be subject to greater influence by
adverse events generally affecting the market, and by large
investors trading significant blocks of securities, than is usual
in the United States. Securities settlements may in some
instances be subject to delays and related administrative
uncertainties. Furthermore, foreign investment in the securities
markets of certain foreign countries is restricted or controlled
to varying degrees. These restrictions or controls may at times
limit or preclude investment in certain securities and may
increase the cost and expenses of the Fund. As illustrations,
certain countries require governmental approval prior to
investments by foreign persons, or limit the amount of investment
by foreign persons in a particular company, or limit the
investment by foreign persons to only a specific class of
securities of a company which may have less advantageous terms
than securities of the company available for purchase by
nationals or impose additional taxes on foreign investors. The
national policies of certain countries may restrict investment
opportunities in issuers deemed sensitive to national interests.
In addition, the repatriation of investment income, capital or
the proceeds of sales of securities from certain of the countries
is controlled under regulations, including in some cases the need
for certain advance government notification or authority, and if
a deterioration occurs in a country's balance of payments, the
country could impose temporary restrictions on foreign capital
remittances. 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, seek local

<PAGE>

governmental approvals or other actions, any of which may involve
additional costs to the Fund. The liquidity of the Fund's
investments in any country in which any of these factors exist
could be affected and the Adviser 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 United States.

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. Foreign issuers are subject to accounting, auditing
and financial standards and requirements that differ, in some
cases significantly, from those applicable to U.S. issuers. In
particular, the assets and profits appearing on the financial
statements of a foreign issuer may not reflect its financial
position or results of operations in the way they would be
reflected had the financial statements been prepared in
accordance with U.S. generally accepted accounting principles. In
addition, for an issuer that keeps accounting records in local
currency, inflation accounting rules in some of the countries in
which the Fund will invest require, for both tax and accounting
purposes, that certain assets and liabilities be restated on the
issuer's balance sheet in order to express items in terms of
currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. Consequently, financial
data may be materially affected by restatements for inflation and
may not accurately reflect the real condition of those issuers
and securities markets. 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

<PAGE>

governing business organizations, bankruptcy and insolvency may
provide less protection to security holders such as the Fund than
that provided by U.S. laws. The Fund intends to spread its
portfolio investments among the capital markets of a number of
countries and, under normal market conditions, will invest in the
equity securities of issuers based in at least four, and normally
considerably more, countries. There is no restriction, however,
on the percentage of the Fund's assets that may be invested in
countries within any one region of the world. To the extent that
the Fund's assets are invested within any one region, the Fund
may be subject to any special risks that may be associated with
that region.

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.

Investments in Lower-Rated Debt Securities. Debt securities
rated below investment grade, i.e., Ba and lower by Moody's or BB
and lower by S&P ("lower-rated securities"), or, if not rated,
determined by the Adviser to be of equivalent quality, are
subject to greater risk of loss of principal and interest than
higher-rated securities and are considered to be predominantly
speculative with respect to the issuer's capacity to pay interest
and repay principal, which may in any case decline during
sustained periods of deteriorating economic conditions or rising
interest rates. They are also generally considered to be subject
to greater market risk than higher-rated securities in times of
deteriorating economic conditions. In addition, lower-rated
securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment
grade securities, although the market values of securities rated
below investment grade and comparable unrated securities tend to
react less to fluctuations in interest rate levels than do those
of higher-rated securities. Debt securities rated Ba by Moody's
or BB by S&P are judged to have speculative characteristics or to
be predominantly speculative with respect to the issuer's ability
to pay interest and repay principal. Debt securities rated B by
Moody's and S&P are judged to have highly speculative
characteristics or to be predominantly speculative. Such
securities may have small assurance of interest and principal
payments. Debt securities having the lowest ratings for non-
subordinated debt instruments assigned by Moody's or S&P (i.e.,
rated C by Moody's or CCC and lower by S&P) are considered to
have extremely poor prospects of ever attaining any real

<PAGE>

investment standing, to have a current identifiable vulnerability
to default, to be unlikely to have the capacity to pay interest
and repay principal when due in the event of adverse business,
financial or economic conditions, and/or to be in default or not
current in the payment of interest or principal.

Adverse publicity and investor perceptions about lower-rated
securities, whether or not based on fundamental analysis, may
tend to decrease the market value and liquidity of such lower-
rated securities. The Adviser will try to reduce the risk
inherent in investment in lower-rated securities through credit
analysis, diversification and attention to current developments
and trends in interest rates and economic and political
conditions. However, there can be no assurance that losses will
not occur. Since the risk of default is higher for lower-rated
securities, the Adviser's research and credit analysis are a
correspondingly important aspect of its program for managing the
Fund's securities than would be the case if the Fund did not
invest in lower-rated securities. In considering investments for
the Fund, the Adviser will attempt to identify those high-risk,
high-yield securities whose financial condition is adequate to
meet future obligations, has improved or is expected to improve
in the future. The Adviser's analysis focuses on relative values
based on such factors as interest or dividend coverage, asset
coverage earnings prospects, and the experience and managerial
strength of the issuer.

Non-rated securities will also be considered for investment
by the Fund when the Adviser believes that the financial
condition of the issuers of such securities, or the protection
afforded by the terms of the securities themselves, limits the
risk to the Fund to a degree comparable to that of rated
securities which are consistent with the Fund's objective and
policies.

Securities Ratings. The ratings of debt securities by S&P
and Moody's are a generally accepted barometer of credit risk.
They are, however, subject to certain limitations from an
investor's standpoint. The rating of an issuer is heavily
weighted by past developments and does not necessarily reflect
probable future conditions. There is frequently a lag between
the time a rating is assigned and the time it is updated. In
addition, there may be varying degrees of difference in credit
risk of securities within each rating category. Securities rated
BBB by S&P or Baa by Moody's are considered to be investment
grade. Securities rated BBB by S&P or Baa by Moody's are
considered to have speculative characteristics. Sustained
periods of deteriorating economic conditions or rising interest
rates are more likely to lead to a weakening in the issuer's
capacity to pay interest and repay principal than in the case of

<PAGE>

higher-rated securities. See Appendix C for a description of
Moody's and S&P's bond and commercial paper ratings.

Non-Diversified Status. The Fund is a "non-diversified"
investment company, which means the Fund is not limited in the
proportion of its assets that may be invested in the securities
of a single issuer. However, 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." 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 market value of the Fund's
total assets will be invested in the securities of a single
issuer, and (ii) with respect to 50% of the market value of its
total assets, not more than 5% of the market value 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. Investments in U.S. Government
Securities are not subject to these limitations. Because the
Fund, as a non-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.

Securities issued or guaranteed by foreign governments 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.

Certain Fundamental Investment Policies. The following
restrictions, which supplement those set forth in the Fund's
Prospectus, may not be changed without approval by the vote of a
majority of the Fund's outstanding voting securities, which means
the affirmative vote of the holders of (i) 67% or more or the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented, or (ii) more than 50% of the
outstanding shares, whichever is less.

To reduce investment risk, as a matter of fundamental policy
the Fund may not:

(i) invest 25% or more of its total assets in
securities of issuers conducting their principal
business activities in the same industry, except
that this restriction does not apply to (a) U.S.
Government Securities; or (b) the purchase of

<PAGE>

securities of issuers whose primary business
activity is in the national commercial banking
industry, so long as the Fund's Board of Directors
determines, on the basis of factors such as
liquidity, availability of investments and
anticipated returns, that the Fund's ability to
achieve its investment objective would be adversely
affected if the Fund were not permitted to invest
more than 25% of its total assets in those
securities, and so long as the Fund notifies its
shareholders of any decision by the Board of
Directors to permit or cease to permit the Fund to
invest more than 25% of its total assets in those
securities, such notice to include a discussion of
any increased investment risks to which the Fund
may be subjected as a result of the Board's
determination;

(ii) borrow money except from banks for temporary or
emergency purposes, including the meeting of
redemption requests which might require the
untimely disposition of securities; borrowing in
the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not
exceed 5% of the value of the Fund's total assets
(including the amount borrowed) less liabilities
(not including the amount borrowed) at the time the
borrowing is made; outstanding borrowings in excess
of 5% of the value of the Fund's total assets will
be repaid before any investments are made;

(iii) pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure permitted borrowings;

(iv) make loans except through (i) the purchase of debt
obligations in accordance with its investment
objectives and policies; (ii) the lending of
portfolio securities; or (iii) the use of
repurchase agreements;

(v) participate on a joint or joint and several basis
in any securities trading account;

(vi) invest in companies for the purpose of exercising
control;

(vii) issue any senior security within the meaning of the
Act except that the Fund may write put and call
options;

<PAGE>

(viii) make short sales of securities or maintain a short
position, unless at all times when a short position
is open it on 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 10% of
the Fund's net assets (taken at market value) is
held as collateral for such sales at any one time
(it is the Fund's present intention to make such
sales only for the purpose of deferring realization
of gain or loss for Federal income tax purposes);
or

(ix) (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 including futures contracts (except
foreign currencies, foreign currency options and
futures, options and futures on securities and
securities indices and forward contracts or
contracts for the future acquisition or delivery of
securities and foreign currencies and related
options on futures contracts and similar
contracts); (c) invest in interests 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; and (e) act as an
underwriter of securities, except that the Fund may
acquire restricted securities under circumstances
in which, if such securities were sold, the Fund
might be deemed to be an underwriter for purposes
of the Securities Act.

In addition to the restrictions set forth above, in
connections with the qualifications of its shares for sale in
certain states, the Fund may not invest in warrants (other than
warrants acquired by the Fund as a part of a unit or attached to
securities at the time of purchase) if as a result of such
warrants valued at the lower of such cost or market would exceed
10% of the value of the Fund's assets at the time of purchase.

<PAGE>

MANAGEMENT OF THE FUND

Directors and Officers

The Directors and principal officers of the Fund, their ages
and their primary 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*, 50, Chairman, is the President, Chief
Operating Officer and a Director of Alliance Capital Management
Corporation, ("ACMC")**, with which he has been associated since
prior to 1990.

RUTH BLOCK, 64, was formerly Executive Vice President and the
Chief Insurance Officer of the Equitable Life Assurance Society
of the United States. She is a Director of Ecolab Incorporated
(specialty chemicals) and Amoco Corporation (oil and gas). Her
address is P.O. Box 4653, Stamford, Connecticut 06903.

DAVID H. DIEVLER, 65, is an independent consultant. He was
formerly, until December 1994, Senior Vice President of ACMC,
with which he was associated since prior to 1990.

JOHN H. DOBKIN, 53, is President of Historic Hudson Valley
(historic preservation) since 1990. Previously, he was Director
of the National Academy of Design. From 1987 to 1992, he was a
Director of ACMC. His address is 105 West 55th Street, New York,
New York 10019.

* An "interested person" of the Fund as defined in the Act.

** For purposes of this Statement of Additional Information,
ACMC refers to Alliance Capital Management Corporation, the
sole general partner of Alliance, and to the predecessor
general partner of Alliance of the same name.

<PAGE>

WILLIAM H. FOULK, JR., 62, is an investment adviser and
independent consultant. He was formerly Senior Manager of
Barrett Associates, Inc., a registered investment advisory firm,
with which he was associated since prior to 1990. He was
formerly President of Competrol (BVI) Limited and Crescent
Diversified Limited (private investments). His address is 521
Fifth Avenue, New York, New York 10175.

DR. JAMES M. HESTER, 70, is President of the Harry Frank
Guggenheim Foundation and a Director of Union Carbide
Corporation. He was formerly President of New York University
and The New York Botanical Garden and Rector of the United
Nations University. His address is 45 East 89th Street, New
York, New York 10128.

CLIFFORD L. MICHEL, 55, is a Partner of the law firm of
Cahill Gordon & Reindel with which he has been associated since
prior to 1990. He is Chief Executive Officer of Wenonah
Development Company (investments) and a Director of Placer Dome,
Inc. (mining) and Faber-Castell Corporation (writing
instruments). His address is 80 Pine Street, New York, New York
10005.

ROBERT C. WHITE, 74, formerly a Vice President and Chief
Financial Officer of the Howard Hughes Medical Institute.
Retired Director of the MEDSTAT Group (healthcare information
systems) and the Ambassador Funds and a retired Trustee of the
St. Clair Fund (registered investment companies). He was
formerly Assistant Treasurer of Ford Motor Company. His address
is 30835 River Crossing, Bingham Farms, Michigan 48025.

Officers

JOHN D. CARIFA, Chairman and President, (see biography,
above).

MARK H. BREEDON, 42, Senior Vice President, is a Vice
President of ACMC since prior to 1989 and a Director and Vice
President of Alliance Capital Limited since prior to 1990.

THOMAS J. BARDONG, 50, Vice President, is a Senior Vice
President of ACMC with which he has been associated since prior
to 1990.

NICHOLAS CROSSLAND, 23, Vice President, is an Assistant Vice
President of ACL with which he has been associated since 1991.
Previously, he was a trading assistant with Brewin Dolphin since
prior to 1990.

A. RAMA KRISHNA, 31, Vice President, is a Senior Vice
President of ACMC, with which he has been associated since 1993.

<PAGE>

Previously, he was Chief Investment Strategist and Director -
Equity Research at First Boston Corporation since prior to 1990.

DAVID LUI, 35, Vice President, has been a Vice President of
ACMC since April 1994 and an international research analyst since
1993. Before joining Alliance in 1993, he was an associate of
global markets at Bankers Trust since prior to 1990.

ERIC PERKINS, 40, Vice President, has been a Senior Vice
President of ACMC since 1993 and a research analyst since prior
to 1990.

JEAN VAN DE WALLE, 36, Vice President, has been Vice
President of ACMC since 1991. Prior thereto, he was resident
Vice President of Citibank.

MARK D. GERSTEN, 44, Treasurer and Chief Financial Officer,
is a Senior Vice President of Alliance Fund Services, Inc. with
which he has been associated since prior to 1990.

EDMUND P. BERGAN, Jr., 45, Secretary, is Senior Vice
President and General Counsel of Alliance Fund Distributors and
Alliance Fund Services, Inc. and Vice President and Assistant
General Counsel of ACMC with which he has been associated since
prior to 1990.

ANDREW L. GANGOLF, Assistant Secretary, 40, Vice President
and Assistant General Counsel of AFD since January 1995. Prior
thereto, since October 1992, he was Vice President and Assistant
Secretary of Delaware Management Co., Inc. Prior thereto, he was
Vice President and Counsel of The Equitable Life Assurance
Society of the United States.

EMILIE D. WRAPP, Assistant Secretary, 39, Special Counsel of
ACMC with which she has been associated since prior to 1990.

PATRICK J. FARRELL, 35, Controller, is a Vice President of
Alliance Fund Services, Inc. with which he has been associated
since prior to 1990.

JOSEPH J. MANTINEO, 36, Assistant Controller, is a Vice
President of Alliance Fund Services, Inc. with which he has been
associated since prior to 1990.

<PAGE>

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 to be paid by the Fund to each
of the Directors during its current fiscal period ending June 30,
1995 (estimating future payments based upon existing
arrangements), the aggregate compensation paid to each of the
Directors during calendar year 1994 by all of the funds to which
the Adviser 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.

<TABLE>
<CAPTION>
Total Total Number of Funds in
Compensation the Alliance Fund Complex,
Aggregate From the Alliance Including the Fund, as to
Name of Director Compensation Fund Complex, which the Director is
of the Fund from the Fund* Including the Fund** a Director or Trustee
________________ _____________ __________________ __________________________

<S> <C> <C> <C>
John D. Carifa $ 0 $ 0 42
Ruth Block $ 3,714 $ 157,000 31
David H. Dievler $ 0 $ 0 49
John H. Dobkin $ 3,714 $ 110,750 29
William H. Foulk, Jr. $ 3,714 $ 141,500 30
Dr. James M. Hester $ 3,714 $ 154,500 32
Clifford L. Michel $ 3,714 $ 120,500 31
Robert C. White $ 3,714 $ 133,500 36

____________________________

* The information in this column represents an estimate of amounts to be paid during the
Fund's current fiscal year.

** The information in this column represents amounts actually paid during calendar year
1994.
</TABLE>

As of May 24, 1995, the Trustees and officers of the Fund as a
group owned 2.68% of the shares of the Fund.

Adviser

Alliance Capital Management L.P. (the "Adviser"), a Delaware
limited partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, has been retained under an

<PAGE>

investment advisory agreement (the "Advisory Agreement") to
provide investment advice and, in general, to conduct the
management and investment program of the Fund under the
supervision of the Fund's Board of Directors (see "Management of
the Fund" in the Prospectus).

The Adviser is a leading international investment
manager supervising client accounts with assets as of December
31, 1994 of more than $121 billion (of which more than $36
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 and included, as of December 31,
1994, 29 of the FORTUNE 100 Companies. As of that date, the
Adviser and its subsidiaries employed approximately 1,450
employees who operated out of domestic offices and the overseas
offices of subsidiaries in Bombay, Istanbul, London, Sydney,
Tokyo, Toronto, Bahrain, Luxembourg and Singapore. The 51
registered investment companies comprising 103 separate
investment portfolios managed by the Adviser currently have more
than one million shareholders.

Alliance Capital Management Corporation, the sole
general partner of, and the owner of a 1% general partnership
interest in, the Adviser, is an indirect wholly-owned subsidiary
of The Equitable Life Assurance Society of the United States
("Equitable"), one of the largest life insurance companies in the
United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by
AXA, a French insurance holding company. As of December 31,
1994, ACMC, Inc. and Equitable Capital Management Corporation,
each a wholly-owned direct or indirect subsidiary of Equitable,
owned in the aggregate approximately 59% of the issued and
outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser
("Units"). As of December 31, 1994, approximately 32% and 9% of
the Units were owned by the public and employees of the Adviser
and its subsidiaries, respectively, including employees of the
Adviser who serve as Directors of the Fund.

AXA owns approximately 60% of the outstanding voting
shares of common stock of ECI. AXA is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations are comprised of
activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of

<PAGE>

January 1, 1995, 42.3% of the issued shares (representing 54.7%
of the voting power) of AXA were owned by Midi Participations, a
French corporation that is a holding company. The voting shares
of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a
Belgian corporation, owned 34.1%). As of January 1, 1995, 62.1%
of the issued shares (representing 75.7% of the voting power) of
Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle,
owned 31.8% of the issued shares) (representing 39.0% of the
voting power), and 26.5% of the issued shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a
French bank ("Paribas"). Including the shares owned by Midi
Participations, as of January 1, 1995, the Mutuelles AXA directly
or indirectly owned 51.3% of the issued shares (representing
65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not
entitled to be voted. Acting as a group, the Mutuelles AXA
control AXA, Midi Participations and Finaxa.

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.

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 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. For the fiscal year ended June 30, 1994,
the Adviser received from the Fund advisory fees of $19,079.

As to the obtaining of services other than those specifically
provided to the Fund by the Adviser, the Fund may employ its own
personnel. For such services, it also may utilize personnel

<PAGE>

employed by the Adviser or by other subsidiaries of Equitable.
In such event, the services will be provided to the Fund at cost
and the payments specifically approved by the Fund's Board of
Directors.

Under the Advisory Agreement, the Fund pays the Adviser a fee
at the annual rate of 1.00% of the value of the average daily net
assets of the Fund. This fee is higher than the management fees
paid by most U.S. registered investment companies investing
exclusively in securities of U.S. issuers, although the Adviser
believes the fee is generally comparable to the management fees
paid by other open-end registered investment companies that
invest in the securities of foreign issuers and it is justified
by the special care that must be given to the selection and
supervision of the particular types of securities in which the
Fund will invest. The fee is accrued daily and paid monthly.

The Advisory Agreement provides that the Adviser will
reimburse the Fund for its net expenses (exclusive of interest,
taxes, brokerage, expenditures pursuant to the Distribution
Services Agreement described below, and extraordinary expenses,
all to the extent permitted by applicable state securities laws
and regulations) which in any year exceed the limits prescribed
by any state in which the Fund's shares are qualified for sale.
The Fund may not qualify its shares for sale in every state. The
Fund believes that at present the most restrictive state expense
ratio limitation imposed by any state in which the Fund has
qualified its shares for sale is 2.5% of the first $30 million of
the mutual fund's average net assets, 2.0% of the next $70
million of its average net assets and 1.5% of its average net
assets in excess of $100 million. Expense reimbursements, if
any, are accrued daily and paid monthly. For the fiscal year
ended June 30, 1994, no reimbursements were required to be made
pursuant to the most restrictive expense limitation.

Expenses of The Fund

In addition to the payments to Alliance under the Advisory
Agreement described above, the Fund pays certain other costs,
including (i) custody, transfer and dividend disbursing expenses,
(ii) fees of the Directors who are not affiliated with Alliance,
(iii) legal and auditing expenses, (iv) clerical, accounting and
other office costs, (v) costs of printing the Fund's prospectuses
and shareholder reports, (vi) costs of maintaining the Fund's
existence, (vii) interest charges, taxes, brokerage fees and
commissions, (viii) costs of stationery and supplies, (ix)
expenses and fees related to registration and filing with the
Commission and with state regulatory authorities, (x) upon the
approval of the Board of Directors, costs of personnel of Adviser
or its affiliate rendering clerical, accounting and other office
services, and (xi) such promotional expenses as may be

<PAGE>

contemplated by the Distribution Services Agreement, described
below.

The Advisory Agreement became effective on April 22, 1994
having been approved by the unanimous vote, cast in person, of
the Fund's Directors, including the Directors who are not parties
to the Advisory Agreement or interested persons as defined in
Investment Company Act of 1940 (the "Act") of any such party, at
a meeting called for that purpose and held on April 19, 1994, and
by the Fund's initial shareholder on April 19, 1994.

The Advisory Agreement will remain in effect until January
31, 1996 and thereafter for successive twelve-month periods
(computed from each February 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 Act.

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 Adviser may act as an investment adviser to other
persons, firms or corporations, including investment companies,
and is investment adviser to ACM Institutional Reserves, Inc.,
AFD Exchange Reserves, The Alliance Fund, Inc., Alliance All-Asia
Investment Fund, Inc., Alliance Balanced Shares, Inc., Alliance
Bond Fund, Inc., Alliance Capital Reserves, Alliance Counterpoint
Fund, Alliance Developing Markets Fund, Inc., Alliance Global
Dollar Government Fund, Inc., Alliance Global Small Cap Fund,
Inc., Alliance Government Reserves, Alliance Growth and Income
Fund, Inc., Alliance Income Builder Fund, Inc., Alliance
International Fund, Alliance Money Market Fund, Alliance Mortgage
Securities Income Fund, Inc., Alliance Mortgage Strategy Trust,
Inc., Alliance Multi-Market Strategy Trust, Inc., Alliance
Municipal Income Fund, Inc., Alliance Municipal Income Fund II,
Alliance Municipal Trust, Alliance New Europe Fund, Inc.,
Alliance North American Government Income Trust, Inc., Alliance
Premier Growth Fund, Inc., Alliance Quasar Fund, Inc., Alliance
Short-Term Multi-Market Trust, Inc., Alliance Technology Fund,
Inc., Alliance Utility Income Fund, Inc., Alliance Variable
Products Series Fund, Inc., Alliance World Income Trust, Inc.,

<PAGE>

Alliance Worldwide Privatization Fund, Inc., The Alliance
Portfolios, Fiduciary Management Associates and The Hudson River
Trust, all registered open-end investment companies; and ACM
Government Income Fund, Inc., ACM Government Securities Fund,
Inc., ACM Government Spectrum Fund, Inc., ACM Government
Opportunity Fund, Inc., ACM Managed Dollar Income Fund, Inc., ACM
Managed Income Fund, Inc., ACM Municipal Securities Income Fund,
Inc., Alliance All-Market Advantage Fund, Inc., Alliance Global
Environment Fund, Inc., Alliance World Dollar Government Fund,
Inc., Alliance World Dollar Government Fund II, Inc., The Austria
Fund, Inc., The Global Privatization Fund, Inc., The Korean
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 Fund directly or indirectly to pay expenses associated
with the distribution of its shares in accordance with a plan of
distribution which is included in the Agreement and has been duly
adopted and approved in accordance with Rule 12b-1 adopted by the
Commission under the Act (the "Rule 12b-1 Plan").

Distribution services fees are accrued daily and paid monthly
and are charged as expenses of the Fund as accrued. The
distribution services fees attributable to the Class B shares and
Class C shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of an
initial sales charge, and, in the case of Class C shares, without
the assessment of a contingent deferred sales charge, and at the
same time to permit the Principal Underwriter to compensate
broker-dealers in connection with the sale of such shares. In
this regard the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class
B shares and the distribution services fee on the Class C shares
are the same as those of the initial sales charge (or contingent
deferred sales charge, when applicable) and distribution services
fee with respect to the Class A shares in that in each case the
sales charge and/or distribution services fee provide for the
financing of the distribution of the Fund's shares.

Under the Agreement, the Treasurer of the Fund reports the
amounts expended under the Rule 12b-1 Plan and the purposes for
which such expenditures were made to the Directors of the Fund
for their review on a quarterly basis. Also, the Agreement

<PAGE>

provides that the selection and nomination of Directors who are
not interested persons of the Fund (as defined in the Act) are
committed to the discretion of such disinterested Directors then
in office. The Agreement was initially approved by the Directors
of the Fund at a meeting held on April 19, 1994, and by the
Fund's initial shareholder on April 19, 1994.

The Agreement became effective on April 22, 1994 with respect
to Class A and Class B shares and February 1, 1995 with respect
to Class C shares. The Agreement will continue in effect for
successive twelve-month periods (computed from each February 1)
with respect to each class of the Fund, provided, however, that
such continuance is specifically approved at least annually by
the Directors of the Fund or by vote of the holders of a majority
of the outstanding voting securities (as defined in the Act) of
that class, and in either case, by a majority of the Directors of
the Fund who are not parties to this agreement or interested
persons, as defined in the 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 Rule 12b-1 Plan or any
agreement related thereto. The Agreement was most recently
approved for the period ending January 31, 1996 by the Directors
of the Fund, including all of the disinterested Directors, at a
meeting held on January 17, 1995.

The Adviser may from time to time and from its own funds or
such other resources as may be permitted by rules of the
Securities and Exchange Commission make payments for distribution
services to the Principal Underwriter; the latter may in turn pay
part or all of such compensation to brokers or other persons for
their distribution assistance.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class A shares, the Fund paid distribution services
fees for expenditures under the Agreement, in the aggregate
amount of $1,021 which constituted approximately .30% of the
Fund's average daily net assets attributable to the Class A
shares during the period, and the Adviser made payments from its
own resources as described above, aggregating $18,863. Of the
$19,884 paid by the Fund and the Adviser under the Plan, with
respect to the Class A shares, $2,066 were spent on advertising,
$1,248 on the printing and mailing of prospectuses for persons
other than current shareholders, $6,053 for compensation to
broker-dealers and other financial intermediaries (including,
$5,272 to the Fund's Principal Underwriter), $4,913 for
compensation to sales personnel and, $5,604 were spent on
printing of sales literature, travel, entertainment, due
diligence and other promotional expenses.

During the Fund's fiscal year ended June 30, 1994, with
respect to Class B shares, the Fund paid distribution services

<PAGE>

fees for expenditures under the Agreement in the aggregate amount
of $15,676, which constituted 1.00% of the Fund's average daily
net assets attributable to Class B shares during the period, and
the Adviser made payments from its own resources, as described
above, aggregating $994,925. Of the $1,011,250 paid by the Fund
and the Adviser under the Plan, with respect to Class B shares,
$9,228 was spent on advertising, $5,510 on the printing and
mailing of prospectuses for persons other than current
shareholders, $958,613 for compensation to broker-dealers and
other financial intermediaries (including, $23,538 to the Fund's
Principal Underwriter), $12,778 for compensation to sales
personnel, and $25,121 was spent on printing of sales literature,
travel, entertainment, due diligence and other promotional
expenses.

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 will become
effective only upon approval as provided in the preceding
paragraph; and the Agreement may not be amended in order to
increase materially the costs that the Fund or a particular class
of the Fund may bear pursuant to the Agreement without the
approval of a majority of the holders of the outstanding voting
shares of the Fund or the class of the Fund affected. The
Agreement may be terminated (a) by the Fund without penalty at
any time by a majority vote of the holders of the Fund's
outstanding voting securities, voting separately by class, or by
a majority vote of the disinterested Directors 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 is not required to give prior
notice to the Principal Underwriter. The Agreement will
terminate automatically in the event of its assignment.

Transfer Agency Agreement

Alliance Fund Services, Inc., an indirect wholly-owned
subsidiary of the Adviser, receives a transfer agency fee per
account holder of the Class A shares, Class B shares and Class C
shares of the Fund, plus reimbursement for out-of-pocket
expenses. The transfer agency fee with respect to the Class B
shares is higher than the transfer agency fee with respect to the

<PAGE>

Class A shares and Class C shares reflecting the additional costs
associated with the Class B contingent deferred sales charge. For
the fiscal year ended June 30, 1994, the Fund paid Alliance Fund
Services, Inc. $-0- pursuant to the Transfer Agency Agreement.

PURCHASE OF SHARES

The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of Shares
- -- How To Buy Shares."

General

Shares of the Fund are offered on a continuous basis at a
price equal to their net asset value plus an initial sales charge
at the time of purchase (the "initial sales charge alternative"),
with a contingent deferred sales charge (the "deferred sales
charge alternative"), or without any initial or contingent
deferred sales charge (the "asset-based sales charge
alternative"), as described below. Shares of the Fund are
offered on a continuous basis through (i) investment dealers that
are members of the National Association of Securities Dealers,
Inc. and have entered into selected dealer agreements with the
Principal Underwriter ("selected dealers"), (ii) depository
institutions and other financial intermediaries or their
affiliates, that have entered into selected agent agreements with
the Principal Underwriter ("selected agents"), or (iii) the
Principal Underwriter. The minimum for initial investments is
$250; subsequent investments (other than reinvestments of
dividends and capital gains distributions in shares) must be in
the minimum amount of $50. As described under "Shareholder
Services," the Fund offers an automatic investment program and a
403(b)(7) retirement plan which permit investments of $25 or
more. The subscriber may use the Subscription Application found
in the Prospectus for his or her initial investment. Sales
personnel of selected dealers and agents distributing the Fund's
shares may receive differing compensation for selling Class A,
Class B or Class C shares.

Investors may purchase shares of the Fund in the United
States either through selected dealers or agents or directly
through the Principal Underwriter. Shares may also be sold in
foreign countries where permissible. The Fund may refuse any
order for the purchase of shares. The Fund reserves the right to
suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.

<PAGE>

The public offering price of shares of the Fund is their net
asset value, plus, in the case of most purchases of Class A
shares, a sales charge which will vary depending on the purchase
alternative chosen by the investor and the amount of the
purchase, as shown in the table below under "Initial Sales Charge
Alternative--Class A Shares". On each Fund business day on which
a purchase or redemption order is received by the Fund and
trading in the types of securities in which the Fund invests
might materially affect the value of Fund shares, the per share
net asset value is computed in accordance with the Fund's
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. New York time) by dividing the value of the
Fund's total assets, less its liabilities, by the total number of
its shares then outstanding. The respective per share net asset
values of the Class A, Class B and Class C shares are expected to
be substantially the same. Under certain circumstances, however,
the per share net asset values of the Class B and Class C shares
may be lower than the per share net asset value of the Class A
shares as a result of the daily expense accruals of the
distribution and transfer agency fees applicable with respect to
the Class B and Class C shares. Even under those circumstances,
the per share net asset values of the two classes eventually will
tend to converge immediately after the payment of dividends,
which will differ by approximately the amount of the expense
accrual differential among the classes. A Fund business day is
any weekday, exclusive of national holidays on which the Exchange
is closed and Good Friday. For purposes of this computation, the
securities in the Fund's portfolio are valued at their current
market value determined on the basis of market quotations or, if
such quotations are not readily available, such other methods as
the Directors believe would accurately reflect fair market value.

The Fund will accept unconditional orders for its shares to
be executed at the public offering price equal to their net asset
value next determined (plus applicable Class A sales charges), as
described below. Orders received by the Principal Underwriter
prior to the close of regular trading on the Exchange on each day
the Exchange is open for trading are priced at the net asset
value computed as of the close of regular trading on the Exchange
on that day (plus applicable Class A sales charges). In the case
of orders for purchase of shares placed through selected dealers
or agents, the applicable public offering price will be the net
asset value as so determined, but only if the selected dealer or
agent receives the order prior to the close of regular trading on
the Exchange and transmits it to the Principal Underwriter prior
to its close of business that same day (normally 5:00 p.m. New
York time). The selected dealer or agent is responsible for
transmitting such orders by 5:00 p.m. If the selected dealer or
agent fails to do so, the investor's right to that day's closing
price must be settled between the investor and the selected

<PAGE>

dealer or agent. If the selected dealer or agent receives the
order after the close of regular trading on the Exchange, the
price will be based on the net asset value determined as of the
close of regular trading on the Exchange on the next day it is
open for trading.

Following the initial purchase of Fund shares, a shareholder
may place orders to purchase additional shares by telephone if
the shareholder has completed the appropriate portion of the
Subscription Application or an "Autobuy" application obtained by
calling the "Literature" telephone number shown on the cover of
this Statement of Additional Information. Payment for shares
purchased by telephone can be made only by Electronic Funds
Transfer from a bank account maintained by the shareholder at a
bank that is a member of the National Automated Clearing House
Association ("NACHA"). If a shareholder's telephone purchase
request is received before 3:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically
placed the following Fund business day, and the applicable public
offering price will be the public offering price determined as of
the close of business on such following business day. Full and
fractional shares are credited to a subscriber's account in the
amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to the Fund, 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 bonuses or other incentives to dealers or
agents, including 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,
such cash or other incentives may be conditioned upon the sale of
a specified minimum dollar amount of the shares of the Fund
and/or other Alliance Mutual Funds, as defined below, during a
specific period of time. On some occasions, such cash or other
incentives may take the form of payment for attendance at
seminars, meals, sporting events or theater performances, or
payment for travel, 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

<PAGE>

agent may elect to receive cash incentives of equivalent amount
in lieu of such payments.

Alternative Purchase Arrangements

The Fund issues three classes of shares: Class A shares are
sold to investors choosing the initial sales charge alternative,
Class B shares are sold to investors choosing the deferred sales
charge alternative, and Class C shares are sold to investors
choosing the asset-based sales charge alternative. The three
classes of shares each represent an interest in the same
portfolio of investments of the Fund, have the same rights and
are identical in all respects, except that (i) Class A shares
bear the expense of the initial sales charge (or contingent
deferred sales charge, when applicable) and Class B shares bear
the expense of the deferred sales charge, (ii) Class B and Class
C shares each bear the expense of a higher distribution services
fee and, in the case of Class B shares, higher transfer agency
costs, (iii) each class has exclusive voting rights with respect
to provisions of the Rule 12b-1 Plan pursuant to which its
distribution services fee is paid which relates to a specific
class and other matters for which separate class voting is
appropriate under applicable law, provided that, if the Fund
submits to a vote of both the Class A shareholders and the Class
B shareholders an amendment to the Rule 12b-1 Plan that would
materially increase the amount to be paid thereunder with respect
to the Class A shares, the Class A shareholders and the Class B
shareholders will vote separately by Class, and (iv) only the
Class B shares are subject to a conversion feature. Each class
has different exchange privileges and certain different
shareholder service options available.

The alternative purchase arrangements permit an investor to
choose the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the investor
expects to hold the shares, and other circumstances. Investors
should consider whether, during the anticipated life of their
investment in the Fund, the accumulated distribution services fee
and contingent deferred sales charges on Class B shares prior to
conversion would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on Class
A shares, as described below. In this regard, the Principal
Underwriter will reject any order (except orders from certain
retirement plans) for more than $250,000 for Class B shares.
Class C shares may not be suitable for the investor who qualifies
to purchase Class A shares at net asset value. In addition, the

<PAGE>

Principal Underwriter will reject any order for more than
$5,000,000 for Class C shares.

Class A shares are subject to a lower distribution services
fee and, accordingly, pay correspondingly higher dividends per
share than Class B shares or Class C shares. However, because
initial sales charges are deducted at the time of purchase, most
investors purchasing Class A shares would not have all their
funds invested initially and, therefore, would initially own
fewer shares. Investors not qualifying for reduced initial sales
charges who expect to maintain their investment for an extended
period of time might consider purchasing Class A shares because
the accumulated continuing distribution charges on Class B shares
or Class C shares may exceed the initial sales charge on Class A
shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that,
because of such initial sales charges, not all their funds will
be invested initially.

Other investors might determine, however, that it would be
more advantageous to purchase Class B shares or Class C shares in
order to have all their funds invested initially, although
remaining subject to higher continuing distribution charges and,
in the case of Class B shares, being subject to a contingent
deferred sales charge for a four-year period. For example, based
on current fees and expenses, an investor subject to the 4.25%
initial sales charge would have to hold his or her investment
approximately seven years for the Class C distribution services
fee to exceed the initial sales charge plus the accumulated
distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer
period might consider purchasing Class A shares. This example
does not take into account the time value of money, which further
reduces the impact of the Class C distribution services fees on
the investment, fluctuations in net asset value or the effect of
different performance assumptions.

Those investors who prefer to have all of their funds
invested initially but may not wish to retain Fund shares for the
four-year period during which Class B shares are subject to a
contingent deferred sales charge may find it more advantageous to
purchase Class C shares.

The Directors of the Fund have determined that currently no
conflict of interest exists between or among the Class A, Class B
and Class C shares. On an ongoing basis, the Directors of the
Fund, pursuant to their fiduciary duties under the 1940 Act and
state laws, will seek to ensure that no such conflict arises.

<PAGE>

Initial Sales Charge Alternative--Class A Shares

The public offering price of Class A shares for purchasers
choosing the initial sales charge alternative is the net asset
value plus a sales charge, as set forth below.

Sales Discount or
Sales Charge Commission
Charge 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 the lesser of the cost
of the shares being redeemed or their net asset value at the time
of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In
addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge on Class A shares will be waived
on certain redemptions, and such charge will be applied to
redemptions of shares by shareholders who hold both Class A and
Class B shares, as described below under "Deferred Sales Charge
Alternative--Class B Shares." Proceeds from the contingent
deferred sales charge on Class A shares are paid to the Principal
Underwriter and are used by the Principal Underwriter to defray
the expenses of the Principal Underwriter related to providing
distribution-related services to the Fund in connection with the
sales of Class A shares, such as the payment of compensation to
selected dealers and agents for selling Class A Shares. With
respect to purchases of $1,000,000 or more made through selected
dealers or agents, the Adviser may, pursuant to the Agreement

<PAGE>

described above, pay such dealers or agents from its own
resources a fee of up to 1% of the amount invested to compensate
such dealers or agents for their distribution assistance in
connection with such purchases.

Shares issued pursuant to the automatic reinvestment of
income dividends or capital gains distributions are not subject
to any sales charges. The 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. The Principal Underwriter may, however, elect to reallow
the entire sales charge to selected dealers and agents for all
sales with respect to which orders are placed with the Principal
Underwriter. A selected dealer who receives reallowance in
excess of 90% of such a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933, as amended.

Set forth below is an example of the method of computing the
offering price of the Class A shares. The example assumes a
purchase of Class A shares of the 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 December 31, 1994.

Net Asset Value per Class A
Share at December 31, 1994 $ 9.98

Per Share Sales Charge - 4.25%
of offering price (4.41% of
net asset value per share) $ .44
_______

Class A Per Share Offering Price
to the Public $10.42
=======

During the Fund's fiscal years ended June 30, 1994, the
aggregate amount of underwriting commission payable with respect
to shares of the Fund was $406,204. Of that amount, the
Principal Underwriter, Alliance Fund Distributors, Inc. ("AFD"),
received the amount of $5,133, representing that portion of the
sales charges paid on shares of the Fund sold during the year
which was not reallowed to selected dealers (and was,
accordingly, retained by the Principal Underwriter). During the
Fund's fiscal year ended June 30, 1994, the Principal Underwriter
received $649 in contingent deferred sales charges.

<PAGE>

An investor choosing the initial sales charge alternative may
under certain circumstances be entitled to pay a reduced initial
sales charge or no initial sales charge but subject in most cases
to a contingent deferred sales charge. The circumstances under
which an investor may pay a reduced sales charge is 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.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Counterpoint Fund
Alliance Developing Markets Fund, Inc.
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.

<PAGE>

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 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.
-The Alliance Growth Fund
-The Alliance Conservative Investors Fund
-The Alliance Growth Investors Fund
-The Alliance Strategic Balanced Fund
-The Alliance Short-Term U.S. Government Fund

Prospectuses for the Alliance Mutual Funds may be obtained
without charge by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the front
cover of this Statement of Additional Information.

Cumulative Quantity Discount (Right of Accumulation). An
investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales
charge will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business on
the previous day) of (a) all Class A, Class B and
Class C shares of the Fund held by the investor and
(b) all shares of any other Alliance Mutual Fund
held by the investor; and

<PAGE>

(iii) the net asset value of all shares described in
paragraph (ii) owned by another shareholder
eligible to combine his or her purchase with that
of the investor into a single "purchase" (see
above).

For example, if an investor owned shares of an Alliance
Mutual Fund worth $200,000 at their then current net asset value
and, subsequently, purchased Class A shares of the Fund worth an
additional $100,000, the initial 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 initial sales charges shown in the table above by
means of a written Statement of Intention, which expresses the
investor's intention to invest not less than $100,000 within a
period of 13 months in Class A shares (or Class A, Class B,
and/or Class C shares) of the Fund or any other Alliance Mutual
Fund. Each purchase of shares under a Statement of Intention
will be made at the public offering price or prices applicable at
the time of such purchase to a single transaction of the dollar
amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases
of shares of the Fund or any other Alliance Mutual Fund made not
more than 90 days prior to the date that the investor signs the
Statement of Intention; however, the 13-month period during which
the Statement of Intention is in effect will begin on the date of
the earliest purchase to be included.

Investors qualifying for the Combined Purchase Privilege
described above may purchase shares of the Alliance Mutual Funds
under a single Statement of Intention. For example, if at the
time an investor signs a Statement of Intention to invest at
least $100,000 in Class A shares of the Fund, the investor and
the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will be necessary to invest
only a total of $60,000 during the following 13 months in shares
of the Fund or any other Alliance Mutual Fund, to qualify for the
3.25% initial sales charge on the total amount being invested
(the initial sales charge applicable to an investment of
$100,000).

<PAGE>

The Statement of Intention is not a binding obligation upon
the investor to purchase the full amount indicated. The minimum
initial investment under a Statement of Intention is 5% of such
amount. Shares purchased with the first 5% of such amount will
be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher initial sales charge
applicable to the shares actually purchased if the full amount
indicated is not purchased, and such escrowed shares will be
involuntarily redeemed to pay the additional sales charge, if
necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow
will be released. To the extent that an investor purchases more
than the dollar amount indicated on the Statement of Intention
and qualifies for a further reduced sales charge, the initial
sales charge will be adjusted for the entire amount purchased at
the end of the 13-month period. The difference in the initial
sales charge will be used to purchase additional shares of the
Fund subject to the rate of the initial sales charge applicable
to the actual amount of the aggregate purchases.

Investors wishing to enter into a Statement of Intention in
conjunction with their initial investment in Class A shares of
the Fund should complete the appropriate portion of the
Subscription Application found in the Prospectus while current
Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting 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 initial sales
charge on a monthly basis during the 13-month period following
such a plan's initial purchase. The initial sales charge
applicable to such initial purchase of shares of the Fund will be
that normally applicable, under the schedule of the initial sales
charges set forth in this Statement of Additional Information, to
an investment 13 times larger than such initial purchase. The
sales charge applicable to each succeeding monthly purchase will
be that normally applicable, under such schedule, to an
investment equal to the sum of (i) the current month's purchase
multiplied by the number of months (including the current month)
remaining in the 13-month period and (ii) the total purchase
previously made during the 13-month period. Sales charges
previously paid during such period will not be retroactively
adjusted on the basis of later purchases.

Reinstatement Privilege. A shareholder who has caused any or
all of his or her Class A shares of the Fund to be redeemed or
repurchased may reinvest all or any portion of the redemption or

<PAGE>

repurchase proceeds in Class A shares of the Fund at net asset
value without any sales charge, provided that such reinvestment
is made within 30 calendar days after the redemption or
repurchase date. Shares are sold to a reinvesting shareholder at
the net asset value next determined as described above. A
reinstatement pursuant to this privilege will not cancel the
redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except
that no loss will be recognized to the extent that the proceeds
are reinvested in shares of the Fund. The reinstatement
privilege may be used by the shareholder only once, irrespective
of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his or her individual retirement account
or other qualified retirement plan account. Investors may
exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of
Additional Information.

Sales at Net Asset Value. The Fund may sell its Class A
shares at net asset value (i.e., without any sales charge) and
without any contingent deferred sales charge to certain
categories of investors including: (i) investment advisory
clients of the Adviser or its affiliates; (ii) officers and
present or former Directors 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;
officers, directors and present or retired full-time employees of
ACMC, the Principal Underwriter, Alliance Fund Services, Inc. and
their affiliates; officers, directors and present and full-time
employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives")
of any such person; or any trust, individual retirement account
or retirement plan account for the benefit of any such person or
relative; or the estate of any such person or relative, if such
shares are purchased for investment purposes (such shares may not
be resold except to the Fund); (iii) certain employee benefit
plans for employees of the Adviser, the Principal Underwriter,
Alliance Fund Services, Inc. and their affiliates; and (iv)
persons participating in a fee-based program, sponsored and
maintained by a registered broker-dealer and approved by the
Principal Underwriter, pursuant to which such persons pay an
asset-based fee to such broker-dealer, or its affiliate or agent,
for service in the nature of investment advisory or
administrative services.

<PAGE>

Deferred Sales Charge Alternative--Class B Shares

Investors choosing the deferred sales charge alternative
purchase Class B shares at the public offering price equal to the
net asset value per share of the Class B shares on the date of
purchase without the imposition of a sales charge at the time of
purchase. The Class B shares are sold without an initial sales
charge so that the Fund will receive the full amount of the
investor's purchase payment.

Proceeds from the contingent deferred sales charge on the
Class B shares are paid to the Principal Underwriter and are used
by the Principal Underwriter to defray the expenses of the
Principal Underwriter related to providing distribution-related
services to the Fund in connection with the sale of the Class B
shares, such as the payment of compensation to selected dealers
and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services
fee enables the Fund to sell the Class B shares without a sales
charge being deducted at the time of purchase. The higher
distribution services fee incurred by Class B shares will cause
such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.

Contingent Deferred Sales Charge. Class B shares which are
redeemed within four years of purchase will be subject to a
contingent deferred sales charge at the rates set forth below
charged as a percentage of the dollar amount subject thereto. The
charge will be assessed on an amount equal to the lesser of the
cost of the shares being redeemed or their net asset value at the
time of redemption. Accordingly, no sales charge will be imposed
on increases in net asset value above the initial purchase price.
In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions.

To illustrate, assume that an investor purchased 100 Class B
shares at $10 per share (at a cost of $1,000) and in the second
year after purchase, the net asset value per share is $12 and,
during such time, the investor has acquired 10 additional Class B
shares upon dividend reinvestment. If at such time the investor
makes his or her first redemption of 50 Class B shares (proceeds
of $600), 10 Class B shares will not be subject to charge because
of dividend reinvestment. With respect to the remaining 40 Class
B shares, the charge is applied only to the original cost of $10
per share and not to the increase in net asset value of $2 per
share. Therefore, $400 of the $600 redemption proceeds will be
charged at a rate of 3.0% (the applicable rate in the second year
after purchase, as set forth below).

The amount of the contingent deferred sales charge, if any,
will vary depending on the number of years from the time of

<PAGE>

payment for the purchase of Class B shares until the time of
redemption of such shares.

Contingent Deferred Sales Charge as
Year Since Purchase a % of Dollar Amount Subject to Charge
___________________ ______________________________________

First 4.00%
Second 3.00%
Third 2.00%
Fourth 1.00%
Fifth None

In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed that the
redemption is first of any shares in the shareholder's Fund
account that are not subject to a contingent deferred sales
charge, second of Class B shares held for over four years and
third of Class A shares that are subject to a contingent deferred
sales charge held shortest during the one-year period during
which such shares are subject to the sales charge. When Class B
shares acquired in an exchange are redeemed, the applicable
contingent deferred sales charge and conversion schedules will be
the schedules that applied to Class B shares of the Alliance
Mutual Fund originally purchased by the shareholder at the time
of their purchase.

The contingent deferred sales charges on Class A and Class B
are waived on redemptions of shares (i) following the death or
disability, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), of a shareholder and (ii) to the extent
that the redemption represents a minimum required distribution
from an individual retirement account or other retirement plan to
a shareholder who has attained the age of 70-1/2.

Conversion Feature. Class B shares will automatically
convert to Class A shares on the tenth Fund business day in the
month following the month in which the eighth anniversary date of
the acceptance of the purchase order for the Class B shares
occurs and such shares will no longer be subject to a higher
distribution services fee. Such conversion will be on the basis
of the relative net asset values of the two classes, without the
imposition of any sales load, fee or other charge. The purpose
of the conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been outstanding
long enough for the Principal Underwriter to have been
compensated for distribution expenses incurred in the sale of
such shares. See "Shareholder Services -- Exchange Privilege."

For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and distributions

<PAGE>

paid in respect of Class B shares in a shareholder's account will
be considered to be held in a separate sub-account. Each time
any Class B shares in the shareholder's account (other than those
in the sub-account) convert to Class A, an equal pro-rata portion
of the Class B shares in the sub-account will also convert to
Class A.

The conversion of Class B shares to Class A shares is subject
to the continuing availability of an opinion of counsel to the
effect that (i) the assessment of the higher distribution
services fee and transfer agency costs with respect to Class B
shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Code, and (ii)
the conversion of Class B shares to Class A shares does not
constitute a taxable event under federal income tax law. The
conversion of Class B shares to Class A shares may be suspended
if such an opinion is no longer available at the time such
conversion is to occur. In that event, no further conversions of
Class B shares would occur, and shares might continue to be
subject to the higher distribution services fee for an indefinite
period which may extend beyond the period ending eight years
after the end of the calendar month in which the shareholder's
purchase order was accepted.

Asset-Bases Sales Charge Alternative--Class C Shares

Investors choosing the asset-based sales charge alternative
purchase Class C shares at the public offering price equal to the
net asset value per share of the Class C shares on the date of
purchase without the imposition of a sales charge either at the
time of purchase or upon redemption. Class C shares are sold
without an initial sales charge so that the Fund will receive the
full amount of the investor's purchase payment and without a
contingent deferred sales charge so that the investor will
receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee
enables the Fund to sell class C shares without either an initial
or contingent deferred sales charge. Class C shares do not
convert to any other class of shares of the Fund and incur higher
distribution services fees than Class A shares, and will thus
have a higher expense ratio and pay correspondingly lower
dividends than Class A shares.

REDEMPTION AND REPURCHASE OF SHARES

The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of Share--
How to Sell Shares."

<PAGE>

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 shares or Class B shares, there is no redemption charge.
Payment of the redemption price will be made within seven days
after the Fund's receipt of such tender for redemption.

The right of redemption may not be suspended or the date of
payment upon redemption postponed for more than seven days after
shares are tendered for redemption, except for any period during
which the New York Stock Exchange (the "Exchange") is closed
(other than customary weekend and holiday closings) or during
which the Securities and Exchange Commission determines that
trading thereon is restricted, or for any period during which an
emergency (as determined by the Securities and Exchange
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 Securities and Exchange Commission may by
order permit for the protection of security holders of the Fund.

Payment of the redemption price will be made in cash. The
value of a shareholder's shares on redemption or repurchase may
be more or less than the cost of such shares to the shareholder,
depending upon the market value of the Fund's portfolio
securities at the time of such redemption or repurchase.
Redemption proceeds on Class A shares and Class B shares will
reflect the deduction of the contingent deferred sales charge, if
any. Payment (either in cash or in portfolio securities)
received by a shareholder upon redemption or repurchase of his
shares, assuming the shares constitute capital assets in his
hands, will result in long-term or short-term capital gains (or
loss) depending upon the shareholder's holding period and basis
in respect of the shares redeemed.

To redeem shares of the Fund for which no share certificates
have been issued, the registered owner or owners should forward a
letter to the Fund containing a request for redemption. The
signature or signatures on the letter must be guaranteed by an
institution that is an "eligible guarantor" as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended.

Telephone Redemption By Electronic Funds Transfer. Requests
for redemption of shares for which no share certificates have
been issued can also be made by telephone at (800) 221-5672 by a

<PAGE>

shareholder who has completed the appropriate portion of the
Subscription Application or, in the case of an existing
shareholder, an "Autosell" application obtained from Alliance
Fund Services, Inc. A telephone redemption request must be for
at least $500 and may not exceed $100,000, and must be made
between 9:00 a.m. and 4:00 p.m. New York time on a Fund business
day as defined above. Proceeds of telephone redemptions will be
sent by Electronic Funds Transfer to a shareholder's designated
bank account at a bank selected by the shareholder that is a
member of the NACHA.

Telephone Redemption By Check. Except as noted below, each
Fund shareholder is eligible to request redemption, once in any
30-day period, of Fund shares by telephone at (800) 221-5672
before 4:00 p.m. New York time on a Fund business day in an
amount not exceeding $25,000. Proceeds of such redemptions are
remitted by check to the shareholder's address of record.
Telephone redemption by check is not available with respect to
shares (i) for which certificates have been issued, (ii) held in
nominee or "street name" accounts, (iii) purchased within 15
calendar days prior to the redemption request, (iv) held by a
shareholder who has changed his or her address of record within
the preceding 30 calendar days or (v) held in any retirement plan
account. A shareholder otherwise eligible for telephone
redemption by check may cancel the privilege by written
instruction to Alliance Fund Services, Inc., or by checking the
appropriate box on the Subscription Application found in the
Prospectus.

General. During periods of drastic economic or market
developments, such as the market break of October 1987, it is
possible that shareholders would have difficulty in reaching
Alliance Fund Services, Inc. by telephone (although no such
difficulty was apparent at any time in connection with the 1987
market break). If a shareholder were to experience such
difficulty, the shareholder should issue written instructions to
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 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

<PAGE>

may charge a commission for handling telephone requests for
redemptions.

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
share certificate surrendered to the Fund for redemption must be
signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or,
alternatively, a stock power signed in the same manner may be
attached to the 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.

Repurchase

The Fund may repurchase shares through the Principal
Underwriter or selected dealers or agents. The repurchase price
will be the net asset value next determined after the Principal
Underwriter receives the request (less the contingent deferred
sales charge, if any, with respect to the Class A shares and
Class B shares), except that requests placed through selected
dealers or agents before the close of regular trading on the
Exchange on any day will be executed at the net asset value
determined as of such close of regular trading on that day if
received by the Principal Underwriter prior to its close of
business on that day (normally 5:00 p.m. New York time). The
selected dealer or agent is responsible for transmitting the
request to the Principal Underwriter by 5:00 p.m. If the
selected dealer or agent fails to do so, the shareholder's right
to receive that day's closing price must be settled between the
shareholder and the dealer or agent. A shareholder may offer
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 shares and Class B
shares). Normally, if shares of the Fund are offered through a
selected dealer or agent, the repurchase is settled by the
shareholder as an ordinary transaction with or through the
selected dealer or agent, who may charge the shareholder for this
service. The repurchase of shares of the Fund as described above
is a voluntary service of the Fund and the Fund may suspend or
terminate this practice at any time.

<PAGE>

General

The Fund reserves the right to close out an account that
through redemption has remained below $200 for at least 60 days
after at least 30 days' written notice to the shareholder
subsequent to such period. No contingent deferred sales charge
will be deducted from the proceeds of this redemption. In the
case of a redemption or repurchase of shares of the Fund recently
purchased by check, redemption proceeds will not be made
available until the Fund is reasonably assured that the check has
cleared, which may take up to 15 calendar days following the
purchase date.

SHAREHOLDER SERVICES

The following information supplements that set forth in the
Fund's Prospectus under the heading "Purchase and Sale of Shares-
- -Shareholder Services." The shareholder services set forth below
are applicable to all three classes of shares of the Fund.

Automatic Investment Program

Investors may purchase shares of the Fund through an
automatic investment program utilizing "pre-authorized check"
drafts drawn on the investor's own bank account. Under such a
program, pre-authorized monthly drafts for a fixed amount (at
least $25) are used to purchase shares through the selected
dealer or selected agent designated by the investor at the public
offering price next determined after the Principal Underwriter
receives the proceeds from the investor's bank. Drafts may be
made in paper form or, if the investor's bank is a member of the
NACHA, in electronic form. If made in paper form, the draft is
normally made on the 20th day of each month, or the next business
day thereafter. If made in electronic form, drafts can be made
on or about a date each month selected by the shareholder.
Investors wishing to establish an automatic investment program in
connection with their initial investment should complete the
appropriate portion of the Subscription Application found in the
Prospectus. Current shareholders should contact Alliance Fund
Services, Inc. at the address or telephone numbers shown on the
cover of this Statement of Additional Information to establish an
automatic investment program.

Exchange Privilege

Class A shareholders of the Fund can exchange their Class A
shares for Class A shares of any other Alliance Mutual Fund that
offers Class A shares and for shares of Alliance World Income

<PAGE>

Trust, Inc. without the payment of any sales or service charges.
For purposes of applying any applicable contingent deferred sales
charge upon the newly acquired Class A shares, the period of time
the Class A shares surrendered in the exchange have been held is
added to the period of time the newly acquired shares have been
held. Prospectuses for the Alliance Mutual Funds may be obtained
by contacting Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information or by
telephone at (800) 227-4618 or, in Illinois, (800) 227-4170.

Class B shareholders of the Fund can exchange their Class B
shares ("original Class B shares") for Class B shares of any
other Alliance Mutual Fund that offers Class B shares ("new Class
B shares") without the payment of any contingent deferred sales
or service charges. For purposes of computing both the time
remaining before the new Class B shares convert to Class A shares
of that fund and the contingent deferred sales charge payable
upon disposition of the new Class B shares, the period of time
for which the original Class B shares have been held is added to
the period of time for which the new Class B shares have been
held. After an exchange, new Class B shares will automatically
convert into Class A shares in accordance with the conversion
schedule applicable to the Alliance Mutual Fund Class B shares
originally purchased for cash, and when redemption occurs, the
contingent deferred sales charge schedule applicable to the Class
B shares originally purchased for cash is applied.

Class C shareholders of the Fund can exchange their Class C
shares for Class C shares of any other Alliance Mutual Fund that
offers Class C shares.

All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the
Prospectus for the Alliance Mutual Fund whose shares are being
acquired. An exchange is effected through the redemption of the
shares tendered for exchange and the purchase of shares being
acquired at their respective net asset values as next determined
following receipt by the Alliance Mutual Fund whose shares are
being exchanged of (i) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or
(ii) a telephone request for such exchange in accordance with the
procedures set forth in the following paragraph. Exchanges
involving the redemption of shares recently purchased by check
will be permitted only after the Alliance Mutual Fund whose
shares have been tendered for exchange is reasonably assured that
the check has cleared, normally up to 15 calendar days following
the purchase date. Exchanges of shares of Alliance Mutual Funds
will generally result in the realization of a capital gain or
loss for Federal income tax purposes.

<PAGE>

Each Fund shareholder, and the shareholder's selected dealer
or agent, are authorized to make telephone requests for exchanges
unless Alliance Fund Services, Inc., receives written instruction
to the contrary from the shareholder, or the shareholder declines
the privilege by checking the appropriate box on the Subscription
Application found in the Prospectus. Such telephone requests
cannot be accepted with respect to shares then represented by
share certificates. Shares acquired pursuant to a telephone
request for exchange will be held under the same account
registration as the shares redeemed through such exchange.

Eligible shareholders desiring to make an exchange should
telephone Alliance Fund Services, Inc. with their account number
and other details of the exchange, at (800) 221-5672 between 9:00
a.m. and 4:00 p.m., New York time, on a Fund business day as
defined above. Telephone requests for exchange received before
4:00 p.m. New York time on a Fund business day will be processed
as of the close of business on that day. During periods of
drastic economic or market developments, such as the market break
of October 1987, it is possible that shareholders would have
difficulty in reaching Alliance Fund Services, Inc. by telephone
(although no such difficulty was apparent at any time in
connection with the 1987 market break). If a shareholder were to
experience such difficulty, the shareholder should issue written
instructions to Alliance Fund Services, Inc. at the address shown
on the cover of this Statement of Additional Information.

A shareholder may elect to initiate a monthly "Auto Exchange"
whereby a specified dollar amount's worth of his or her Fund
shares (minimum $25) is automatically exchanged for shares of
another Alliance Mutual Fund. Auto Exchange transactions
normally occur on the 12th day of each month, or the Fund
business day prior thereto.

Neither the Alliance Funds nor the Adviser, the Principal
Underwriter or Alliance Fund Services, Inc. will be responsible
for the authenticity of telephone requests for exchanges that the
Fund reasonably believes to be genuine. The Fund will employ
reasonable procedures in order to verify that telephone requests
for exchanges are genuine, including, among others, recording
such telephone instructions and causing written confirmations of
the resulting transactions to be sent to shareholders. If the
Fund did not employ such procedures, it could be liable for
losses arising from unauthorized or fraudulent telephone
instructions. Selected dealers or agents may charge a commission
for handling telephone requests for exchanges.

The exchange privilege is available only in states where
shares of the Alliance Mutual Funds being acquired may be legally
sold. Each Alliance Mutual Fund reserves the right, at any time
on 60 days' notice to its shareholders, to reject any order to

<PAGE>

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
"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.

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 shares and Class C
shares of the Fund held by such plan can be exchanged at the
plan's request, without any sales charge, for Class A shares of
such 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.

<PAGE>

403(b)(7) Retirement Plan. Certain tax-exempt organizations
and public educational institutions may sponsor retirements plans
under which an employee may agree that monies deducted from his
or her compensation (minimum $25 per pay period) may be
contributed by the employer to a custodial account established
for the employee under the plan.

The Alliance Plans Division of Frontier Trust Company, a
subsidiary of The Equitable Life Assurance Society of the United
States, which serves as custodian or trustee under the retirement
plan prototype forms available from the 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 or Class C Fund account, a Class A, Class B
or Class C account(s) with one or more other Alliance Mutual
Funds may direct that income dividends and/or capital gains paid
on his or her Class A, Class B or Class C Fund shares be
automatically reinvested, in any amount, without the payment of
any sales or service charges, in shares of the same class of such
other Alliance Mutual Fund(s). Further information can be
obtained by contacting Alliance Fund Services, Inc. at the
address or the "Literature" telephone number shown on the cover
of this Statement of Additional Information. Investors wishing
to establish a dividend direction plan in connection with their
initial investment should complete the appropriate section of the
Subscription Application found in the Prospectus. Current
shareholders should contact Alliance Fund Services, Inc. to
establish a dividend direction plan.

Systematic Withdrawal Plan

Any shareholder who owns or purchases shares of 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

<PAGE>

from the Fund automatically reinvested in additional shares of
the Fund.

Shares of the Fund owned by a participant in the Fund's
systematic withdrawal plan will be redeemed as necessary to meet
withdrawal payments and such withdrawal payments will be subject
to any taxes applicable to redemptions. 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
shareholder of Class A shares who is maintaining a systematic
withdrawal plan, such investment should normally be an amount
equivalent to three times the annual withdrawal or $5,000,
whichever is less.

For Class A shareholders, Class B shareholders that purchased
their Class B shares under a retirement plan and Class C
shareholders, payments under a systematic withdrawal plan may be
made by check or electronically via the Automated Clearing House
("ACH") network. Investors wishing to establish a systematic
withdrawal plan in conjunction with their initial investment in
shares of 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
the "Literature" telephone number shown on the cover of this
Statement of Additional Information.

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 accountants, Price Waterhouse LLP, as well
as a confirmation of each purchase and redemption. By contacting
his or her broker or Alliance Fund Services, Inc., a shareholder
can arrange for copies of his or her account statements to be
sent to another person.

<PAGE>

NET ASSET VALUE

Shares of the Fund will be priced at the net asset value per
share next determined after receipt of a purchase or redemption
order. The net asset value per share is computed in accordance
with the Fund's Articles of Incorporation and By-Laws as of the
next close of regular trading on the Exchange following receipt
of a purchase order or tender of a redemption order on each Fund
business day on which such an order is received and trading in
the types of securities in which the Fund invests might
materially affect the value of the Fund's shares and on such
other days as the Directors of the Fund deems necessary in order
to comply with Rule 22c-1 under the 1940 Act. The net asset
value per share is calculated by adding the market value of all
securities in the Fund's portfolio and other assets, subtracting
liabilities incurred or accrued and dividing by the total number
of the Fund's shares then outstanding.

For purposes of this computation, readily marketable
portfolio securities listed on the Exchange are valued, except as
indicated below, at the last sale price reflected on the
consolidated tape at the close of the Exchange on the business
day as of which such value is being determined. If there has
been no sale on such day, the securities are valued at the mean
of the closing bid and asked prices on such day. If no bid or
asked prices are quoted on such day, then the security is valued
by such method as the Directors of the Fund shall determine in
good faith to reflect its fair market value. Readily marketable
securities, including options, not listed on the Exchange but
listed on other national securities exchanges or admitted to
trading on the National Association of Securities Dealers
Automatic Quotations, Inc. ("NASDAQ") National List ("List") are
valued in like manner. Portfolio securities traded on more than
one national securities exchange are valued at the last sale
price on the business day as of which such value is being
determined as reflected on the tape at the close of the exchange
representing the principal market for such securities. Stock
index futures contracts will be valued in a like manner, except
that open futures contracts sales will be valued using the
closing settlement price or, in the absence of such a price, the
most recent quoted asked price.

Readily marketable securities including options, traded only
in the over-the-counter market, including listed securities whose
primary market is believed by the Adviser to be over-the-counter
but excluding those admitted to trading on the List, are valued
at the mean of the current bid and asked prices as reported by
NASDAQ or, in the case of securities not quoted by NASDAQ, the

<PAGE>

National Quotation Bureau or such other comparable sources as the
Directors of the Fund deem appropriate to reflect their fair
market value. United States Government obligations and other
debt instruments having sixty days or less remaining until
maturity are stated at amortized cost which approximates market
value. All other assets of the Fund, including restricted and
not readily marketable securities, are valued in such manner as
the Directors of the Fund in good faith deem appropriate to
reflect their fair market value.

The assets belonging to the Class A shares and the Class B
shares and the Class C shares will be invested together in a
single portfolio. The net asset value of each class will be
determined separately by subtracting the accrued expenses and
liabilities allocated to that class from the assets belonging to
that class pursuant to an order issued by the Securities and
Exchange Commission.

DIVIDENDS, DISTRIBUTIONS AND TAXES

United States Federal Income Taxation
Of Dividends and Distributions

General. The Fund qualified for the year ended June 30, 1994
and intends for each future year to qualify for tax treatment
with a "regulated investment company" under the Internal Revenue
code of 1986, as amended (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

<PAGE>

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 to write and purchase
options, futures and forward foreign currency 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.

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 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.

<PAGE>

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.

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.

<PAGE>

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
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 foreign taxes paid by
the Fund, (ii) treat 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 individual United States
shareholders may be subject to rules which limit or reduce their
availability to fully deduct 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.

<PAGE>

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
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.

<PAGE>

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
interest 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, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of 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 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. To the
extent that such distributions exceed such shareholder's basis,
each distribution will be treated as a gain from the sale of
shares.

Options, Futures and Forward Contracts. Certain listed
options, regulated futures contracts, and forward foreign
currency 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 other
than forward foreign currency contracts will be considered 60%
long-term and 40% short-term capital gain or loss. Gain or loss
realized by the Fund on forward foreign currency contracts 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 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.

The Treasury Department has the authority to issue
regulations that would permit or require the Fund either to
integrate a foreign currency hedging transaction with the

<PAGE>

investment that is hedged and treat the two as a single
transaction, or otherwise to treat the hedging transaction in a
manner that is consistent with the hedged investment. The
regulations issued under this authority generally should not
apply to the type of hedging transactions in which the Fund
intends to engage.

With respect to equity options or options traded over-the-
counter or on certain foreign exchanges, 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 shall 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
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, futures contract, forward foreign
currency contract, currency swaps, 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

<PAGE>

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
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.

<PAGE>

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, 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.

<PAGE>

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 Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
and subject to seeking best execution, the Fund may consider
sales of shares of the Fund or other investment companies managed
by the Adviser as a factor in the selection of brokers to execute
portfolio transactions for the Fund. During the fiscal year
ended June 30, 1994 transactions in portfolio securities of the
Fund amounting to $18,983,338, with associated brokerage
commissions of approximately $41,842, were allocated to persons
or firms supplying investment information to the Adviser.

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, an affiliate
of the Adviser, and with brokers which may have their
transactions cleared or settled, or both, by the Pershing
Division of Donaldson, Lufkin & Jenrette Securities Corporation,
for which Donaldson, Lufkin & Jenrette Securities Corporation 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 Donaldson, Lufkin &
Jenrette Securities Corporation is an affiliate of the Adviser.

Many of the Fund's portfolio transactions in equity
securities will occur on foreign stock exchanges. Transactions
on stock exchanges involve the payment of brokerage commissions.
On many foreign stock exchanges these commissions are fixed.
Securities traded in foreign over-the-counter markets (including
most fixed-income securities) are purchased from and sold to
dealers acting as principal. Over-the-counter transactions
generally do not involve the payment of a stated commission, but
the price usually includes an undisclosed commission or markup.
The prices of underwritten offerings, however, generally include
a stated underwriter's discount. The Adviser expects to effect
the bulk of its transactions in securities of companies based in
foreign countries through brokers, dealers or underwriters
located in such countries. U.S. Government or other U.S.
securities constituting permissible investments will be purchased
and sold through U.S. brokers, dealers or underwriters.

<PAGE>

During the fiscal year ended June 30, 1994, the Fund incurred
brokerage commissions amounting in the aggregate to $41,842.
During the fiscal year ended June 30, 1994, brokerage commissions
amounting in the aggregate to $-0- were paid to DLJ and brokerage
commissions amounting in the aggregate to $-0- were paid to
brokers utilizing the Pershing Division of DLJ. During the
fiscal year ended June 30, 1994, the brokerage commissions paid
to DLJ constituted -0-% of the Fund's aggregate brokerage
commissions and the brokerage commissions paid to brokers
utilizing the Pershing Division of DLJ constituted -0-% of the
Fund's aggregate brokerage commissions. During the fiscal year
ended June 30, 1994, of the Fund's aggregate dollar amount of
brokerage transactions involving the payment of commissions, -0-%
were effected through DLJ and -0-% were effected through brokers
utilizing the Pershing Division of DLJ.

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 Class Y 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 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. 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.

<PAGE>

An order has been received from the Securities and Exchange
Commission permitting the issuance and sale of the Class A,
Class B, Class C and Class Y shares representing interests in the
Fund. The issuance and sale of any other additional classes will
require an additional order from the Securities and Exchange
Commission. There is no assurance that such exemptive relief
would be granted.

At May 30, 1995, there were 1,364,041.163 Class A shares,
7,899,731.139 Class B shares and 21,681.746 Class C shares of
beneficial interest of the Fund outstanding. Set forth and
discussed below is certain information as to all persons who were
record holders or beneficial owners of 5% or more of any class of
the Fund's shares at May 31, 1994.

No. of % of
Name and Address Shares Class
________________ ______ _____

Merrill Lynch 789,817 55.34
4800 Deer Lake Drive East Class A
Jacksonville, FL 32246

5,766,187 69.81
Class B

Custodian

Brown Brothers Harriman & Co. ("Brown Brothers"), 40 Water
Street, Boston, Massachusetts 02109, will act as the Fund's
custodian. The Fund's securities and cash are held under a
custodian agreement by Brown Brothers. 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

<PAGE>

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. Alliance Fund
Distributors, Inc. is not obligated to sell any specific amount
of shares and will purchase shares for resale only against orders
for shares. Under the Agreement between the Fund and the
Principal Underwriter, the Fund has agreed to indemnify the
Principal Underwriter, in the absence of its willful misfeasance,
bad faith, gross negligence or reckless disregard of its
obligations thereunder, against certain civil liabilities,
including liabilities under the Securities Act of 1933, as
amended.

Counsel

Legal matters in connection with the issuance of the shares
offered hereby are passed upon by Messrs. Seward & Kissel, One
Battery Park Plaza, New York, New York 10004. Seward & Kissel
has relied upon the opinion of Venable, Baetjer and Howard,
Baltimore Maryland, for matters relating to Maryland law.

Independent Accountants

Price Waterhouse LLP, 1177 Avenue of the Americas, New York,
New York 10036, has been appointed as independent accountants for
the Fund and has registered as a Registered Limited Liability
Partnership under the laws of the State of Delaware. All
references to Price Waterhouse in the Prospectus and Statement of
Additional Information are to Price Waterhouse LLP.

Total Return Quotations

From time to time the Fund advertises its "total return."
Computed separately for each class, the Fund's "total return" is
its average annual compounded total return for recent 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

<PAGE>

been paid. The Fund will include performance data for Class A,
Class B and Class C shares in any advertisement or information
including performance data of the Fund.

The Fund's average annual compounded total return for Class A
and Class B shares was (4.41%) and (4.58%) for the period from
June 2, 1994 (commencement of distribution) through December 31,
1994.

The Fund's total return is not fixed and will fluctuate in
response to prevailing market conditions or as a function of the
type and quality of the securities in the Fund's portfolio and
its expenses. Total return information is useful in reviewing
the Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments
which pay a fixed yield for a stated period of time. An
investor's principal invested in the Fund is not fixed and will
fluctuate in response to prevailing market conditions.

A $10,000 investment in Class A shares of the Fund would have
grown to $10,120 over the eleven months since inception in June
1994 through May 24, 1995, giving the investor a 1.20% cumulative
total return. Total returns of Class B shares and Class C shares
would be lower because of higher expenses. As of May 24, 1995,
SEC cumulative total returns (at maximum offering price) since
the inception of the Fund were -3.07% with respect to Class A
shares and -4.07% with respect to Class B shares. As of May 24,
1995, cumulative total returns (at net asset value) since the
fund's inception were 1.20% with respect to Class A shares and
0.50% with respect to Class B shares. No Class C shares were
outstanding during the period ended February 7, 1995. The
preceding information is not an indication of future Fund
composition or performance. SEC average annual total returns for
the periods shown reflect deduction of the maximum front-end
sales charge for Class A Shares or applicable contingent deferred
sales charge for Class B Shares. The performance figures for
cumulative total return do not reflect sales charges which would
reduce total return figures. The investment return and principal
value of the Fund will fluctuate so that Shares, when redeemed,
may be worth more or less than their original cost.

Advertisements quoting performance ratings of the Fund as
measured by financial publications or by independent
organizations such as Lipper Analytical Services, Inc. ("Lipper")
and advertisements presenting the historical record of payments
of income dividends by the Fund may also from time to time be
sent to investors or placed in newspapers, 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.

<PAGE>

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.

79
00250157.BA3

<PAGE>

PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS & OTHER INVESTMENTS--76.3%
ARGENTINA--2.8%
Central Costanera, S.A.............. 101,000 $ 267,836
Central Puerto, S.A.
(ADS)(b).......................... 5,000 122,500
Class B ............................ 13,000 64,346
Dycasa "B".......................... 46,285 187,445
Metrogas, S.A. (ADR)................ 22,700 229,838
Naviera Perez Companc, S.A.
CIA. Class B*..................... 115,000 473,776
Telecom Argentina, S.A.
(ADR) Class B .................... 101,000 494,876
Telefonica de Argentina, S.A.
Class B .......................... 3,900 392,205
Transportadora de Gas del
Sur, S.A. Class B*................ 56,000 105,274
YPF, S.A. Class D (ADR)........... 14,300 305,663
----------
2,643,759
----------
AUSTRALIA--2.5%
Commonwealth
Bank of Australia................. 48,000 295,835
Commonwealth Serum
Lab, Ltd.*........................ 428,000 802,973
Tab Corporation
Holdings, Ltd..................... 730,000 1,332,772
----------
2,431,580
----------
AUSTRIA--2.6%
Austria Mikro Systeme
International AG.................. 9,755 735,396
OMV AG*............................. 7,000 593,187
VA Technologie AG*.................. 11,800 1,188,246
----------
2,516,829
----------
BRAZIL--3.0%
Celesc PN........................... 170,000 160,577
Centrais Electricas Brasileiras
(Eletrobras), S.A................. 1,034,739 365,706
Companhia Paulista de Forca
e Luz*............................ 3,600,000 319,149
Compania Siderurgica de
Tubarao-CST (ADR)(b).............. 1,500 40,313
Companhia Siderurgica
Nacional CSN...................... 10,000,000 341,017
Companhia Vale
de Rio Doce PN.................... 4,000,000 765,958
Emaq Verolme Estal PN............... 750,000 6,959
Light Servicios de
Electricidad, S.A................. 2,000,000 $ 723,405
Telecomunicacoes
de Sao Paulo, S.A.
ON-Telep............................ 870,000 142,944
----------
2,866,028
----------
CANADA--1.2%
Alberta Energy Co., Ltd............. 29,000 372,127
Cameco Corp......................... 12,000 266,263
Nova Scotia Power, Inc.............. 30,000 240,598
Petro Canada........................ 36,000 291,926
----------
1,170,914
----------
CHEC REPUBLIC--0.4%
Ceske Energeticke
Zavody (GDS)(b)*.................. 2,000 96,220
Elektrarny Opatovice................ 228 32,559
Prague Brewery A.S.................. 275 28,888
Tabak A.S.*......................... 200 20,758
Vodni Stavby Praha A.S.............. 3,400 170,609
----------
349,034
----------
CHILE--0.6%
Chilgener, S.A. (ADS)............... 1,700 41,863
Chilquinta, S.A.
(ADS)(b).......................... 10,000 180,000
Compania de Telefonos
de Chile (ADR).................... 2,000 157,500
Distribuidora Chilectra
Metropolitan S.A. (ADR)........... 3,000 150,375
----------
529,738
----------
DENMARK--1.2%
Copenhagen Airport.................. 8,500 461,050
Tele Danmark, A/S.
Series B*......................... 13,000 660,265
----------
1,121,315
----------
FINLAND--2.6%
Kemira OY........................... 69,000 495,220
Outokumpu OY Series A............... 34,000 624,408
Rautaruukki OY Series K*............ 78,000 625,676
Valmet Corp. Series A*.............. 40,000 760,775
----------
2,506,079
----------
FRANCE--6.5%
Allevard Industries................. 2,000 161,019
Assurance Generale
de France......................... 15,400 611,272
</TABLE>

6
<PAGE>

ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Banque Nationale de Paris........... 12,068 $ 554,708
Credit Local de France.............. 4,000 286,089
Eramet.............................. 14,400 930,163
Renault, S.A........................ 20,000 660,925
Rhone Poulenc, S.A.................. 22,000 510,354
Roussel-Uclaf....................... 5,000 598,202
Societe Nationale Elf
Aquitaine........................... 10,579 744,550
Total, S.A. Class B................. 4,500 261,355
Ugine, S.A.......................... 12,300 863,602
----------
6,182,239
----------
GERMANY--3.5%
Bankgesellschaft Berlin............. 1,400 324,964
DEPFA Bank.......................... 750 366,374
Deutsche Lufthansa A.G.*............ 7,750 967,718
I.V.G............................... 1,800 603,426
Viag A.G............................ 3,500 1,084,115
----------
3,346,597
----------
GHANA--1.2%
Ashanti Goldfields Co.,
Ltd. (ADR)(b)*.................... 53,000 1,144,800
----------
GREECE--0.2%
Commercial Bank of Greece........... 2,000 67,818
Hellenic Sugar...................... 9,000 143,789
----------
211,607
----------
HONG KONG--3.3%
Beiren Printing
Machinery, Ltd.................... 64,000 17,784
Champion Technology................. 674,554 140,351
Citic Pacific, Ltd.................. 296,000 713,461
Consolidated Electric
Power............................. 203,000 446,009
Harbin Power Equipment
Co. Ltd........................... 250,000 84,007
Hopewell Holdings................... 1,033,000 854,437
Hutchison Whampoa, Ltd.............. 46,000 186,081
Yizheng Chemical
Fibre Co.*........................ 1,960,000 728,271
----------
3,170,401
----------

HUNGARY--0.7%
Danubius Hotel and Spa.............. 12,450 $ 114,993
Gideon Richter G.I.C................ 12,000 186,001
Gideon Richter
Vegyeszeti Gyar................... 6,650 101,096
Magyar Olaj-es
Gazipare Reszvenytar.............. 525 58,931
Pannonplast Plastic
Industries........................ 6,900 76,232
Primagaz Hungaria Co................ 1,155 28,686
Zalakeremia......................... 6,300 116,934
----------
682,873
----------
INDONESIA--0.9%
PT Indosat*......................... 237,000 847,776
----------
IRELAND--0.5%
Greencore Plc....................... 38,000 235,359
Irish Life Plc...................... 95,000 279,488
----------
514,847
----------
ISRAEL--0.3%
Bank Hapoalim....................... 53,500 77,484
Bank Leumi.......................... 70,371 80,928
Bezeq, Ltd.......................... 86,500 151,077
Tadiran, Ltd........................ 1,050 21,919
----------
331,408
----------
ITALY--2.9%
I.N.A............................... 880,000 1,169,384
Instituto Mobiliare
Italiano S.P.A.................... 140,000 860,697
Telecom Italia S.p.A................ 120,000 312,263
Telecom Italia S.p.A.-Di Risp*...... 225,000 448,832
----------
2,791,176
----------
JAPAN--2.2%
East Japan Railway Co............... 203 1,014,490
Nippon Telegraph &
Telephone Corp...................... 121 1,069,754
----------
2,084,244
----------
JORDAN--0.2%
Arab Potash Co.(a).................. 11,100 151,363
----------
</TABLE>

7
<PAGE>

PORTFOLIO OF INVESTMENTS (cont.) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
KAZAKHSTAN--0.4%
Bakyrchik Gold.............. 105,450 $ 404,256
----------
MALAYSIA--1.3%
Aokam Perdana Berhad........ 72,000 445,506
Ekran Berhad................ 85,000 251,322
Telekom Malaysia............ 26,000 176,150
Westmont Berhad............. 51,000 317,564
----------
1,190,542
----------
MEXICO--2.7%
Banpais, S.A. (ADR)*........ 22,000 77,000
Consorcio Grupo Dina "A",
S.A. de C.V. (ADR)........ 4,000 37,500
Consorcio Grupo Dina "L",
S.A. de C.V. (ADR)........ 4,420 33,150
S.A. de C.V. ............. 8,000 14,472
GBM Atlantico (ADS) (b)..... 8,000 86,000
Grupo Financiero Banamex
Accival, S.A. de C.V.
Class C ................... 50,000 143,718
Grupo Financiero Bancomer,
S.A. de C.V.
Class B................... 170,000 80,302
Class C................... 360,000 211,296
Grupo Financiero Bancrecer,
S.A. de C.V. Class B...... 136,014 114,826
Grupo Financiero Banorte, S.A.
de C.V. Class B........... 141,000 385,448
Grupo Mexicano de
Desarrollo, S.A.
de C.V. (ADS)............. 21,482 190,653
Class B................... 29,000 221,125
Grupo Profesional Planeacion
Y Proyectos, S.A. Class B. 9,000 85,387
Grupo Tribasa, S.A.
de C.V. (ADR)*............ 16,000 266,000
Telefonos de Mexico,
S.A. (ADR) Class L ....... 15,900 651,900
----------
2,598,777
----------
NETHERLANDS--4.4%
D.S.M. NV................... 9,000 715,049
E.V.C. International N.V. .. 19,000 841,800
KLM Royal Dutch Air
Lines N.V. ............... 26,000 638,134
Royal PTT Nederland
N.V.*..................... 60,000 2,022,256
----------
4,217,239
----------
NEW ZEALAND--1.7%
Air New Zealand, Ltd. ...... 88,000 $ 276,033
Energy Direct Corp., Ltd. .. 268,000 274,496
Infrastructure and Utilities
of New Zealand............ 100,846 60,683
Ports of Aukland............ 208,000 299,590
Telecom Corporation of
New Zealand, Ltd. ........ 182,000 594,187
Trustpower, Ltd. ........... 216,000 153,482
----------
1,658,471
----------
NORWAY--0.8%
Christiana Bank OG
Kreditkasse............... 180,000 369,904
Den Norske Bank............. 145,000 388,015
----------
757,919
----------
PAKISTAN--1.0%
Hub Power Co. (GDS)......... 41,500 430,770
Pakistan Telecom (GDR)...... 3,654 495,117
----------
925,887
----------
PEOPLES REPUBLIC
OF CHINA--0.2%
Maanshan Iron & Steel Co.,
Ltd. Series H............. 622,000 131,031
Tsingtao Brewery
Co., Ltd. ................ 123,000 67,560
----------
198,591
----------
PERU--1.4%
Explosivos, S.A. Class C.... 55,000 322,491
Norte Cimentos Pacasmayo.... 45,000 174,187
Peru Telefonos.............. 693,830 813,654
----------
1,310,332
----------
PHILIPPINES--2.3%
First Philippine Holdings Corp.
Series B.................. 151,333 606,440
International Container
Terminal Services, Inc.*... 366,000 297,803
Manila Electric Co. Class B. 82,000 1,117,575
Philippine Long Distance
Telephone Co. (ADR)....... 3,000 165,375
Philippine National Bank.... 1,404 19,706
----------
2,206,899
----------
</TABLE>

8
<PAGE>

ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMPANY SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
POLAND--0.7%
Bank Rozwoju Eksportu....... 100,000 $ 151,827
Bank Slaski................. 6,700 31,067
Elektrim, S.A.*............. 51,300 229,451
Polifarb Cieszyn............ 148,750 67,141
Polifarb Wroclaw............ 311,000 48,494
Vistula, S.A.*.............. 122,000 60,574
Wielkpolski Bank
Kredytowy................... 420,200 115,524
----------
704,078
----------
PORTUGAL--0.8%
Banco Portugues
do Atlantico.............. 16,000 202,365
Mundial Confianca........... 18,000 294,192
Televisao Independiente(a).. 43,000 308,148
----------
804,705
----------
RUSSIA--0.3%
Sun Brewing (GDR)(b)........ 24,000 300,000
----------
SINGAPORE--3.1%
Developement Bank of
Singapore, Ltd............ 91,000 936,535
Keppel Corp., Ltd.*......... 85,000 723,156
Singapore Airlines, Ltd..... 23,000 211,457
Singapore Press
Hldgs., Ltd............... 36,000 654,545
Van Der Horst, Ltd.*........ 139,000 427,253
----------
2,952,946
----------
SOUTH AFRICA--0.6%
Iscor....................... 503,000 578,104
----------
SOUTH KOREA--0.5%
Yukong, Ltd. (GDR).......... 28,565 435,616
----------
SPAIN--2.0%
Argentaria Bancaria
de Espana................. 12,000 425,242
Endesa...................... 14,500 590,385
Repsol, S.A................. 32,500 881,362
----------
1,896,989
----------
SWEDEN--3.0%
AssiDoman A.B.*............. 35,000 833,718
Celsius Ondustries Class B.. 18,000 399,700
Pharmacia Series B ......... 74,000 1,180,124
Stadshypotek................ 34,606 454,081
----------
2,867,623
----------
THAILAND--1.7%
Electricity Generating
Public of Thailand........ 60,000 $ 105,159
Industrial Finance
Corporation
of Thailand (The)*
Foreign................... 459,000 982,723
Local..................... 77,000 164,090
Thai Airways
International, Ltd........ 168,000 327,902
----------
1,579,874
----------
TURKEY--1.0%
Eregli Demir Ve Celic
Fabrikalari T.A.S......... 968,750 87,614
Petrol Ofisi A.S............ 367,000 130,395
Tofas Turk Otomobile
Fabrikasi................. 190,000 162,015
(ADR)..................... 20,000 85,000
Tupras Turkiye Petrol
Rafinerileri A.S.......... 90,000 33,720
Turk Hava Yollari A.O....... 1,435,000 300,348
Usas Class B ............... 17,000 116,408
----------
915,500
----------
UNITED KINGDOM--7.1%
British Airways Plc......... 184,000 1,027,853
British Gas Plc............. 160,000 786,131
British Steel............... 110,000 264,639
East Midlands Electric...... 12,320 162,126
London Electricity.......... 18,500 215,952
National Power Plc.......... 60,000 459,098
Northern Ireland
Electricity Plc............ 130,000 740,439
Northwest Water............. 35,500 301,073
Norweb Plc. ................ 25,000 336,421
RJB Mining.................. 179,152 933,492
Scottish Hydro Electric..... 66,000 337,704
Scottish Power Corp......... 50,000 273,831
Southern Water Plc.......... 31,000 280,856
South Western Electricity... 18,500 255,320
Wessex Water Plc............ 78,336 366,502
----------
6,741,437
----------
Total Common Stocks
(cost $77,461,499)........ 72,840,392
----------
</TABLE>

9
<PAGE>

COMPANY SHARES OR VALUE
PRINCIPAL
AMOUNT
(000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Gerais-Usiminas
(ADS)*(b)................. 33,800 $ 447,850
-----------
2,942,472
-----------
RUSSIA--1.1%
RNGS Holdings, Ltd.
8.00%, redeemable
pfd. (a).................... 3,200 1,072,000
-----------
Total Preferred Stocks
(cost $3,644,698)........... 4,014,472
-----------
CONVERTIBLE BONDS--0.4%
COLUMBIA--0.2%
Banco de Columbia
5.20%, 2/01/99.............. $150,000 141,750
-----------
PERU--0.2%
International Financial
Holdings, Inc.
6.50%, 8/01/99.............. 150,000 172,500
-----------
Total Convertible Bonds
(cost $304,500)............. 314,250
-----------
TIME DEPOSIT--17.4%
Credit Suisse
5.75%, 1/03/95
(cost $16,600,000).......... 16,600 16,600,000
-----------
TOTAL INVESTMENTS--98.3%
(cost $98,010,697).......... 93,769,114
Other assets less liabilities--1.7% 1,637,783
-----------
NET ASSETS--100%.................... $95,406,897
===========
</TABLE>
- --------------------------------------------------------------------------------
* Non-income producing security.

(a) Illiquid Security, valued at fair market value. (See Notes A & G).

(b) Securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
December 31, 1994 these securities amounted to $2,417,683 or 2.5% of net
assets.

Glossary of Terms:
ADR--American depository receipt.
ADS--American depository security.
GDR--Global depository receipt.
GDS--Global depository security.

See notes to financial statements.

10
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, at value (cost $98,010,697)............................ $ 93,769,114
Cash at value (cost $1,860,999)................................................... 1,866,016
Receivable for investment securities sold......................................... 18,449,483
Receivable for capital stock sold................................................. 868,824
Dividends and interest receivable................................................. 96,779
Deferred organization expense and other assets.................................... 195,433
------------
Total assets...................................................................... 115,245,649
------------
LIABILITIES
Payable for investment securities purchased....................................... 19,195,072
Payable for capital stock redeemed................................................ 275,354
Unrealized depreciation of forward exchange currency contracts.................... 83,408
Advisory fee payable.............................................................. 79,882
Distribution fee payable.......................................................... 71,448
Accrued expenses.................................................................. 133,588
------------
Total liabilities................................................................. 19,838,752
------------
NET ASSETS........................................................................... $ 95,406,897
============

COMPOSITION OF NET ASSETS
Capital stock, at par............................................................. $ 95,891
Additional paid-in capital........................................................ 100,404,110
Undistributed net investment income............................................... (200,376)
Net realized loss on investments and foreign currency transactions................ (568,944)
Net unrealized depreciation of investments and foreign currency denominated
assets and liabilities........................................................... (4,323,784)
------------
$ 95,406,897
============
CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($14,226,343 / 1,425,163 shares of capital stock issued and
outstanding)..................................................................... $ 9.98
Sales charge--4.25% of public offering price...................................... .44
------------
Maximum offering price............................................................ $10.42
============
CLASS B SHARES
Net asset value and offering price per share
($81,180,554 / 8,163,975 shares of capital stock issued and
outstanding)..................................................................... $ 9.94
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.

11
<PAGE>

STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994
(UNAUDITED) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $45,599)............... $374,120
Interest........................................................... 363,168 $ 737,288
--------
EXPENSES
Advisory fee....................................................... 323,631
Distribution fee-Class A........................................... 15,605
Distribution fee-Class B........................................... 271,615
Audit and Legal.................................................... 72,132
Administrative..................................................... 59,116
Custodian.......................................................... 52,050
Transfer Agency.................................................... 50,822
Registration....................................................... 28,280
Printing........................................................... 27,077
Amortization of organization expenses.............................. 21,270
Directors' fees.................................................... 10,572
Miscellaneous...................................................... 14,152
--------
Total expenses..................................................... 946,322
-----------
Net investment loss................................................ (209,034)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized loss on investments................................... (498,426)
Net realized gain on foreign currency transactions................. 24,735
Net change in unrealized depreciation of:
Investments...................................................... (3,663,435)
Foreign currency denominated assets and liabilities.............. (75,842)
-----------
Net loss on investments and foreign currency transactions.......... (4,212,968)
-----------
NET DECREASE IN NET ASSETS FROM OPERATIONS............................ $(4,422,002)
===========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 2, 1994*
DECEMBER 31, 1994 TO
(UNAUDITED) JUNE 30, 1994
----------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income (loss)............................................. $ (209,034) $ 8,658
Net realized loss on investments and foreign currency transactions....... (473,691) (95,253)
Net unrealized depreciation of investments and foreign currency
denominated assets and liabilities....................................... (3,739,277) (584,507)
----------- -----------
Net decrease in net assets from operations............................... (4,422,002) (671,102)
CAPITAL STOCK TRANSACTIONS
Net increase............................................................. 71,979,684 28,419,317
----------- -----------
Total increase........................................................... 67,557,682 27,748,215
NET ASSETS
Beginning of year........................................................ 27,849,215 101,000
----------- -----------
End of period (including undistributed net investment income
of $8,658, for the period ended June 30, 1994)........................... $95,406,897 $27,849,215
=========== ===========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.

See notes to financial statements.

12
<PAGE>

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 (UNAUDITED) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

NOTE A: SIGNIFICANT ACCOUNTING POLICIES

Alliance Worldwide Privatization Fund, Inc. (the "Fund"), organized as a
Maryland corporation on March 16, 1994, is registered under the Investment
Company Act of 1940 as a non-diversified, open-end management investment
company. The Fund had no operations other than the sale to Alliance Capital
Management L.P. (the "Adviser") of 10,000 shares of Class A common stock and 100
shares of Class B common stock for the aggregate amount of $101,000 on April 6,
1994. Class A and B shares commenced operations on June 2, 1994. The Fund
offers both Class A and Class B shares. Class A shares are sold with an initial
sales charge of up to 4.25%. Class B shares are sold with a contingent deferred
sales charge which declines from 4.00% to zero depending on the period of time
the shares are held. Class B shares will automatically convert to Class A shares
eight years after the end of the calendar month of purchase. Both classes of
shares have identical voting, dividend, liquidation and other rights, except
that Class A bears different distribution expenses than Class B and each class
has exclusive voting rights with respect to its distribution plan. The following
is a summary of significant accounting policies followed by the Fund.

1. SECURITY VALUATION

Portfolio securities traded on a national securities exchange for which
market quotations are readily available are valued at the last quoted sales
price on that exchange prior to the time when assets are valued. Securities
listed or traded on certain foreign exchanges whose operations are similar to
the U.S. over-the-counter market are valued at the price within the limits of
the latest available current bid and asked price deemed best to reflect fair
value. Securities which mature in 60 days or less are valued at amortized
cost which approximates market value. Restricted securities are valued at
fair value as determined by the Board of Directors. In determining fair
value, consideration is given to cost, operating and other financial data.

2. ORGANIZATION EXPENSES

Organization expenses of approximately $220,000 have been deferred and are
being amortized on a straight-line basis through June, 1999.

3. CURRENCY TRANSLATION

Assets and liabilities denominated in foreign currencies and commitments
under forward exchange currency contracts are translated into U.S. dollars at
the mean of the quoted bid and asked price of such currencies against the
U.S. dollar. Purchases and sales of portfolio securities are translated at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated at rates of exchange prevailing when
accrued.

Net realized gain on foreign currency transactions of $24,735 represents
foreign exchange gains and losses from the holding of foreign currencies,
exchange gains or losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of dividends,
interest and foreign taxes receivable recorded on the Fund's books and the
U.S. dollar equivalent of the amounts actually received or paid. Net currency
gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation of investments and foreign currency denominated
assets and liabilities.

4. TAXES

It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.

5. INVESTMENT INCOME AND SECURITY TRANSACTIONS

Dividend income is recorded on the ex-dividend date. Interest income is
accrued daily. Security transactions are accounted for on the date securities
are purchased

13
<PAGE>

NOTES TO FINANCIAL STATEMENTS (cont.) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

or sold. Security gains and losses are determined on the identified cost basis.
The Fund accretes discounts on short-term securities as adjustments to interest
income.

6. DIVIDENDS AND DISTRIBUTIONS

Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with tax regulations, which may differ from generally accepted
accounting principles.

7. CHANGE IN ACCOUNTING FOR DISTRIBUTION IN SHAREHOLDERS

Effective June 30, 1994, the Fund adopted Statement of Position 93-2
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. As
a result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statements
amounts and distributions determined in accordance with income tax
regulations.

- --------------------------------------------------------------------------------

NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Under an investment advisory agreement, the Fund pays its Adviser, Alliance
Capital Management, L.P., (the "Adviser"), a fee at an annual rate of 1% of
the Fund's average daily net assets. Such fee is accrued daily and paid
monthly. The Adviser has agreed, under the terms of the advisory agreement,
to reimburse the Fund to the extent that its aggregate expenses (exclusive of
interest, taxes, brokerage, distribution fee, extraordinary expenses and
certain other expenses) exceed the limits prescribed by any state in which
the Fund's shares are qualified for sale. The Fund believes that the most
restrictive expense ratio limitation currently imposed by any state is 2.5%
of the first $30 million of its average daily net assets, 2% of the next $70
million of its average daily net assets and 1.5% of its average daily net
assets in excess of $100 million. No such reimbursement was required for the
six months ended December 31, 1994.

The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary
of the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund.

Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $22,576 from the sale of Class A shares and
$39,658 in contingent deferred sales charges imposed upon redemptions by
shareholders of Class B for the six months ended December 31, 1994.

Brokerage commissions paid on securities transactions for the six months
ended December 31, 1994, amounted to $196,215, none of which was paid to
brokers utilizing the services of the Pershing Division of Donaldson, Lufkin
& Jenrette Securities Corp., an affiliate of the Adviser.

- --------------------------------------------------------------------------------

NOTE C: DISTRIBUTION SERVICES AGREEMENT

The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays a distribution fee to the Distributor at an annual
rate of up to .30 of 1% of the Fund's average daily net assets attributable
to Class A shares and 1% of the average daily net assets attributable to the
Class B shares. The fees are accrued daily and paid monthly. The Agreement
provides that the Distributor will use such payments in their entirety for
distribution assistance and promotional activities. The Distributor has
incurred expenses in excess of the distribution costs reimbursed by the Fund
in the amount of $3,669,683 for Class B shares; such costs may be recovered
from the Fund in future periods so long as the Agreement is in effect. In
accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
current fiscal year for Class A shares. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of the Fund's
shares.

14
<PAGE>

ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

NOTE D: INVESTMENT TRANSACTIONS

Purchases and sales of investment securities (excluding short-term
investments) aggregated $70,747,896 and $7,822,112, respectively, for the six
months ended December 31, 1994. There were no purchases or sales of U.S.
Government and government agency obligations for the six months ended
December 31, 1994. At December 31, 1994, the cost of securities for federal
income tax purposes was the same as the cost for financial reporting
purposes.

Accordingly, gross unrealized appreciation of investments was $3,458,270 and
gross unrealized depreciation of investments was $7,699,857, resulting in net
unrealized depreciation of $4,241,583. Foreign currency losses incurred after
June 2, 1994, within the taxable year are deemed to arise on the first
business day of the Fund's next taxable year. In accordance with the Internal
Revenue Code, the Fund incurred and will elect to defer a net currency loss
of $95,253 during such period in fiscal 1994.

- --------------------------------------------------------------------------------

NOTE E: CAPITAL STOCK

There are 12,000,000,000 shares of $0.001 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Class D
shares. Currently only Class A and Class B shares are outstanding.

Each class consists of 3,000,000,000 authorized shares.

Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
SHARES AMOUNT
---------------------------------- ------------------------------------
SIX MONTHS ENDED JUNE 2, 1994* SIX MONTHS ENDED JUNE 2, 1994*
DECEMBER 31, 1994 TO DECEMBER 31, 1994 TO
(UNAUDITED) JUNE 30, 1994 (UNAUDITED) JUNE 30, 1994
----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold................ 1,029,107 505,529 $10,991,172 $ 5,040,282
Shares redeemed............ (115,936) (3,537) (1,217,160) (35,194)
--------- --------- ----------- -----------
Net increase............... 913,171 501,992 $ 9,774,012 $ 5,005,088
========= ========= =========== ===========
CLASS B
Shares sold................ 6,150,113 2,435,492 $65,697,590 $24,287,396
Shares redeemed............ (332,957) (88,773) (3,491,918) (873,167)
--------- --------- ----------- -----------
Net increase............... 5,817,156 2,346,719 $62,205,672 $23,414,229
========= ========= =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Concentration of Risk
Investing in securities of foreign companies involves special risks which
include revaluation of currency and future adverse political and economic
developments. Moreover, securities of many foreign companies and their markets
may be less liquid and their prices more volatile than those of comparable U.S.
companies. The Fund invests in securities issued by enterprises that are
undergoing, or that have undergone, privatization. Privatization is a process
through which the ownership and control of companies or assets changes in whole
or in part from the public sector to the private sector. Through privatization a
government or state divests or transfers all or a portion of its interest in a
state enterprise to some form of private ownership. Therefore, the Fund is
susceptible to the government renationalization of these enterprises and
economic factors adversely affecting the economics of these emerging market
countries. In addition, these securities created through privatization may be
less liquid and subject to greater volatility than securities of more developed
countries.

15
<PAGE>

NOTES TO FINANCIAL STATEMENTS (cont.) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

NOTE G: ILLIQUID SECURITIES

<TABLE>
<CAPTION>
DATE
SECURITY ACQUIRED U.S. $ COST
- -------- -------- -----------
<S> <C> <C>
Arab Potash Co................................ 10/05/94 96,508
RNGS Holdings, Ltd. 8% pfd.................... 10/18/94 997,500
Televisao Independiente....................... 8/16/94 323,668
</TABLE>

The securities shown above are illiquid and have been valued at fair value in
accordance with the procedures described in Note A. The value of these
securities at December 31, 1994 was $1,531,511 representing 1.6% of net assets.

- --------------------------------------------------------------------------------

NOTE H: SUBSEQUENT EVENT

On April 19, 1994 the creation of a third class of shares, Class C shares, was
approved by the Board of Directors. Class C shares commenced operations on
January 31, 1995.

- --------------------------------------------------------------------------------

* Commencement of operations.

16
<PAGE>

ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

At December 31, 1994, the Fund had outstanding forward exchange currency
contracts as follows:

<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY BUY CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------ --------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Austrian Schilling,
expiring 1/03/95....................... 12,102 $1,105,294 $1,109,927 $ 4,633
Deutsche Marks,
expiring 1/03/95....................... 2,497 1,606,071 1,611,616 5,545
Danish Krone,
expiring 1/03/95....................... 3,675 603,895 604,001 106
Finnish Markka,
expiring 1/03/95....................... 6,276 1,326,770 1,324,731 (2,039)
French Franc,
expiring, 1/03/95...................... 12,855 2,402,108 2,406,830 4,722
Italian Lira,
expiring 1/03/95....................... 3,068,975 1,888,600 1,892,432 3,832
Dutch Guilder,
expiring 1/03/95....................... 3,846 2,206,906 2,215,673 8,767
Spanish Peseta,
expiring 1/03/95....................... 130,630 988,124 992,307 4,183
Swedish Krone,
expiring 1/03/95....................... 14,312 1,921,066 1,926,089 5,023

<CAPTION>
FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
<S> <C> <C> <C> <C>
Austrian Schilling,
expiring 1/03/95-2/03/95............... 24,205 2,209,644 2,217,506 (7,862)
British Pounds,
expiring 1/30/95....................... 1,910 2,949,994 2,987,544 (37,550)
Danish Krona,
expiring 1/03/95-2/03/95............... 7,349 1,203,596 1,207,878 (4,282)
Deutsche Marks,
expiring 1/03/95-2/03/95............... 4,995 3,211,252 3,218,011 (6,759)
Dutch Guilder,
expiring 1/03/95-2/03/95............... 7,691 4,415,247 4,424,104 (8,857)
Finnish Markka,
expiring, 1/03/95-2/03/95.............. 12,551 2,623,133 2,645,636 (22,503)
French Francs,
expiring 1/03/95-2/03/95............... 25,710 4,800,426 4,806,243 (5,817)
Italian Lira,
expiring 1/03/95-2/03/95............... 6,137,950 3,786,822 3,785,344 1,478
Spanish Peseta,
expiring 1/03/95-2/03/95............... 261,260 1,988,765 1,985,708 3,057
Swedish Krone,
expiring 1/03/95-2/03/95............... 28,624 3,820,647 3,849,732 (29,085)
--------
$(83,408)
========
</TABLE>

17
<PAGE>

FINANCIAL HIGHLIGHTS ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------- --------------------------------
SIX MONTHS ENDED JUNE 2, 1994* SIX MONTHS ENDED JUNE 2, 1994*
DECEMBER 31, 1994 TO DECEMBER 31, 1994 TO
(UNAUDITED) JUNE 30, 1994 (UNAUDITED) JUNE 30, 1994
----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................ $9.75 $10.00 $9.74 $10.00
----- ------ ----- ------

<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
<S> <C> <C> <C> <C>
Net investment income (loss)........................ (.01) .01 (.03) -0-
Net realized and unrealized
gain (loss) on investments......................... .24 (.26) .23 (.26)
----- ------ ----- ------
Net increase (decrease) in net
asset value from operations........................ .23 (.25) .20 (.26)
----- ------ ----- ------
Net asset value, end of period...................... $9.98 $ 9.75 $9.94 $ 9.74
===== ====== ===== ======

<CAPTION>
TOTAL RETURN
- ------------
<S> <C> <C> <C> <C>
Total investment return based on net asset
value (a).......................................... 2.36% (2.50)% 2.05% (2.60)%
===== ====== ===== ======

<CAPTION>
RATIOS/SUPPLEMENTAL DATA
- ------------------------
<S> <C> <C> <C> <C>
Net assets, end of period
(000's omitted).................................. $14,226 $4,990 $81,181 $22,859
Ratio of expenses to average net assets........... 2.30%(b) 2.75%(b) 2.99%(b) 3.45%(b)
Ratio of net investment
income (loss) to average net assets.............. (.04)%(b) 1.03%(b) (.75)%(b) .33%(b)
Portfolio turnover rate........................... 16% -0-% 16% -0-%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.

(a) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period of
less than one year is not annualized.
(b) Annualized.

18
<PAGE>

PORTFOLIO OF INVESTMENTS
JUNE 30, 1994 ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--63.5%
ARGENTINA--3.5%
Central Costanera S.A.
Class B........................... 41,000 $ 130,636
Central Puerto S.A.
Class A........................... 13,000 83,753
Naviera Perez Companc
S.A., CIA. Class B*............... 36,000 171,696
Telecom Argentina S.A.
Class B........................... 33,000 193,427
Telefonica de Argentina S.A.
Class B........................... 3,900 227,175
Transportadora de Gas del
Sur S.A. Class B*................. 26,000 62,263
YPF S.A. (ADR) Class D.............. 5,000 119,375
----------
988,325
----------
AUSTRALIA--2.2%
Commonwealth Serum
Lab, Ltd.*........................ 200,000 351,643
GIO Australia Holdings Ltd.......... 150,000 259,355
----------
610,998
----------
AUSTRIA--2.0%
VA Technologies AG*................. 6,800 561,212
----------
BRAZIL--2.1%
Centrais Electricas Brasileiras
(Eletrobras) S.A.................. 700,000 148,912
Companhia Paulista de
Forca e Luz*...................... 2,100,000 80,182
Companhia Siderurgica
Nacional CSN...................... 7,000,000 185,793
Light Servicios de
Electricidad S.A.................. 750,000 163,637
----------
578,524
----------
CANADA--0.8%
Alberta Energy Co., Ltd............. 16,000 237,259
----------
CHILE--1.5%
Compania de Telefonos
de Chile S.A. (ADR)............... 2,300 $ 195,502
Enersis S.A. (ADR).................. 11,000 232,377
----------
427,879
----------
CZECHOSLOVAKIA--0.8%
Ceske Energeticke
Zavody (GDS)(a)................... 2,000 98,000
Elektrarny Opatovice................ 200 31,727
Prague Brewery A.S.................. 275 56,586
Tabak A.S.*......................... 200 39,395
----------
225,708
----------
DENMARK--1.3%
Tele Danmark, A.S.
Series B*......................... 7,000 351,545
----------
FINLAND--2.8%
Rautaruukki OY Series K*............ 48,000 400,271
Valmet Corp. Series A*.............. 23,000 374,875
----------
775,146
----------
FRANCE--6.5%
Banque Nationale de Paris* 7,000 299,421
Roussel-Uclaf....................... 3,000 321,222
Societe Centrale des
Assurances Generales de
France (AGF)...................... 4,200 364,713
Societe Nationale Elf
Aquitaine......................... 6,400 446,957
Ugine S.A........................... 6,300 375,531
----------
1,807,844
----------
GERMANY--3.0%
Deutsche Lufthansa A.G.* 3,400 395,835
Viag A.G............................ 1,500 435,873
----------
831,708
----------
GHANA--1.7%
Ashanti Goldfields Co., Ltd.*(a) 23,000 476,330
----------
</TABLE>
<PAGE>

ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
HONG KONG--2.7%
Citic Pacific, Ltd.................. 70,000 $ 189,275
Hopewell Holdings................... 240,000 194,062
Peregrine Investment Holdings....... 110,000 180,736
Yizheng Chemical Fibre Co.*......... 700,000 174,784
----------
738,857
----------
HUNGARY--0.4%
Danubius Hotel and Spa Huf.......... 3,800 36,739
Pannoplast Plastic Industries Huf... 1,600 20,703
Sopronyi Sorgyar Huf
(Brauerei Sopron)................. 285 11,689
Zalakeremia Huf..................... 1,900 42,211
----------
111,342
----------
ITALY--2.5%
Istituto Mobiliare
Italiano S.p.A.................... 60,000 406,120
Societa Italiana per L' Eserrcizio
delle Telecomunicazioni,
S.p.A. (SIP)...................... 122,000 304,641
----------
710,761
----------
MALAYSIA--1.0%
Malayan Banking Bhd................. 18,000 100,922
Westmont Bhd........................ 28,000 179,569
----------
280,491
----------

MEXICO--4.5%
Banpais, S.A. (ADR)*................ 2,000 20,000
Consorcio Grupo Dina,
S.A. de CV (ADR).................. 4,000 43,250
GBM Atlantico (ADS)(a).............. 2,000 39,500
Grupo Financiero Banamex
Accival, S.A. de C.V.
Class C........................... 25,000 162,908
Grupo Financiero Bancomer,
S.A. de C.V. Class C.............. 150,000 168,951
Grupo Financiero Banorte, S.A.
de C.V. Class B................... 50,000 190,181
Grupo Mexicano de
Desarrollo, S.A. (ADR)
Series L*......................... 10,000 151,250
Grupo Tribasa, S.A. de C.V.
(ADR)*............................ 8,000 177,000
Telefonos de Mexico,
S.A. (ADR) Class L................ 5,500 307,313
----------
1,260,353
----------
NETHERLANDS--3.1%
KLM Royal Dutch Air Lines
N.V.*............................. 15,000 $ 419,514
Royal PTT Nederland N.V.*........... 16,000 449,281
----------
868,795
----------
NEW ZEALAND--1.0%
Telecom Corporation of
New Zealand, Ltd.................. 100,000 269,829
----------
PERU--1.1%
Cementos Lima S.A.*................. 300 84,717
Compania Peruana de Telefonos
Class B........................... 45,000 228,900
----------
313,617
----------
PHILIPPINES--4.4%
First Philippine Holdings Corp.
Series B.......................... 70,000 276,659
International Container Terminal
Services, Inc.*................... 200,000 205,070
Manila Electric Co.
Series B.......................... 22,500 283,137
Philippine Long Distance
Telephone Co...................... 3,000 177,001
Philippine National Bank............ 18,000 291,946
----------
1,233,813
----------
POLAND--0.6%
Bank Rozwoju Eksportu............... 800 50,579
Elektrim S.A.*...................... 970 36,494
Vistula S.A.*....................... 4,200 37,025
Wielkpolski Bank
Kredytowy......................... 1,300 49,198
----------
173,296
----------
SINGAPORE--2.8%
Developement Bank of
Singapore, Ltd.................... 25,000 239,368
Keppel Corporation, Ltd............. 30,000 206,578
Singapore Airlines, Ltd............. 13,000 107,420
Van Der Horst, Ltd.*................ 50,000 214,775
----------
768,141
----------
</TABLE>
<PAGE>

PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

COMPANY SHARES U.S. $ VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
SPAIN--2.4%
Corporacion Bancaria de Espana
S.A............................... 7,000 $ 272,545
Empresa Nacional de
Electridad S.A.................... 8,500 384,158
----------
656,703
----------
SWEDEN--0.9%
AssiDoman A.B.*..................... 12,000 247,471
----------
THAILAND--1.4%
Industrial Finance Corporation
of Thailand (The)*................ 92,000 187,381
Thai Airways International, Ltd..... 92,000 189,218
----------
376,599
----------
TURKEY--2.1%
Eregli Demir Ve Celic
Fabrikalari T.A.S.*............... 625,000 144,047
Petrol Ofisi A.S.*.................. 110,000 146,127
Tofas Turk Otomobile Fabrikasi
Group E........................... 10,000 75,001
Tupras Turkiye Petrol
Rafinerileri A.S.*................ 90,000 21,896
Turk Hava Yollari A.O.*............. 715,000 185,388
----------
572,459
----------
UNITED KINGDOM--4.4%
British Gas Plc..................... 50,000 207,819
National Power Plc.................. 38,000 255,297
Northern Ireland Electricity Plc.... 100,000 529,415
Wessex Water Plc.................... 27,000 235,729
----------
1,228,260
----------
Total Common Stocks
(cost $18,209,275)................ 17,683,265
----------

<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- --------------------------------------------------------------------------------
<S>................................... <C> <C>
PREFERRED STOCKS--2.6%
BRAZIL--2.6%
Acesita Acos Especiais
Itabira*.......................... 1,000,000 $ 48,291
CESP-Companhia Energetica
de Sao Paulo*..................... 80,000 82,910
Compania Vale do Rio Doce*.......... 3,000,000 302,181
Copene Petroquimica do
Nordeste S.A.
Class A........................... 100,000 40,800
Petroleo Brasileiro (Petrobras)
S.A............................... 500,000 48,727
Telecomunicacoes Brasileiras
(Telebras) S.A.*.................. 1,500,000 57,381
Telecomunicacoes de Sao
Paulo (Telesp) S.A................ 200,000 62,545
Uniao Sider Minas
Gerais-Usiminas*.................. 75,000,000 79,090
----------

Total Preferred Stocks
(cost $774,063)................... 721,925
----------

TIME DEPOSIT--34.1%
Mitsubishi Bank-
Grand Cayman
4.4375%, 7/01/94
(cost $9,500,000)................. US$ 9,500 9,500,000
----------

TOTAL INVESTMENTS--100.2%
(cost $28,483,338)................ 27,905,190
Other assets less liabilities--(0.2)% (55,975)
----------

NET ASSETS--100%...................... $27,849,215
==========
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At June 30, 1994,
these securities amounted to $613,830 or 2.2% of net assets.
See notes to financial statements.
<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1994 ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>

<S> <C>
ASSETS
Investments in securities, at value (cost $28,483,338)....... $27,905,190
Cash, at value (cost $823,095)............................... 819,131
Receivable for capital stock sold............................ 1,540,599
Dividends and interest receivable............................ 8,511
Deferred organization expense and other assets............... 205,079
-----------
Total assets................................................. 30,478,510
-----------

LIABILITIES
Payable for investment securities purchased.................. 2,358,806
Organization expenses payable................................ 204,880
Advisory fee payable......................................... 19,079
Distribution fee payable..................................... 16,697
Payable for capital stock redeemed........................... 5,252
Accrued expenses............................................. 24,581
-----------
Total liabilities............................................ 2,629,295
-----------
NET ASSETS.................................................... $27,849,215
===========

COMPOSITION OF NET ASSETS
Capital stock, at par........................................ $ 2,859
Additional paid-in capital................................... 28,517,458
Undistributed net investment income.......................... 8,658
Net realized loss on foreign currency transactions........... (95,253)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities................. (584,507)
-----------
$27,849,215
===========

CALCULATION OF MAXIMUM OFFERING PRICE
CLASS A SHARES
Net asset value and redemption price per share
($4,989,731 / 511,992 shares of capital stock issued
and outstanding)............................................ $ 9.75
Sales charge--4.25% of public offering price................. .43
------
Maximum offering price....................................... $10.18
======

CLASS B SHARES
Net asset value and offering price per share
($22,859,484 / 2,346,819 shares of capital stock issued
and outstanding)............................................. $ 9.74
======
- --------------------------------------------------------------------------------
</TABLE>

See notes to financial statements.
<PAGE>

STATEMENT OF OPERATIONS
JUNE 2, 1994* TO JUNE 30, 1994 ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of
$4,818)......................................... $11,638
Interest.......................................... 60,677 $ 72,315
-------

EXPENSES
Advisory fee...................................... 19,079
Distribution fee-Class A.......................... 1,021
Distribution fee-Class B.......................... 15,676
Audit and legal................................... 21,267
Amortization of organization expenses............. 3,301
Printing.......................................... 1,200
Miscellaneous..................................... 2,113
-------
Total expenses.................................... 63,657
---------
Net investment income............................. 8,658
---------

REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized loss on foreign currency transactions (95,253)
Net unrealized depreciation of:
Investments..................................... (578,148)
Foreign currency denominated assets and liabilities (6,359)
---------
Net loss on investments and foreign currency transactions (679,760)
---------

NET DECREASE IN NET ASSETS FROM OPERATIONS............. $(671,102)
=========
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS
JUNE 2, 1994* TO JUNE 30, 1994
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income............................. $ 8,658
Net realized loss on foreign currency transactions (95,253)
Net unrealized depreciation of investments and foreign
currency denominated assets and liabilities..... (584,507)
-----------
Net decrease in net assets from operations........ (671,102)

CAPITAL STOCK TRANSACTIONS
Net increase...................................... 28,419,317
-----------
Total increase.................................... 27,748,215

NET ASSETS
Beginning of period............................... 101,000
-----------
End of period (including undistributed net
investment income of $8,658).................... $27,849,215
===========
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
See notes to financial statements.
<PAGE>

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994 ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES

Alliance Worldwide Privatization Fund, Inc. (the "Fund"), organized as a
Maryland corporation on March 16, 1994, is registered under the Investment
Company Act of 1940 as a non-diversified, open-end management investment
company. The Fund had no operations other than the sale to Alliance Capital
Management L.P. (the "Adviser") of 10,000 shares of Class A common stock and
100 shares of Class B common stock for the aggregate amount of $101,000 on
April 6, 1994. Class A and B shares commenced operations on June 2, 1994. The
Fund offers both Class A and Class B shares. Class A shares are sold with an
initial sales charge of up to 4.25%. Class B shares are sold with a
contingent deferred sales charge which declines from 4.00% to zero depending
on the period of time the shares are held. Class B shares will automatically
convert to Class A shares eight years after the end of the calendar month of
purchase. Both classes of shares have identical voting, dividend, liquidation
and other rights, except that Class A bears different distribution expenses
than Class B and each class has exclusive voting rights with respect to its
distribution plan. The following is a summary of significant accounting
policies followed by the Fund.

1. SECURITY VALUATION

2. ORGANIZATION EXPENSES

Organization expenses of approximately $207,880 have been deferred and are
being amortized on a straight-line basis through June, 1999.

3. CURRENCY TRANSLATION

Net realized loss on foreign currency transactions of $95,253 represents
foreign exchange gains and losses from the holding of foreign currencies,
exchange gains or losses realized between the trade and settlement dates on
security transactions, and the difference between the amounts of dividends,
interest and foreign taxes receivable recorded on the Fund's books and the
U.S. dollar equivalent of the amounts actually received or paid. Net currency
gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized depreciation of investments and foreign currency denominated
assets and liabilities.

4. TAXES

5. INVESTMENT INCOME AND SECURITY TRANSACTIONS

Dividend income is recorded on the ex-dividend date.
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONT.) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------
or sold. Security gains and losses are determined on the identified cost basis.
The Fund accretes discounts on short-term securities as adjustments to interest
income.

6. DIVIDENDS AND DISTRIBUTIONS

- --------------------------------------------------------------------------------

NOTE B: ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of an investment advisory agreement, the Fund pays its
Adviser, Alliance Capital Management, L.P., (the "Adviser"), a fee at an
annual rate of 1% of the Fund's average daily net assets. Such fee is accrued
daily and paid monthly. The Adviser has agreed, under the terms of the
advisory agreement, to reimburse the Fund to the extent that its aggregate
expenses (exclusive of interest, taxes, brokerage, distribution fee,
extraordinary expenses and certain other expenses) exceed the limits pr
escribed by any state in which the Fund's shares are qualified for sale. The
Fund believes that the most restrictive expense ratio limitation currently
imposed by any state is 2.5% of the first $30 million of its average daily net
assets, 2% of the next $70 million of its average daily net assets and 1.5% of
its average daily net assets in excess of $100 million. No such reimbursement
was required for the period June 2, 1994 (commencement of operations) through
June 30, 1994.

Pursuant to the Advisory Agreement, the Adviser provides to the Fund certain
legal and accounting services. For the period June 2, 1994 through June 30,
1994, the Adviser voluntarily agreed to waive its fees for such services.
Such waivers and reimbursement amounted to $41,000.

Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor received
front-end sales charges of $5,133 from the sale of Class A shares and $649 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B for the period June 2, 1994 through June 30, 1994.

Brokerage commissions paid on securities transactions for the period June 2,
1994 through June 30, 1994, amounted to $41,842, none of which was paid to
brokers utilizing the services of the Pershing Division of Donaldson, Lufkin
& Jenrette Securities Corp. ("DLJ"), an affiliate of the Adviser nor to DLJ
directly.
<PAGE>

ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

NOTE C: DISTRIBUTION SERVICES AGREEMENT

The Distributor has incurred expenses in excess of the distribution costs
reimbursed by the Fund in the amount of $994,925 for Class B shares; such
costs may be recovered from the Fund in future periods so long as the
Agreement is in effect. In accordance with the Agreement, there is no
provision for recovery of unreimbursed distribution costs, incurred by the
Distributor, beyond the current fiscal year for Class A shares. The Agreement
also provides that the Adviser may use its own resources to finance the
distribution of the Fund's shares.

- --------------------------------------------------------------------------------

NOTE D: INVESTMENT TRANSACTIONS

Purchases and sales of investment securities (excluding short-term
investments) aggregated $18,983,338 and $0, respectively, for the period June
2, 1994 through June 30, 1994. There were no purchases or sales of U.S.
Government and government agency obligations for the period June 2, 1994
through June 30, 1994.

At June 30, 1994, the cost of securities for federal income tax purposes was
the same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $171,559 and gross unrealized
depreciation of investments was $749,707, resulting in net unrealized
depreciation of $578,148. Foreign currency losses incurred after June 2,
1994, within the taxable year are deemed to arise on the first business day
of the Fund's next taxable year. In accordance with the Internal Revenue
Code, the Fund incurred and will elect to defer a net currency loss of
$95,253 during such period in fiscal 1994.

- --------------------------------------------------------------------------------

NOTE E: CAPITAL STOCK

Each class consists of 3,000,000,000 authorized shares.

Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
---------------- ----------------
JUNE 2, 1994* JUNE 2, 1994*
TO JUNE 30, TO JUNE 30,
1994 1994
---------------- ----------------
<S> <C> <C>
CLASS A
Shares sold........................... 505,529 $ 5,040,282
Shares redeemed....................... (3,537) (35,194)

Net increase .................... 501,992 $ 5,005,088

CLASS B
Shares sold........................... 2,435,492 $24,287,396
Shares redeemed....................... (88,773) (873,167)

Net increase.......................... 2,346,719 $23,414,229

- -------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
<PAGE>

NOTES TO FINANCIAL STATEMENTS (CONT.) ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

NOTE F: CONCENTRATION OF RISK

Investing in securities of foreign companies involves special risks which
include revaluation of currency and future adverse political and economic
developments. Moreover, securities of many foreign companies and their
markets may be less liquid and their prices more volatile than those of
comparable U.S. companies. The Fund invests in securities issued by
enterprises that are undergoing, or that have undergone, privatization.
Privatization is a process through which the ownership and control of compani
es or assets changes in whole or in part from the public sector to the private
sector. Through privatization a government or state divests or transfers all
or a portion of its interest in a state enterprise to some form of private
ownership. Therefore, the Fund is susceptible to the government
re-nationalization of these enterprises and economic factors adversely
affecting the economics of these emerging market countries. In addition,
these securities created through privatization may be less liquid and subject
to greater volatility than securities of more developed countries.

- --------------------------------------------------------------------------------

NOTE G: RECLASSIFICATION OF COMPONENTS OF NET ASSETS

For the period June 2, 1994 through June 30, 1994, the Fund adopted Statement
of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies. Accordingly, dividend from net
investment income and distributions from realized gains from investment
transactions will be determined in accordance with income tax regulations.
Such amounts may differ from investment income and realized gains. At June
30, 1994 there were no book to tax differences requiring reclassification.

- --------------------------------------------------------------------------------

NOTE H: FOREIGN TAX CREDIT (UNAUDITED)

The Fund has elected to give the benefit to its shareholders of foreign taxes
that have been paid and/or withheld. For the fiscal year ended June 30, 1994,
this amounted to $4,818. Although the Fund has made the election required to
make this credit available, the amount of allowable tax credit is subject to
limitations under the Internal Revenue Code.

A notification reflecting the per share amount to be used by taxpayers on
their federal income tax return will be mailed to shareholders in January
1995.
<PAGE>

FINANCIAL HIGHLIGHTS ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING FOR THE PERIOD JUNE 2,
1994* THROUGH JUNE 30, 1994

<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Net asset value, beginning of period $10.00 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------
Net investment income .01 .00
Net realized and unrealized loss on investments
and foreign currency transactions (.26) (.26)
------ ------
Net decrease in net asset value from operations (.25) (.26)
------ ------
Net asset value, end of period $ 9.75 $ 9.74
====== ======

TOTAL RETURN
- ------------
Total investment return based on net
asset value (a) (2.50)% (2.60)%
======= =======

RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net assets, end of period (000's omitted) $4,990 $22,859
Ratio of expenses to average net assets 2.75%(b) 3.45%(b)
Ratio of net investment income to average
net assets 1.03%(b) .33%(b)
Portfolio turnover rate 0% 0%
- --------------------------------------------------------------------------------
</TABLE>
* Commencement of operations.
(a) Total investment return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return calculated for a period of
less than one year is not annualized.
(b) Annualized.
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE WORLDWIDE PRIVATIZATION FUND
- --------------------------------------------------------------------------------

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF ALLIANCE WORLDWIDE PRIVATIZATION FUND

In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Alliance
Worldwide Privatization Fund at June 30, 1994, the results of its operations,
the changes in its net assets and the financial highlights for the period
June 2, 1994 (commencement of operations) through June 30, 1994 in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit, which included confirmation of securities at June 30, 1994 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provides a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

New York, New York
August 18, 1994

<PAGE>

APPENDIX A: OPTIONS

Options

The Fund will only write "covered" put and call options,
unless such options are written for cross-hedging purposes. The
manner in which such options will be deemed "covered" is
described in the Prospectus under the heading "Investment
Objective and Policies -- Investment Practices -- Options."

The writer of an option may have no control over when the
underlying securities must be sold, in the case of a call option,
or purchased, in the case of a put option, since with regard to
certain options, the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Whether or
not an option expires unexercised, the writer retains the amount
of the premium. This amount, of course, may, in the case of a
covered call option, be offset by a decline in the market value
of the underlying security during the option period. If a call
option is exercised, the writer experiences a profit or loss from
the sale of the underlying security. If a put option is
exercised, the writer must fulfill the obligation to purchase the
underlying security at the exercise price, which will usually
exceed the then market value of the underlying security.

The writer of a listed option that wishes to terminate its
obligation may effect a "closing purchase transaction." This is
accomplished by buying an option of the same series as the option
previously written. The effect of the purchase is that the
writer's position will be cancelled by the clearing corporation.
However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. Likewise, an
investor who is the holder of a listed option may liquidate its
position by effecting a "closing sale transaction". This is
accomplished by selling an option of the same series as the
option previously purchased. There is no guarantee that either a
closing purchase or a closing sale transaction can be effected in
any particular situation.

Effecting a closing transaction in the case of a written call
option will permit the Fund to write another call option on the
underlying security with either a different exercise price or
expiration date or both, or in the case of a written put option
will permit the Fund to write another put option to the extent
that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction
will permit the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other Fund

A-1

<PAGE>

investments. If the Fund desires to sell a particular security
from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale
of the security.

The Fund will realize a profit from a closing transaction if
the price of the transaction is less than the premium received
from writing the option or is more than the premium paid to
purchase the option; the Fund will realize a loss from a closing
transaction if the price of the transaction is more than the
premium received from writing the option or is less than the
premium paid to purchase the option. Because increases in the
market price of a call option will generally reflect increases in
the market price of the underlying security, any loss resulting
from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned
by the Fund.

An option position may be closed out only where there exists
a secondary market for an option of the same series. If a
secondary market does not exist, it might not be possible to
effect closing transactions in particular options with the result
that the Fund would have to exercise the options in order to
realize any profit. If the Fund is unable to effect a closing
purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it
delivers the underlying security upon exercise. Reasons for the
absence of a liquid secondary market include the following:
(i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national
securities exchange ("Exchange") on opening transactions or
closing transactions or both, (iii) trading halts, suspensions or
other restrictions may be imposed with respect to particular
classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal
operations on an Exchange, (v) the facilities of an Exchange or
the Options Clearing Corporation may not at all times be adequate
to handle current trading volume, or (vi) one or more Exchanges
could, for economic or other reasons, decide or be compelled at
some future date to discontinue the trading of options (or a
particular class or series of options), in which event the
secondary market on that Exchange (or in that class or series of
options) would cease to exist, although outstanding options on
that Exchange that had been issued by the Options Clearing
Corporation as a result of trades on that Exchange would continue
to be exercisable in accordance with their terms.

The Fund may write options in connection with buy-and-write
transactions; that is, the Fund may purchase a security and then
write a call option against that security. The exercise price of
the call the Fund determines to write will depend upon the

A-2

<PAGE>

expected price movement of the underlying security. The exercise
price of a call option may be below ("in-the-money"), equal
to("at-the-money") or above ("out-of-the-money") the current
value of the underlying security at the time the option is
written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the
underlying security will remain flat or decline moderately during
the option period. Buy-and-write transactions using at-the-money
call options may be used when it is expected that the price of
the underlying security will remain fixed or advance moderately
during the option period. Buy-and-write transactions using out-
of-the-money call options may be used when it is expected that
the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to
the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are
exercised in such transactions, the Fund's maximum gain will be
the premium received by it for writing the option, adjusted
upwards or downwards by the difference between the Fund's
purchase price of the security and the exercise price. If the
options are not exercised and the price of the underlying
security declines, the amount of such decline will be offset in
part, or entirely, by the premium received.

The writing of covered put options is similar in terms of
risk/return characteristics to buy-and-write transactions. If
the market price of the underlying security rises or otherwise is
above the exercise price, the put option will expire worthless
and the Fund's gain will be limited to the premium received. If
the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the
position or take delivery of the security at the exercise price
and the Fund's return will be the premium received from the put
option minus the amount by which the market price of the security
is below the exercise price. Out-of-the-money, at-the-money, and
in-the-money put options may be used by the Fund in the same
market environments that call options are used in equivalent buy-
and-write transactions.

The Fund may purchase put options to hedge against a decline
in the value of its portfolio. By using put options in this way,
the Fund will reduce any profit it might otherwise have realized
in the underlying security by the amount of the premium paid for
the put option and by transaction costs. The Fund may purchase
call options to hedge against an increase in the price of
securities that the Fund anticipates purchasing in the future.
The premium paid for the call option plus any transaction costs
will reduce the benefit, if any, realized by the Fund upon
exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to
the Fund.

A-3
00250157.BA3

<PAGE>

APPENDIX B: FUTURES CONTRACTS, OPTIONS ON FUTURES CONTRACTS
AND OPTIONS ON FOREIGN CURRENCIES

Futures Contracts

The Fund may enter into contracts for the purchase or sale
for future delivery of fixed-income securities or foreign
currencies, or contracts based on financial indices including any
index of U.S. Government Securities, securities issued by foreign
government entities or common stocks. U.S. futures contracts
have been designed by exchanges which have been designated
"contracts markets" by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission
merchant, or brokerage firm, which is a member of the relevant
contract market. Futures contracts trade on a number of exchange
markets, and, through their clearing corporations, the exchanges
guarantee performance of the contracts as between the clearing
members of the exchange.

At the same time a futures contract is purchased or sold, the
Fund must allocate cash or securities as a deposit payment
("initial deposit"). It is expected that the initial deposit
would be approximately 1 1/2% to 5% of a contract's face value.
Daily thereafter, the futures contract is valued and the payment
of "variation margin" may be required, since each day the Fund
would provide or receive cash that reflects any decline or
increase in the contract's value.

At the time of delivery of securities pursuant to such a
contract, adjustments are made to recognize differences in value
arising from the delivery of securities with a different price or
interest rate from that specified in the contract. In some (but
not many) cases, securities called for by a futures contract may
not have been issued when the contract was written.

Although futures contracts by their terms call for the actual
delivery or acquisition of securities, in most cases the
contractual obligation is fulfilled before the date of the
contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a
commodities exchange an identical futures contract calling for
delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation
to make or take delivery of the securities. Since all
transactions in the futures market are made, offset or fulfilled
through a clearinghouse associated with the exchange on which the

B-1

<PAGE>

contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.

Stock Index Futures

The Fund may purchase and sell stock index futures as a hedge
against movements in the equity markets. There are several risks
in connection with the use of stock index futures by the Fund as
a hedging device. One risk arises because of the imperfect
correlation between movements in the price of the stock index
futures and movements in the price of the securities which are
the subject of the hedge. The price of the stock index futures
may move more than or less than the price of the securities being
hedged. If the price of the stock index futures moves less than
the price of the securities which are the subject of the hedge,
the hedge will not be fully effective but, if the price of the
securities being hedged has moved in an unfavorable direction,
the Fund would be in a better position than if it had not hedged
at all. If the price of the securities being hedged has moved in
a favorable direction, this advantage will be partially offset by
the loss on the index future. If the price of the future moves
more than the price of the stock, the Fund will experience either
a loss or gain on the future which will not be completely offset
by movements in the price of the securities which are subject to
the hedge. To compensate for the imperfect correlation of
movements in the price of securities being hedged and movements
in the price of the stock index futures, the Fund may buy or sell
stock index futures contracts in a greater dollar amount than the
dollar amount of securities being hedged if the volatility over a
particular time period of the prices of such securities has been
greater than the volatility over such time period of the index,
or if otherwise deemed to be appropriate by Alliance. Conversely,
the Fund may buy or sell fewer stock index futures contracts if
the volatility over a particular time period of the prices of the
securities being hedged is less than the volatility over such
time period of the stock index, or it is otherwise deemed to be
appropriate by Alliance. It is also possible that, where the
Fund has sold futures to hedge its portfolio against a decline in
the market, the market may advance and the value of securities
held in the Fund may decline. If this occurred, the Fund would
lose money on the futures and also experience a decline in value
in its portfolio securities. However, over time the value of a
diversified portfolio should tend to move in the same direction
as the market indices upon which the futures are based, although
there may be deviations arising from differences between the
composition of the Fund and the stocks comprising the index.

Where futures are purchased to hedge against a possible
increase in the price of stock before the Fund is able to invest
its cash (or cash equivalents) in stocks (or options) in an
orderly fashion, it is possible that the market may decline

B-2

<PAGE>

instead. If the Fund then concludes not to invest in stock or
options at that time because of concern as to possible further
market decline or for other reasons, the Fund will realize a loss
on the futures contract that is not offset by a reduction in the
price of securities purchased.

In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the
stock index futures and the portion of the portfolio being
hedged, the price of stock index futures may not correlate
perfectly with movement in the stock index due to certain market
distortions. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through
offsetting transactions which could distort the normal
relationship between the index and futures markets. Secondly,
from the point of view of speculators, the deposit requirements
in the futures market are less onerous than margin requirements
in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between
the movements in the stock index and movements in the price of
stock index futures, a correct forecast of general market trends
by the investment adviser may still not result in a successful
hedging transaction over a short time frame.

Positions in stock index futures may be closed out only on an
exchange or board of trade which provides a secondary market for
such futures. Although the Fund intends to purchase or sell
futures only on exchanges or boards of trade where there appear
to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will
exist for any particular contract or at any particular time. In
such event, it may not be possible to close a futures investment
position, and in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of
variation margin. However, in the event futures contracts have
been used to hedge portfolio securities, such securities will not
be sold until the futures contract can be terminated. In such
circumstances, an increase in the price of the securities, if
any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee
that the price of the securities will in fact correlate with the
price movements in the futures contract and thus provide an
offset on a futures contract.

Options on Futures Contracts

The Fund intends to purchase and write options on futures
contracts for hedging purposes. The Fund is not a commodity pool
and all transactions in futures contracts and options on futures

B-3

<PAGE>

contracts engaged in by the Fund must constitute bona fide
hedging or other permissible transactions in accordance with the
rules and regulations promulgated by the CFTC. The purchase of a
call option on a futures contract is similar in some respects to
the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the
price of the futures contract upon which it is based or the price
of the underlying debt securities, it may or may not be less
risky than ownership of the futures contract or underlying debt
securities. As with the purchase of futures contracts, when the
Fund is not fully invested it may purchase a call option on a
futures contract to hedge against adverse market conditions.

The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the
security or foreign currency which is deliverable upon exercise
of the futures contract or securities comprising an index. If
the futures price at expiration of the option is below the
exercise price, the Fund will retain the full amount of the
option premium which provides a partial hedge against any decline
that may have occurred in the Fund's portfolio holdings. The
writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or
foreign currency which is deliverable upon exercise of the
futures contract or securities comprising an index. If the
futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the
option premium which provides a partial hedge against any
increase in the price of securities which the Fund intends to
purchase. If a put or call option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by
the amount of the premium it receives. Depending on the degree
of correlation between changes in the value of its portfolio
securities and changes in the value of its futures positions, the
Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio
securities.

The purchase of a put option on a futures contract is similar
in some respects to the purchase of protective put options on
portfolio securities. For example, the Fund may purchase a put
option on a futures contract to hedge the Fund's portfolio
against the risk of rising interest rates.

The amount of risk the Fund assumes when it purchases an
option on a futures contract is the premium paid for the option
plus related transaction costs. In addition to the correlation
risks discussed above, the purchase of an option also entails the
risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the option purchased.

B-4

<PAGE>

Options on Foreign Currencies

The Fund may purchase and write options on foreign currencies
for hedging purposes in a manner similar to that in which futures
contracts on foreign currencies, or forward contracts, will be
utilized. For example, a decline in the dollar value of a
foreign currency in which portfolio securities are denominated
will reduce the dollar value of such securities, even if their
value in the foreign currency remains constant. In order to
protect against such diminutions in the value of portfolio
securities, the Fund may purchase put options on the foreign
currency. If the value of the currency does decline, the Fund
will have the right to sell such currency for a fixed amount in
dollars and will thereby offset, in whole or in part, the adverse
effect on its portfolio which otherwise would have resulted. 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 amount of the premium plus related
transaction costs. Options on foreign currencies to be written
or purchased by the Fund are traded on U.S. and foreign exchanges
or over-the-counter.

Conversely, where a rise in the dollar value of a currency in
which securities to be acquired are denominated is projected,
thereby increasing the cost of such securities, the Fund may
purchase call options thereon. The purchase of such options
could offset, at least partially, the effects of the adverse
movements in exchange rates. As in the case of other types of
options, however, the benefit to the Fund deriving from purchases
of foreign currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where
currency exchange rate do not move in the direction or to the
extent anticipated, the Fund could sustain losses on transactions
in foreign currency options which would require it to forego a
portion or all of the benefits of advantageous changes in such
rates.

The Fund may write options on foreign currencies for the same
types of hedging purposes. For example, where the Fund
anticipates a decline in the dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange
rates it could, instead of purchasing a put option, write a call
option on the relevant currency. If the expected decline occurs,
the option will most likely not be exercised, and the diminution
in value of portfolio securities will be offset by the amount of
the premium received.

Similarly, instead of purchasing a call option to hedge
against an anticipated increase in the dollar cost of securities
to be acquired, the Fund could write a put option on the relevant

B-5

<PAGE>

currency which, if rates move in the manner projected, will
expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. As in the case of other
types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of
the premium, and only if rates move in the expected direction. If
this does not occur, the option may be exercised and the Fund
would be required to purchase or sell the underlying currency at
a loss which may not be offset by the amount of the premium.
Through the writing of options on foreign currencies, the Fund
also may be required to forego all or a portion of the benefits
which might otherwise have been obtained from favorable movements
in exchange rates.

The Fund intends to write covered call options on foreign
currencies. A call option written on a foreign currency by the
Fund is "covered" if the Fund owns the underlying foreign
currency covered by the call or has an absolute and immediate
right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a
segregated account by its Custodian) upon conversation or
exchange of other foreign currency held in its portfolio. A call
option is also covered if the Fund has a call on the same foreign
currency and in the same principal amount as the call written
where the exercise price of the call held (a) is equal to or less
than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is
maintained by the Fund in cash, U.S. Government Securities and
other high-grade liquid debt securities in a segregated account
with its Custodian.

The Fund also intends to write call options on foreign
currencies for cross-hedging purposes. An option that is cross-
hedged is not covered, but is designed to provide a hedge against
a decline in the U.S. dollar value of a security which the Fund
owns or has the right to acquire and which is denominated in the
currency underlying the option due to an adverse change in the
exchange rate. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
Custodian, cash or other high-grade liquid debt securities in an
amount not less than the value of the underlying foreign currency
in U.S. dollars marked to market daily.

Additional Risks of Options on Futures Contracts, Forward
Contracts and Options on Foreign Currencies

Unlike transactions entered into by the Fund in futures
contracts, options on foreign currencies and forward contracts
are not traded on contract markets regulated by the CFTC or (with
the exception of certain foreign currency options) by the SEC. To
the contrary, such instruments are traded through financial

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institutions acting as market-makers, although foreign currency
options are also traded on certain national securities exchanges,
such as the Philadelphia Stock Exchange and the Chicago Board
Options Exchange, subject to SEC regulation. Similarly, options
on securities may be traded over-the-counter. In an over-the-
counter trading environment, many of the protections afforded to
exchange participants will not be available. Although the
purchaser of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could
be lost. Moreover, the option writer and a trader of forward
contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral
requirements associated with such positions.

Options on foreign currencies traded on national securities
exchanges are within the jurisdiction of the SEC, as are other
securities traded on such exchanges. As a result, many of the
protections provided to traders on organized exchanges will be
available with respect to such transactions. In particular, all
foreign currency option positions entered into on a national
securities exchange are cleared and guaranteed by the Options
Clearing Corporation ("OCC"), thereby reducing the risk of
counterparty default. Further, a liquid secondary market in
options traded on a national securities exchange may be more
readily available than in the over-the-counter market,
potentially permitting the Fund to liquidate open positions at a
profit prior to exercise or expiration, or to limit losses in the
event of adverse market movements.

The purchase and sale of exchange-traded foreign currency
options, however, is subject to the risks of the availability of
a liquid secondary market described above, as well as the risks
regarding adverse market movements, margining of options written,
the nature of the foreign currency market, possible intervention
by governmental authorities and the effects of other political
and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the OCC, which has
established banking relationships in applicable foreign countries
for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the
orderly settlement of foreign currency option exercise, or would
result in undue burdens on the OCC or its clearing member, impose
special procedures on exercise and settlement, such as technical
changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices or prohibitions on exercise.

In addition, futures contracts, options on futures contracts,
forward contracts and options on foreign currencies may be traded
on foreign exchanges. Such transactions are subject to the risk

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<PAGE>

of governmental actions affecting trading in or the prices of
foreign currencies or securities. The value of such positions
also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in
the United States of data on which to make trading decisions,
(iii) delays in the Fund's ability to act upon economic events
occurring in foreign markets during nonbusiness hours in the
United States, (iv) the imposition of different exercise and
settlement terms and procedures and margin requirements than in
the United States, and (v) lesser trading volume.

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APPENDIX C: BOND RATINGS

Moody's Investors Service, Inc.

Aaa: Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.

Aa: Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what
are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger
than the Aaa securities.

A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impair some time in the future.

Baa: Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.

Ba: Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.

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Caa: Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Unrated: When no rating has been assigned or when a rating has
been suspended or withdrawn, it may be for reasons unrelated to
the quality of the issue.

Should no rating be assigned, the reason may be one of the
following:

1.An application for rating was not received or accepted.

2.The issue or issuer belongs to a group of securities or
companies that are not rated as a matter of policy.

3.There is a lack of essential data pertaining to the issue or
issuer.

4.The issue was privately placed, in which case the rating is
not published in Moody's publications.

Suspension or withdrawal may occur if new and material
circumstances arise, the effects of which preclude satisfactory
analysis; if there is no longer available reasonable up-to-date
data to permit a judgment to be formed; if a bond is called for
redemption; or for other reasons.

Note: Those bonds in the Aa, A, Baa, Ba and B groups which
Moody's believe possess the strongest investment attributes are
designated by the symbols Aa 1, A-1, Baa 1, Ba 1 and B 1.

Standard & Poor's Corporation

AAA: Bonds rated AAA have the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is
extremely strong.

AA: Bonds rated AA have a very strong capacity to pay interest
and repay principal and differ from the highest rated issues only
in small degree.

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A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.

BBB: Bonds rated BBB are regarded as having an adequate capacity
to pay interest and repay principal. Whereas they normally
exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for bonds
in this category than in higher rated categories.

BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded
as having predominantly speculative characteristics with respect
to capacity to pay interest and repay principal. BB indicates
the least degree of speculation and C the highest. While such
bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or
major exposures to adverse conditions.

C1: The rating C1 is reserved for income bonds on which no
interest is being paid.

D: Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such
grace period. The D rating also will be used upon the filing of
a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified
by the addition of a plus or minus sign to show relative standing
within the major rating categories.

NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P
does not rate a particular type of obligation as a matter of
policy.

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