ALLIANCE ALL ASIA INVESTMENT FUND INC, 497, 1995-06-23

ALLIANCE ALL ASIA INVESTMENT FUND INC
497, 1995-06-23

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This is filed pursuant to Rule 497(c).
File Nos. 33-84270 and 811-08776.

<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.

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

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.

Privatization is a process through which the ownership and control of
companies or assets changes in whole or in part from the public sector to the
private sector. Through privatization a government or state divests or
transfers all or a portion of its interest in a state enterprise to some form
of private ownership. Governments and states with established economies,
including France, Great Britain, Germany and Italy, and those with developing
economies, including Argentina, Mexico, Chile, Indonesia, Malaysia, Poland
and Hungary, are engaged in privatizations. Although the Fund will invest in
any country believed to present attractive investment opportunities,
currently approximately 70% of the Fund's total assets are invested in
countries with established economies.

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

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

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

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

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,

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<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.

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<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

34
<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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<PAGE>

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.

Issuers of securities in foreign jurisdictions are generally not subject to
the same degree of regulation as are U.S. issuers with respect to such
matters as insider trading rules, restrictions on market manipulation,
shareholder proxy requirements and timely disclosure of information. The
reporting, accounting and auditing standards of foreign countries may differ,
in some cases significantly, from U.S. standards in important respects and
less information may be available to investors in foreign securities than to
investors in U.S. securities. Substantially less information is publicly
available about certain non-U.S. issuers than is available about U.S. issuers.

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

Investment in United Kingdom Issuers by New Europe Fund. Investment in
securities of United Kingdom issuers involves certain considerations not
present with investment in securities of U.S. issuers. As with any investment
not denominated in the U.S. dollar, the U.S. dollar value of the Fund's
investment denominated in the british pound sterling will fluctuate with
pound sterling--dollar exchange rate movements. Since 1972, when the pound
sterling was allowed to float against other currencies, it has generally
depreciated against most major currencies, including the U.S. dollar. From
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

38
<PAGE>

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. 33-84270 and 811-08776.

<PAGE>

(Logo)(R)

ALLIANCE ALL-ASIA
INVESTMENT 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. 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 . . . . . . . . . . . . . . . . . 28

Expenses of the Fund . . . . . . . . . . . . . . . . . . 37

Purchase of Shares . . . . . . . . . . . . . . . . . . . 39

Redemption and Repurchase of Shares . . . . . . . . . . 54

Shareholder Services . . . . . . . . . . . . . . . . . . 57

Net Asset Value . . . . . . . . . . . . . . . . . . . . 63

Dividends, Distributions and Taxes . . . . . . . . . . . 65

Brokerage and Portfolio Transactions . . . . . . . . . . 72

General Information . . . . . . . . . . . . . . . . . . 74

Report of Independent Auditors and Financial Statements. 79

Appendix A: Options . . . . . . . . . . . . . . . . . . A-1

Appendix B: Futures Contracts, Options
on Futures Contracts and
Options on Foreign Currencies . . . . . . B-1

Appendix C: Bond Ratings . . . . . . . . . . . . . . . C-1

Appendix D: Japan . . . . . . . . . . . . . . . . . . . D-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 All-Asia Investment 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 is
fundamental and 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
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 issued by Asian
companies. The Fund may invest up to 35% of its total
assets in debt securities issued or guaranteed by Asian
companies or by Asian governments, their agencies or
instrumentalities. The Fund may also invest in equity or
debt securities issued by non-Asian issuers provided that
the Fund will invest at least 80% of its total assets in
equity securities issued by Asian companies and Asian debt
securities referred to above. The Fund expects to invest,
from time to time, a significant portion, but less than 50t,
of its assets in equity securities of Japanese companies.
For a description of Japan, see Appendix D. Equity
securities are common and preferred stocks, securities
convertible into common and preferred stocks and equity-
linked debt securities, but do not include rights, warrants
or options to subscribe for or purchase common and preferred
stocks.

The Fund defines an Asian company to be 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.

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

How The Fund Pursues Its Objective

Investment in Asian Countries. 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 Capital Management
L.P., the Fund's investment adviser (the "Adviser"),
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. The Adviser
believes that these conditions are important to the long-
term economic growth of Asian countries.

As the economics 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.

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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, 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. The Adviser 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 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 rated below Baa by
Moody's Investors Service, Inc. ("Moody's") and BBB by
Standard and Poor's Rating Group ("S&P"), or, if not rated,
determined by The Adviser 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, but-may retain a
debt security the rating of which drops below B. See
"Certain Risk Considerations-Securities Ratings" and
Appendix C for a description of such ratings.

Defensive Position. For temporary defensive
purposes, 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

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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 Asian companies,
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

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. 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.

Convertible Securities. The Fund may invest up to
25% of its total assets in convertible securities of issuers
whose common stocks are eligible for purchase by the Fund
under the investment policies described above. Convertible
securities include bonds, debentures, corporate notes and
preferred stocks. Convertible 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 securities which provide a stable stream of
income with generally higher yields than those of equity

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securities of the same or similar issuers. The market value
of convertible 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.

Depositary Receipts and Securities of Supranational
Entities. The Fund may invest in depositary receipts,
securities of supranational entities denominated in the
currency of any country, securities of multinational
companies and "semi- governmental securities". 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 the Fund in
depositary receipts are deemed to be investments in the
underlying securities.

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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. "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.

Equity-Linked Debt Securities. The Fund may, with
the objective of realizing capital appreciation, invest up
to 25% of its net assets in 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. The Fund
may invest up to 25% of its net assets in loans and other
direct debt instruments. Loans and other direct debt
instruments are interests in amounts owed by a corporate,
governmental or other borrower to another party. They may
represent amounts owed to lenders or lending syndicates
(loans and loan participations), to suppliers of goods or
services (trade claims or other receivables), or to other
creditors. Direct debt instruments involve the risk of loss
in case of default or insolvency of the borrower and may
offer less legal protection to the Fund in the event of
fraud or misrepresentation than debt securities. In
addition, loan participations involve a risk of insolvency

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of the lending bank or other financial intermediary. Direct
debt instruments may also include standby financing
commitments that obligate the Fund to supply additional cash
to the borrower on demand. Loans and other direct debt
instruments are generally illiquid and may be transferred
only through individually negotiated private transactions.

Purchasers of loans and other forms of direct
indebtedness depend primarily upon the creditworthiness of
the borrower for payment of principal and interest. Direct
debt instruments may not be rated by any nationally
recognized rating service. If the Fund does not receive
scheduled interest or principal payments on such
indebtedness, the Fund's share price and yield could be
adversely affected. Loans that are fully secured offer the
Fund more protection than unsecured loans in the event of
non-payment of scheduled interest or principal. However,
there is no assurance that the liquidation of collateral
from a secured loan would satisfy the borrower's obligation,
or that the collateral can be liquidated. Indebtedness of
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

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delays in realizing payment on the loan or loan
participation and could suffer a loss of principal or
interest.

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

The Fund's investment in lower-rated loans and
other lower-rated direct debt instruments is subject to the
Fund's policy of maintaining not more than 5% of its net
assets in lower-rated securities.

Interest Rate Transactions. The Fund may enter
into interest rate swaps and may purchase or sell interest
rate caps and floors. The use of interest rate swaps is a
highly specialized activity which involves investment
techniques and risks different from those associated with
ordinary portfolio securities transactions. If the Adviser
is incorrect in its forecasts of market values, interest
rates and other applicable factors, the investment
performance of the Fund would diminish compared with what it
would have been if these investment techniques were not
used. Moreover, even if the Adviser is correct in its
forecasts, there is a risk that the swap position may
correlate imperfectly with the price of the asset or
liability being hedged.

There is no limit on the amount of interest rate
swap transactions that may be entered into by the Fund.
These transactions do not involve the delivery of securities
or other underlying assets of principal. Accordingly, the
risk of loss with respect to interest rate swaps is limited
to the net amount of interest payments that the Fund is
contractually obligated to make. If the other party to an
interest rate swap defaults, the Fund's risk of loss
consists of the net amount of interest payments that the
Fund contractually is entitled to receive. The Fund may
purchase and sell (i.e., write) caps and floors without
limitation, subject to the segregated account requirement

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described in the Prospectus under "Description of the Fund -
Additional Investment Policies and Practices - Interest Rate
Transactions."

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 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

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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 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

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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 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

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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 instruments 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 segregated account of the Fund having a

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value 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

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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 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.

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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 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

<PAGE>

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 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.

<PAGE>

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 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.

<PAGE>

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, 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

<PAGE>

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 of such
securities than with respect to companies whose securities
are traded on an exchange. Securities not readily

<PAGE>

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 as a result more than 25% 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

<PAGE>

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 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

<PAGE>

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 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

<PAGE>

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 150%. A 150% annual turnover rate
would occur if all the securities in the Fund's portfolio
were replaced one and one-half times 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.

Certain Risk Considerations

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

Investment in Asian Countries; Risks of Foreign
Investment. The securities markets of many Asian 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. These
problems are particularly severe in India, where settlement
is through physical delivery, and, where currently, a severe
shortage of vault capacity exists among custodial banks,
although efforts are being undertaken to alleviate the
shortage.

Foreign investment in the securities markets of
certain Asian 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 specified percentage of an issuer's outstanding securities
or a specific class of securities of a company which may
have less advantageous terms (including price) than

<PAGE>

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 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 Asian countries are
generally higher than in the United States.

Issuers of securities in Asian 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 Asian 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. Asian
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 an Asian 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

<PAGE>

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 Asian 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 an Asian 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 Asian 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 smaller, emerging Asian companies
involves greater risk 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.

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

<PAGE>

foreign currencies by engaging in certain of the investment
practices listed above. While the Fund has this 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.

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

<PAGE>

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 SEP 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 SEP) are considered to have
extremely poor prospects of ever attaining any real
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.

<PAGE>

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 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.

<PAGE>

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;

(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;

<PAGE>

(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;

(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 25% 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.

<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 and President, is
the President and Chief Operating Officer and a Director of
ACMC** with which he has been associated since prior to
1990.

DAVID H. DIEVLER, 65, formerly a Senior Vice
President of ACMC, with which he had been associated since
prior to 1990.

JOHN H. DOBKIN, 53, has been the President of
Historic Hudson Valley (historic preservation) since 1990.
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 1940
Act.

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

<PAGE>

W.H. HENDERSON, 68, retired oil company executive
and independent oil and gas consultant. He is also a
Director of Fidelity Japan OTC and Regional Markets Fund.
His address is Quarrey House, Charlton Horethorne,
Sherborne, Dorset, DT9 4NY, England.

STIG HOST, 68, is the Chairman and Chief Executive
Officer of International Energy Corp. (oil and gas
exploration) with which he has been associated since prior
to 1990. He is also Chairman and Director of Kriti
Exploration, Inc. (oil and gas exploration and production),
Managing Director of Kriti Oil and Minerals, N.V., Chairman
of Kriti Properties and Development Corporation (real
estate), Chairman of International marine Sales, Inc.
(marine fuels), a Director of Florida Fuels, Inc. (marine
fuels) and President of Alexander Host Foundation. He is
also a Trustee of the Winthrop Focus Funds. His address is
36 Keofferam Road, Old Greenwich, Connecticut 06870.

RICHARD M. LILLY, 64, is retired and was formerly
President and Chief Executive Officer of Esso Italiana,
S.p.A., Esso Europe-Africa Services and Esso North Europe
A/S since prior to 1990. His address is 70 Palace Gardens
Terrace, London W8 4RR England.

ALAN STOGA, 44, has been a Managing Director and a
member of the Board of Directors of Kissinger Associates,
Inc. since prior to 1990. His address is Kissinger
Associates, Inc., 350 Park Avenue, New York, New York 10022.

HON. JOHN C. WEST, 72, has been an attorney in
private practice since prior to 1990. Prior thereto he was
United States Ambassador to Saudi Arabia, Governor of South
Carolina and a Distinguished Professor of Middle East
Studies, University of south Carolina. He is also a
Director of Whittaker Corp. (chemical and aero space) and
BioWhittaker Corp. (technology). His address is P.O. Drawer
13, Hilton Head, South Carolina 29938.

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.

<PAGE>

Officers

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

A. RAMA KRISHNA, Senior Vice President, 31, is a
Senior Vice President of ACMC, with which he has been
associated with since 1993. Previously he was Chief
Investment Strategist and Director- Equity Research at First
Boston Corporation since prior to 1990.

KARAN TREHAN, Senior Vice President, 41, is a
Senior Vice President of ACL with which he has been
associated since prior to 1991. Prior thereto, he was
Managing Director of Potomac Capital since prior to 1990.

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

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

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

EDMUND P. BERGAN. JR., Secretary, 45, is Senior
Vice President and General Counsel of AFD and AFS 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.

<PAGE>

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

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

STEPHEN M. ATKINS, Assistant Controller, 29, is a
Manager of International Mutual Fund Accounting of AFS since
July, 1992. Prior thereto, he was Supervisor in
International Mutual Fund Accounting since prior to 1990.

The Fund does not pay any fees to, or reimburse
expenses of its Directors who are considered "interested
persons" of the Fund. The aggregate compensation paid by
the Fund to each of the Directors during its fiscal year
ended October 31, 1994, and the aggregate compensation paid
to each of the Directors during calendar year 1994 by all of
the registered investment companies to which the Adviser
provides investment advisory services (collectively, the
"Alliance Fund Complex"), are set forth below. Each of the
Directors is a director or trustee of one or more other
registered investment companies in the Alliance Fund
Complex.

Total
Compensation
from the Total Number of Funds in
Alliance Fund the Alliance Fund Complex,
Aggregate Complex Including the Fund, as to
Name of Director Compensation including the which the Director is
of the Fund from the Fund Fund a Director or Trustee

John D. Carifa $-0- $-0- 42
David H. Dievler $-0- $-0- 49
John H. Dobkin $5,000 $110,750 29
W.H. Henderson $4,000 $ 22,250 5
Stig Host $4,000 $ 22,250 5
Richard M. Lilly $4,000 $ 22,250 5
Alan Stoga $4,000 $ 21,500 5
Hon. John C. West $4,000 $ 22,500 5
Robert C. White $5,000 $133,500 36

________________

As of May 24, 1995, the Directors and officers of the
Fund as a group owned 27.28% of the shares of the Fund.

<PAGE>

Adviser

Alliance Capital Management L.P., (the "Adviser"), a
Delaware limited partnership with principal offices at 1345
Avenue of the Americas, New York, New York 10105, has been
retained under an investment advisory agreement (the "Advisory
Agreement") as the Fund's Adviser (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

<PAGE>

activities in life insurance, property and casualty insurance and
reinsurance. The insurance operations are diverse geographically
with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage,
real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of
January 1, 1995, 42.3% of the issued shares (representing 54.7%
of the voting power) of AXA were owned by Midi Participations, a
French corporation that is a holding company. The voting shares
of Midi Participations are in turn owned 60% by Finaxa, a French
corporation that is a holding company, and 40% by subsidiaries of
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

<PAGE>

the Fund who are affiliated persons of the Adviser. The Adviser
or its affiliates also furnishes the Fund, without charge,
management supervision and assistance and office facilities and
provides persons satisfactory to the Fund's Board of Directors to
serve as the Fund's officers.

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

The Advisory Agreement became effective on October 21,
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

<PAGE>

party, at a meeting called for that purpose and held on
October 20, 1994, and by the Fund's initial shareholder on
October 20, 1994.

The Advisory Agreement will remain in effect until
June 30, 1996, and thereafter for successive twelve-month periods
(computed from each July 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 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., 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

<PAGE>

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 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.

Consultant

The Adviser has retained at its expense OCBC Asset
Management Limited ("OAM") as a consultant to provide to Alliance
such statistical and other factual information, research, advice
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
and 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 S1 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 Asia 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.

Administrator

Alliance Capital Management L.P. has been retained under
an administration agreement (the "Administration Agreement") to
perform administrative services necessary for the operation of
the Fund (in such capacity, the "Administrator").

Pursuant to the Administration Agreement and in
consideration of its administrative fee, the Administrator will

<PAGE>

perform or arrange for the performance of the following services
(i) prepare and assemble reports required to be sent to Fund
shareholders and arrange for the printing and dissemination of
such reports to shareholders; (ii) assemble reports required to
be filed with the Securities and Exchange Commission and file
such completed reports with the Securities and Exchange
Commission; (iii) arrange for the dissemination to shareholders
of the Fund's proxy materials and oversee the tabulation of
proxies by the Fund's transfer agent; (iv) negotiate the terms
and conditions under which custodian services will be provided to
the Fund and the fees to be paid by the Fund to its custodian in
connection therewith; (v) negotiate the terms and conditions
under which dividend disbursing services will be provided to the
Fund, and the fees to be paid by the Fund in connection
therewith; review the provision of dividend disbursing services
to the Fund; (vi) calculate, or arrange for the calculation of,
the net asset value of the Fund's shares; (vii) determine the
amounts available for distribution as dividends and distributions
to be paid by the Fund to its shareholders; prepare and arrange
for the printing of dividend notices to shareholders; and provide
the Fund's dividend disbursing agent and custodian with such
information as is required for it to effect the payment of
dividends and distributions and to implement the Fund's dividend
reinvestment plan; (viii) assist in providing to the Fund's
independent accountants such information as is necessary for such
accountants to prepare and file the Fund's federal income and
excise tax returns and the Fund's state and local tax returns;
(ix) monitor compliance of the Fund's operations with the 1940
Act and with its investment policies and limitations as currently
in effect; (x) provide accounting and bookkeeping services
(including the maintenance of such accounts, books and records of
the Fund as may be required by Section 31(a) of the 1940 Act and
the rules and regulations thereunder); and (xi) make such reports
and recommendations to the Board as the Board reasonably requests
or deems appropriate.

For the services rendered to the Fund and related
expenses borne by the Administrator, the Fund will pay the
Administrator a monthly fee at the annual rate of .15 of 1% of
the Fund's average daily net assets.

<PAGE>

___________________________________________________________

EXPENSES OF THE FUND
___________________________________________________________

Distribution Services Agreement

The Fund has entered into a Distribution Services
Agreement (the "Agreement") with Alliance Fund Distributors,
Inc., the Fund's principal underwriter (the "Principal
Underwriter"), to permit the Fund directly or indirectly to pay
expenses associated with 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 "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 on a quarterly basis. Also, the Agreement provides that the
selection and nomination of Directors who are not "interested
persons" of the Fund, as defined in the 1940 Act, are committed
to the discretion of such disinterested Directors then in office.
The Agreement was initially approved by the Directors of the Fund
at a meeting held on October 20, 1994, and by the Fund's initial
shareholder on October 20, 1994.

The Agreement became effective on October 21, 1994. The
Agreement will continue in effect until June 30, 1995 and
thereafter for successive twelve-month periods (computed from

<PAGE>

each July 1), 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 1940 Act) of that class,
and, in either case, by a majority of the Directors of the Fund
who are not parties to the Agreement or interested persons, as
defined in the 1940 Act, of any such party (other than as
directors of the Fund) and who have no direct or indirect
financial interest in the operation of the Rule 12b-1 Plan or any
agreement related thereto.

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

In the event that the Agreement is terminated or not
continued with respect to the Class A shares, Class B shares or
Class C shares, (i) no distribution services fees (other than
current amounts accrued but not yet paid) would be owed by the
Fund to the Principal Underwriter with respect to that class, and
(ii) the Fund would not be obligated to pay the Principal
Underwriter for any amounts expended under the Agreement not
previously recovered by the Principal Underwriter from
distribution services fees in respect of shares of such class or
through deferred sales charges.

All material amendments to the Agreement must be
approved by a vote of the Directors or the holders of the Fund's
outstanding voting securities, voting separately by class, and in
either case, by a majority of the disinterested Directors, cast
in person at a meeting called for the purpose of voting on such
approval; and the Agreement may not be amended in order to
increase materially the costs that a particular class may bear
pursuant to the Agreement without the approval of a majority of
the holders of the outstanding voting shares of the class
affected. The Agreement may be terminated (a) by the Fund
without penalty at any time by a majority vote of the holders of
the outstanding voting securities of the Fund, voting separately
by class or by a majority vote of the Directors who are not
"interested persons" as defined in the 1940 Act, or (b) by the
Principal Underwriter. To terminate the Agreement, any party
must give the other parties 60 days' written notice; to terminate
the Rule 12b-1 Plan only, the Fund need give no notice to the
Principal Underwriter. The Agreement will terminate
automatically in the event of its assignment.

<PAGE>

Transfer Agency Agreement

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

___________________________________________________________

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 S25 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.

<PAGE>

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

The public offering price of shares of the Fund is their
net asset value, plus, in the case of most purchases of Class A
shares, a sales charge which will vary depending on the purchase
alternative chosen by the investor and the amount of the
purchase, as shown in the table below. 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 three classes eventually
will tend to converge immediately after the payment of dividends,
which will differ by approximately the amount of the expense
accrual differential among the classes. A Fund business day is
any weekday, exclusive of national holidays on which the Exchange
is closed and Good Friday. For purposes of this computation,
Exchange-listed securities and over-the-counter securities
admitted to trading on the NASDAQ National List are valued at the
last quoted sale or, if no sale, at the mean of closing bid and
asked prices and portfolio bonds are presently valued by a
recognized pricing service. If accurate quotations are not
available, securities will be valued at fair value determined in
good faith by the Board of Directors.

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

<PAGE>

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 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.

<PAGE>

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

Alternative Purchases Arrangements

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

<PAGE>

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, or the accumulated distribution services fee on Class
C shares, would be less than the initial sales charge and
accumulated distribution services fee on Class A shares purchased
at the same time, and to what extent such differential would be
offset by the higher return of Class A shares. Class A shares
will normally be more beneficial than Class B shares to the
investor who qualifies for reduced initial sales charges on Class
A shares, as described below. In this regard, the Principal
Underwriter will reject any order (except orders from certain
retirement plans) for more than $250,000 for Class B shares.
Class C shares will normally not be suitable for the investor who
qualifies to purchase Class A shares at net asset value. For
this reason, the Principal Underwriter will reject any order for
more than t5,000,000 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

<PAGE>

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.

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.

<PAGE>

Sales Charge Discount or
Sales Charge As % of Commission
As % of Net the Public to Dealers or
Amount of Amount Offering Agents As % of
Purchase Invested Price Offering Price

Less than
$100,000 . . . 4.44% 4.25% 4.00%
$100,000 but
less than
250,000. . . . 3.36 3.25 3.00
250,000 but
less than
500,000. . . . 2.30 2.25 2.00
500,000 but
less than
1,000,000. . . 1.78 1.75 1.50

________________

There is no initial sales charge on transactions of $1,000,000 or
more.

With respect to purchases of $1,000,000 or more,
Class A shares redeemed within one year of purchase will be
subject to a contingent deferred sales charge equal to 1% of
the lesser of the cost of the shares being redeemed or their
net asset value at the time of redemption. Accordingly, no
sales charge will be imposed on increases in net asset value
above the initial purchase price. In addition, no charge
will be assessed on shares derived from reinvestment of
dividends or capital gains distributions. The contingent
deferred sales charge on Class A shares will be waived on
certain redemptions, as described below under "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 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 or agents for selling Class A Shares. With respect
to purchases of $1,000,000 or more made through selected
dealers or agents, the Manager may, pursuant to the
Agreement described above, pay such dealers or agents from
its own resources a fee of up to 1% of the amount invested
to compensate such dealers or agents for their distribution
assistance in connection with such purchases.

<PAGE>

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 $50,000 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 at April 30, 1995.

Net Asset Value per Class A Share at $10.24
April 30, 1994
Class A Per Share Sales Charge
- 4.25% of offering price 4.39 of
net asset value per share) .45
_
Class A Per Share Offering Price to
the public $10.69

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 initial sales charge or no initial sales
charge are described below.

Combined Purchase Privilege. Certain persons may
qualify for the sales charge reductions indicated in the
schedule of such charges 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

<PAGE>

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 Balanced Shares, Inc.
Alliance Bond Fund, Inc.
-Corporate Bond Portfolio
-U.S. Government Portfolio
Alliance Counterpoint Fund
Alliance Global Dollar Government Fund, Inc.
Alliance Global Small Cap Fund, Inc.
Alliance Growth and Income Fund, Inc.
Alliance Income Builder Fund, Inc.
Alliance International Fund
Alliance Mortgage Securities Income Fund, Inc.
Alliance Mortgage Strategy Trust, Inc.
Alliance Multi-Market Strategy Trust, Inc.
Alliance Municipal Income Fund, Inc.
-California Portfolio
-Insured California Portfolio
-Insured National Portfolio
-National Portfolio
-New York Portfolio
Alliance Municipal Income Fund II
-Arizona Portfolio
-Florida Portfolio

<PAGE>

-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

(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).

<PAGE>

For example, if an investor owned shares of an
Alliance Mutual Fund worth $200,000 at their then current
net asset value and, subsequently, purchased Class A shares
of the Fund worth an additional $100,000, the sales charge
for the $100,000 purchase would be at the 2.25% rate
applicable to a single $300,000 purchase of shares of the
Fund, rather than the 3.25% rate.

To qualify for the Combined Purchase Privilege or
to obtain the Cumulative Quantity Discount on a purchase
through a selected dealer or agent, the investor or selected
dealer or agent must provide the Principal Underwriter with
sufficient information to verify that each purchase
qualifies for the privilege or discount.

Statement of Intention. Class A investors may also
obtain the reduced sales charges shown in the table above by
means of a written Statement of Intention, which expresses
the investor's intention to invest not less than $100,000
within a period of 13 months in Class A shares (or Class A,
Class B 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 a
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 only be necessary to invest a total of
$60,000 during the following 13 months in shares of the Fund
or any other Alliance Mutual Fund, to qualify for the 3.25%
sales charge on the total amount being invested (the sales
charge applicable to an investment of $100,000).

<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 sales charge applicable to the shares
actually purchased if the full amount indicated is not
purchased, and such escrowed shares will be involuntarily
redeemed to pay the additional sales charge, if necessary.
Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to
escrow. When the full amount indicated has been purchased,
the escrow will be released. To the extent that an investor
purchases more than the dollar amount indicated on the
Statement of Intention and qualifies for a further reduced
sales charge, the sales charge will be adjusted for the
entire amount purchased at the end of the 13-month period.
The difference in sales charge will be used to purchase
additional shares of the Fund subject to the rate of sales
charge applicable to the actual amount of the aggregate
purchases.

Investors wishing to enter into a Statement of
Intention in conjunction with their initial investment in
Class A shares of the Fund should complete the appropriate
portion of the Subscription Application found in the
Prospectus while current Class A shareholders desiring to do
so can obtain a form of Statement of Intention by contacting
Alliance Fund Services, Inc. at the address or telephone
numbers shown on the cover of this Statement of Additional
Information.

Certain Retirement Plans. Multiple participant
payroll deduction retirement plans may also purchase shares
of the Fund or any other Alliance Mutual Fund at a reduced
sales charge on a monthly basis during the 13-month period
following such a plan's initial purchase. The sales charge
applicable to such initial purchase of shares of the Fund
will be that normally applicable, under the schedule of
sales charges set forth in this Statement of Additional
Information, to an investment 13 times larger than such
initial purchase. The sales charge applicable to each
succeeding monthly purchase will be that normally
applicable, under such schedule, to an investment equal to
the sum of (i) the total purchase previously made during the
13-month period, and (ii) the current month's purchase
multiplied by the number of months (including the current

<PAGE>

month) remaining in the 13-month period. Sales charges
previously paid during such period will not be retroactively
adjusted on the basis of later purchases.

Reinstatement Privilege. A Class A shareholder who
has caused any or all of his or her shares of the Fund to be
redeemed or repurchased may reinvest all or any portion of
the redemption or repurchase proceeds in Class A shares of
the Fund at net asset value without any sales charge,
provided that such reinvestment is made within 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 an initial sales charge) and without
any contingent deferred sales charge to certain categories
of investors including:

(i) investment management clients of the Adviser
or its affiliates;

(ii) officers and present or former Directors of
the Fund, present or former directors and
trustees of other investment companies managed
by the Adviser; present or retired full-time
employees of the Adviser; 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 full-time employees of

<PAGE>

selected dealers or agents; or the spouse,
sibling, direct ancestor or direct descendent
(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
sales are made 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;

(iv) in exchange for securities valued in the same
manner as securities held by the Fund; and

(v) persons participating in a fee-based program,
sponsored and maintained by a registered
broker-dealer and approved by the Principal
Underwriter, pursuant-to which such persons
pay an asset-based fee to such broker-dealer,
or its affiliate or agent, for service in the
nature of investment advisory or
administrative services.

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

<PAGE>

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).

The amount of the contingent deferred sales charge,
if any, will vary depending on the number of years from the
time of payment for the purchase of Class B shares until the
time of redemption of such shares.

Contingent Deferred Sales Charge as a %
Years Since Purchase of Dollar Amount Subject to Charge

Less than one 4.00%
One 3 00%
Two 2.00%
Three 1.00%
Four or more None

In determining the contingent deferred sales charge
applicable to a redemption, it will be assumed, in the case

<PAGE>

of Class B shares purchased on or after November 19, 1993,
that the redemption is first of any shares in the
shareholder's Fund account that are not subject to a
contingent deferred sales charge, second of Class B shares
held for over three years and third of Class A shares 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 shares are waived on redemptions of shares
(i) following the death or disability, as defined in the
Internal Revenue Code of 1986, as amended (the "Code"), of a
shareholder, (ii) to the extent that the redemption
represents a minimum required distribution from an
individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2 or (iii) that
had been purchased by present or former Directors of the
Fund, by the relative of any such person, by any trust,
individual retirement account or retirement plan account for
the benefit of any such person or relative, or by the estate
of any such person or relative.

Conversion Feature. At the end of the period
ending eight years after the end of the calendar month in
which the shareholder's purchase order was accepted, Class B
shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee.
Such conversion will be on the basis of the relative net
asset values of the two classes, without the imposition of
any sales load, fee or other charge. The purpose of the
conversion feature is to reduce the distribution services
fee paid by holders of Class B shares that have been
outstanding long enough for the Principal Underwriter to
have been compensated for distribution expenses incurred in
the sale of such shares.

For purposes of conversion to Class A, Class B
shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B shares in a
shareholder's account will be considered to be held in a
separate sub-account. Each time any Class B shares in the
shareholder's account (other than those in the sub-account)

<PAGE>

convert to Class A, an equal pro-rata portion of the Class B
shares in the sub-account will also convert to Class A.

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

Asset-Based Sales Charge Alternative--Class C Shares

Investors choosing the asset-based sales charge
alternative purchase Class C shares at the public offering
price equal to the net asset value per share of the Class C
shares on the date of purchase without the imposition of a
sales charge either at the time of purchase or upon
redemption. Class C shares are sold without an initial
sales charge so that the Fund will receive the full amount
of the investor's purchase payment and without a contingent
deferred sales charge so that the investor will receive as
proceeds upon redemption the entire net asset value of his
or her Class C shares. The Class C distribution services
fee enables the Fund to sell Class C shares without either
an initial or contingent deferred sales charge. 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.

<PAGE>

___________________________________________________________

REDEMPTION AND REPURCHASE OF SHARES
___________________________________________________________

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

Redemption

Subject only to the limitations described below,
the Fund's 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 Commission determines
that trading thereon is restricted, or for any period during
which an emergency (as determined by the Commission) exists
as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or as a result of
which it is not reasonably practicable for the Fund fairly
to determine the value of its net assets, or for such other
periods as the Commission may by order permits for the
protection of security holders of the Fund.

Payment of the redemption price may be made either
in cash or in portfolio securities (selected in the
discretion of the Directors of the Fund and taken at their
value used in determining the redemption price), or partly
in cash and partly in portfolio securities. However,
payments will be made wholly in cash unless the Directors
believe that economic conditions exist which would make such
a practice detrimental to the best interests of the Fund.
The Fund has filed a formal election with the Commission
pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular shareholder of

<PAGE>

record is redeeming more than $250,000 or 1% of the Fund's
total net assets, whichever is less, during any 90-day
period. In the opinion of the Fund's management, however,
the amount of a redemption request would have to be
significantly greater than $250,000 or 1% of total net
assets before a redemption wholly or partly in portfolio
securities would be made. If payment for shares redeemed is
made wholly or partly in portfolio securities, brokerage
costs may be incurred by the investor in converting the
securities to cash.

The value of a shareholder's shares on redemption
or repurchase may be more or less than the cost of such
shares to the shareholder, depending upon the market value
of the Fund's portfolio securities at the time of such
redemption or repurchase. Redemption proceeds on 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 or her shares, assuming the
shares constitute capital assets in his, 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 stock
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 stock
certificates have been issued can also be made by telephone
at (800) 221-5672 by a shareholder who has completed the
appropriate portion of the Subscription Application or, in
the case of an existing shareholder, an "Autosell"
application obtained from Alliance Fund Services, Inc. A
telephone redemption request must be for at least $500 and
may not exceed $100,000, and must be made between 9:00 a.m.
and 4:00 p.m. New York time on a Fund business day as
defined above. Proceeds of telephone redemptions will be
sent by Electronic Funds Transfer to a shareholder's
designated bank account at a bank selected by the
shareholder that is a member of the NACHA.

<PAGE>

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 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

<PAGE>

that the shares represented thereby, or a specified portion
thereof, be redeemed. The stock assignment form on the
reverse side of each stock certificate surrendered to the
Fund for redemption must be signed by the registered owner
or owners exactly as the registered name appears on the face
of the certificate or, alternatively, a stock power signed
in the same manner may be attached to the stock certificate
or certificates or, where tender is made by mail, separately
mailed to the Fund. The signature or signatures on the
assignment form must be guaranteed in the manner described
above.

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,
normally up to 15 calendar days following the purchase date.

___________________________________________________________

SHAREHOLDER SERVICES
___________________________________________________________

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

Automatic Investment Program

Investors may purchase shares of the Fund through
an automatic investment program utilizing "pre-authorized
check" drafts drawn on the investor's own bank account.
Under such a program, pre-authorized monthly drafts for a
fixed amount (at least $25) are used to purchase shares
through the selected dealer or selected agent designated by
the investor at the public offering price next determined
after the Principal Underwriter receives the proceeds from
the investor's bank. Drafts may be made in paper form or,
if the investor's bank is a member of the NACHA, in
electronic form. If made in paper form, the draft is
normally made on the 20th day of each month, or the next
business day thereafter. If made in electronic form, drafts
can be made on or about a date each month selected by the
shareholder. Investors wishing to establish an automatic
investment program in 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.

<PAGE>

Exchange Privilege

Class A shareholders of the Fund can exchange their
Class A shares for Class A shares of any other Alliance
Mutual Fund that offers Class A shares and for shares of
Alliance World Income Trust, Inc. without the payment of any
sales or service charges. For 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 each Alliance Mutual Fund may be
obtained by contacting Alliance Fund Services, Inc. at the
address shown on the cover of this Statement of Additional
Information or by telephone at (800) 227-4618 or, in
Illinois, (800) 227-4170.

Class B shareholders of the 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, and the original fund's contingent deferred sales
charge schedule 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

<PAGE>

involving the redemption of shares recently purchased by
check will be permitted only after the Alliance Mutual Fund
whose shares have been tendered for exchange is reasonably
assured that the check has cleared, normally up to 15
calendar days following the purchase date. Exchanges of
shares of Alliance Mutual Funds will generally result in the
realization of a capital gain or loss for Federal income tax
purposes.

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

Eligible shareholders desiring to make an exchange
should telephone Alliance Fund Services, Inc. with their
account number and other details of the exchange, at
(800) 221-5672 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

<PAGE>

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 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

<PAGE>

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 the qualified plan reaches $5
million on or before December 15 in any year, all Class B
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.

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.

<PAGE>

Dividend Direction Plan

A shareholder who already maintains, in addition to
his or her Class A, Class B or Class C Fund account, a Class
A, Class B or Class C account with one or more other
Alliance Mutual Funds may direct that income dividends
and/or capital gains paid on his or her Class A, Class B or
Class C Fund shares be automatically reinvested, in any
amount, without the payment of any sales or service charges,
in shares of the same class of such other Alliance Mutual
Fund(s). Further information can be obtained by contacting
Alliance Fund Services, Inc. at the address or the
"Literature" telephone number shown on the cover of this
Statement of Additional Information. Investors wishing to
establish a dividend direction plan in connection with their
initial investment should complete the appropriate section
of the Subscription Application found in the Prospectus.
Current shareholders should contact Alliance Fund Services,
Inc. to establish a dividend direction plan.

Systematic Withdrawal Plan

Any shareholder who owns or purchases shares of the
Fund having a current net asset value of at least $4,000
(for quarterly or less frequent payments), $5,000 (for
bi-monthly payments) or $10,000 (for monthly payments) may
establish a systematic withdrawal plan under which the
shareholder will periodically receive a payment in a stated
amount of not less than $50 on a selected date. Systematic
withdrawal plan participants must elect to have their
dividends and distributions from the Fund automatically
reinvested in additional shares of the Fund.

Shares of the Fund owned by a participant in the
Fund's systematic withdrawal plan will be redeemed as
necessary to meet withdrawal payments and such withdrawal
payments will be subject to any taxes applicable to
redemptions. 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

<PAGE>

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

___________________________________________________________

NET ASSET VALUE
___________________________________________________________

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

<PAGE>

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 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

<PAGE>

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, Class B
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 intends to qualify and elect to
be treated as a "regulated investment company" under
sections 851 through 855 of the Code. To so qualify, the
Fund must, among other things, (i) derive at least 90% of
its gross income in each taxable year from dividends,
interest, payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or
foreign currency, or certain other income (including, but
not limited to, gains from options, futures and forward
contracts) derived with respect to its business of investing
in stock, securities or currency; (ii) derive less than 30%
of its gross income in each taxable year from the sale or
other disposition within three months of their acquisition
by the Fund of stocks, securities, options, futures or
forward contracts and foreign currencies (or options,
futures or forward contracts on foreign currencies) that are
not directly related to the Fund's principal business of
investing in stock or securities (or options and futures
with respect to stocks or securities); and (iii) diversify
its holdings so that, at the end of each quarter of its
taxable year, the following two conditions are met: (a) at
least 50% of the value of the Fund's assets is represented
by cash, U.S. Government Securities, securities of other
regulated investment companies and other securities with
respect to which the Fund's investment is limited, in
respect of any one issuer, to an amount not greater than 5%
of the Fund's assets and 10% of the outstanding voting

<PAGE>

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.

<PAGE>

Dividends and Distributions. The Fund intends to
make timely distributions of the Fund's taxable income
(including any net capital gain) so that the Fund will not
be subject to federal income and excise taxes. Dividends of
the Fund's net ordinary income and distributions of any net
realized short-term capital gain are taxable to shareholders
as ordinary income.

The excess of net long-term capital gains over the
net short-term capital losses realized and distributed by
the Fund to its shareholders will be taxable to the
shareholders as long-term capital gains, irrespective of the
length of time a shareholder may have held his Fund shares.
Any dividend or distribution received by a shareholder on
shares of the Fund will have the effect of reducing the net
asset value of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a shareholder,
although in effect a return of capital to that particular
shareholder, would be taxable to him as described above.
Dividends are taxable in the manner discussed regardless of
whether they are paid to the shareholder in cash or are
reinvested in additional shares of the Fund.

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

<PAGE>

taxable to the shareholder as a long-term capital gain, any
loss recognized by the shareholder on the sale of those
shares during the six-month period will be treated as a
long-term capital loss to the extent of the dividend. In
determining the holding period of such shares for this
purpose, any period during which a shareholder's risk of
loss is offset by means of options, short sales or similar
transactions is not counted.

Any loss realized by a shareholder on a sale or
exchange of shares of the Fund will be disallowed to the
extent the shares disposed of are replaced within a period
of 61 days beginning 30 days before and ending 30 days after
the shares are sold or exchanged. For this purpose,
acquisitions pursuant to the Dividend Reinvestment Plan
would constitute a replacement if made within the period.
If disallowed, the loss will be reflected in an upward
adjustment to the basis of the shares acquired.

Foreign Taxes. Income received by the Fund may
also be subject to foreign income taxes, including
withholding taxes. The United States has entered into tax
treaties with many foreign countries which entitle the Fund
to a reduced rate of such taxes or exemption from taxes on
such income. It is impossible to determine the effective
rate of foreign tax in advance since the amount of the
Fund's assets to be invested within various countries is not
known. If more than 50% of the value of the Fund's total
assets at the close of its taxable year consists of stocks
or securities of foreign corporations, the Fund will be
eligible and intends to file an election with the Internal
Revenue Service to pass through to its shareholders the
amount of foreign taxes paid by the Fund. However, there
can be no 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

<PAGE>

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.

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

<PAGE>

will not give rise to any deduction or credit to the Fund or
to any shareholder. A PFIC means any foreign corporation
if, for the taxable year involved, either (i) it derives at
least 75% of its gross income from "passive income"
(including, but not limited to, interest, dividends,
royalties, rents and annuities), or (ii) on average, at
least 50% of the value (or adjusted tax basis, if elected)
of the assets held by the corporation produce "passive
income." The Treasury has issued proposed regulations which
would provide a "marked to market" election solely with
respect to gain inherent in PFIC stock held by a regulated
investment company, such as the Fund, which does not elect
to treat the PFIC as a "qualified electing fund." If the
proposed regulations are adopted in final form and the
election provided therein were to be made by the Fund, the
Fund would recognize a gain as of the last business day of
its taxable year equal to the excess of the fair market
value of each share of stock in the PFIC over the Fund's
adjusted tax basis in that share. This gain, which would be
treated as derived from securities held by the Fund for at
least three months, generally would not be subject to the
deferred tax and interest charge amounts to which it might
otherwise be subject, as discussed above, in the event of an
"excess distribution" or gain with regard to shares of a
PFIC. If the Fund purchases shares in a PFIC and the Fund
does elect to treat the foreign corporation as a "qualified
electing fund" under the Code, the Fund may be required to
include in its income each year a portion of the ordinary
income and net capital gains of the foreign corporation,
even if this income is not distributed to the Fund. Any
such income would be subject to the 90% and calendar year
distribution requirements described above.

Currency Fluctuations-"Section 988" Gains or
Losses. Under the Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time
the Fund accrues 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

<PAGE>

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
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.

<PAGE>

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 purposes. A straddle of

<PAGE>

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.

<PAGE>

Allocations are made by the officers of the Fund or
of the Adviser. Purchases and sales of portfolio securities
are determined by the Adviser and are placed with broker-
dealers by the order department of the Adviser.

The 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.

___________________________________________________________

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

<PAGE>

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.

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 outstanding voting shares of the Fund as of
May 24, 1995 consisted of 118,218,318 shares of common
stock. Of this amount 215,859.753 shares were Class A,
318,373.876 shares were Class B and 19,235.705 were Class C.
Set forth below is certain information as to all persons who
owned of record or beneficially 5% or more of either class
of the Fund's outstanding shares at May 31, 1995.

<PAGE>

Name and Address No. of % of % of % of
Shares Class A Class B Class C

Merrill Lynch 26,661 1
4800 Deer Lake Dr East 94,190 32
Jacksonville, FL 32246

Alliance Capital Mgmt. 10,000 5
1345 Avenue of the Americas
New York, NY 10105

Rauscher Pierce Refsnes 9,834 5
FBO John P. Thompson IRA
2711 W Haskell
Dallas, TX 75204

Alliance Plans Div/FTC 32,795 18
C/F Sarah J. Sonnette IRA 964 5
5585 East Evergreen Blvd.
Apt. 5203
Vancouver, WA 98661

Yo-Sung Cho 4,450 25
58 Crescent Place
Short Hills, NJ 07078

Donaldson Lufkin & Jenrette 4,219 23
Securities Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07383

Jonathan Francis 987 5
ADA Gonzalez-Francis JTWROS
330 Central Park Avenue
Apt. 9F
Scarsdale, NY 10583

Resources Trust Co. 1,053 6
C/F Raymond C Loemr DRP
PO Box 5900
Denver, CO 80217

David H. Dievler 32,795 17.47
P.O. Box 167
Spring Lake, NJ 07762

<PAGE>

Custodian

Brown Brothers Harriman & Co. ("Brown Brothers"),
40 Wall Street, Boston, Massachusetts, 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 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.

<PAGE>

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 Auditors

Ernst & Young LLP, 787 Seventh Avenue, New York,
New York, has been appointed as independent auditors for the
Fund.

Total Return Quotations

From time to time the Fund advertises its "total
return." Computed separately for each class, the Fund's
"total return" is its average annual compounded total return
for recent one, five, and ten-year periods (or the period
since the Fund's inception). The Fund's total return for
such a period is computed by finding, through the use of a
formula prescribed by the Securities and Exchange
Commission, the average annual compounded rate of return
over the period that would equate an assumed initial amount
invested to the value of such investment at the end of the
period. For purposes of computing total return, income
dividends and capital gains distributions paid on shares of
the Fund are assumed to have been reinvested when paid and
the maximum sales charge applicable to purchases of Fund
shares is assumed to have been paid. The Fund will include
performance data for Class A and Class B shares in any
advertisement or information including performance data of
the Fund.

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.

<PAGE>

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.

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.

88
00250157.BA1

<PAGE>

PORTFOLIO OF INVESTMENTS Alliance All-Asia Investment Fund
April 30, 1995 (unaudited)

Company Shares U.S. $ Value
- ----------------------------------------------------------------------
COMMON STOCKS & OTHER INVESTMENTS-86.0%
AUSTRALIA-2.4%
Boral, Ltd. 24,539 $ 62,291
Renison Goldfields
Consolidated, Ltd. 18,000 62,188
rights expiring 5/24/95* 4,176 -0-
124,479

HONG KONG-18.1%
Cheung Kong
Holdings, Ltd. 19,000 80,261
Citic Pacific, Ltd. 30,000 74,021
Dao Heng Bank Group, Ltd. 10,000 25,578
Hong Kong & China Gas Co., Ltd. 60,000 87,198
Hong Kong & Shanghai Hotels 18,500 22,465
Hopewell Holdings 100,000 71,050
Jardine International Motor
Holdings, Ltd. 8,000 8,164
New World Development Co., Ltd. 30,000 77,897
Orient Telecom & Technology
Holdings, Ltd.* 237,000 76,541
Peregrine Investment
Holdings, Ltd. 60,000 63,170
Shun Tak Holdings, Ltd. 70,000 42,275
Sun Hung Kai Properties, Ltd. 16,000 102,106
Swire Pacific, Ltd. Cl.A 6,000 40,111
Television Broadcasts, Ltd. 24,000 89,136
Yizheng Chemical
Fibre Co., Ltd. 200,000 65,883
925,856

INDIA-4.0%
Bajaj Auto, Ltd. (GDR) 6,000 $152,280
Hindalco Industries, Ltd. (GDR)(a) 2,000 52,000
204,280

INDONESIA-5.7%
PT Astra International 19,000 24,250
PT Indosat 20,000 72,100
PT HM Sampoerna 28,000 164,263
PT Indo-Rama Synthetics 10,500 32,210
292,823

JAPAN-25.7%
Asahi Bank, Ltd. 2,000 25,701
Bank of Tokyo, Ltd. 1,000 18,086
Canon, Inc. 2,000 33,078
Chiba Bank 1,000 10,114
DDI Corp. 4 35,219
Dai-Ichi Kangyo Bank 4,000 81,861
Dai Nippon Printing Co., Ltd. 1,000 16,777
Daiwa Securities Co., Ltd. 1,000 12,612
Fuji Photo Film Co. 3,000 73,532
Heiwa Corp. 3,000 79,243
Hitachi, Ltd. 2,000 20,346
House Food Industry Corp. 1,000 20,227
Kao Corp. 2,000 24,273
Kirin Brewery Co., Ltd. 1,000 11,875
Kuraray Co., Ltd. 4,000 47,546
Matsushita Electric Industrial Co. 3,000 50,330
Matsushita Electric Works 2,000 24,035
Mitsubishi Heavy Industries, Ltd. 2,000 14,516
Mitsui Marine & Fire Insurance Co. 7,000 53,055

PORTFOLIO OF INVESTMENTS (continued) Alliance All-Asia Investment Fund

Company Shares U.S. $ Value
- ----------------------------------------------------------------------
Mitsui Trust & Banking Co., Ltd. 5,000 $ 56,041
National House Industrial 1,000 20,465
Nikko Securities Co., Ltd. 2,000 19,609
Nintendo Corp., Ltd. 1,200 76,959
Nippon Paper Industries Co. 1,000 7,770
Nippon Telegraph & Telephone Corp. 3 26,522
Nippon Express Co., Ltd. 1,000 9,888
Nippon Steel Corp. 4,000 15,896
Nippon Electric Glass Co., Ltd. 1,000 17,729
Nomura Securities Co., Ltd. 3,000 60,682
NTN Corp. 2,000 13,231
Osaka Gas Co. 5,000 20,525
Rohm Co. 1,000 46,285
Sanyo Electric Co., Ltd. 2,000 11,280
Sumitomo Bank, Ltd. 3,000 64,965
Takara Shuzo Co. 1,000 8,174
Takeda Chemical Industries 1,000 13,326
Tokyo Electric Power Co., Ltd. 1,000 32,007
Tokyo Gas Co., Ltd. 8,000 36,552
Tostem Corp. 1,000 36,290
Toyota Motor Corp. 2,000 40,692
UBE Industries, Ltd. 1,000 4,117
Yamanouchi Pharmaceutical Co.,Ltd. 1,000 22,488
1,313,919

MALAYSIA-10.2%
Aokam Perdana Berhad 10,000 $ 44,912
AMMB Holdings Berhad 11,000 108,598
Lion Land Berhad 60,000 69,188
Malaysian International Shipping Berhad30,000 77,686
Perusahaan Otomobil Nasional Berhad 20,000 67,975
Resorts World Berhad 16,000 84,158
YTL Corp. Berhad 15,000 67,975
520,492

PHILIPPINES-4.5%
International Container
Terminal Services, Inc.* 131,250 73,057
Manila Electric Company Series B 15,000 159,789
232,846

SINGAPORE-8.4%
Fraser & Neave, Ltd. 5,000 54,898
Oversea-Chinese Banking Corp., Ltd. 5,000 54,538
Overseas Union Bank, Ltd. 14,000 80,875
Singapore Airlines, Ltd. 14,000 134,625
Singapore Press Holdings 6,000 103,337
428,273

SOUTH KOREA-1.5%
Korea Mobile Telecom (GDS) 2,700 77,976

Alliance All-Asia Investment Fund

Company Shares U.S. $ Value
- ----------------------------------------------------------------------
THAILAND-5.5%
Bangkok Bank Co., Ltd. 10,000 $ 96,768
Bank of Ayudhya, Ltd. 20,000 89,448
Thai Airways International, Ltd. 42,000 96,483
282,699

Total Common Stocks & Other Investments
(cost $4,341,688) 4,403,643

TIME DEPOSIT-19.5%
BNP
5.95%, 5/01/95
(cost $1,000,000) US $1,000 $1,000,000

TOTAL INVESTMENTS-105.5%
(cost $5,341,688) 5,403,643
Other assets less liabilities-(5.5%) (282,851)
NET ASSETS-100% $5,120,792

* Non-income producing security.
(a) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At April 30, 1995 this security
amounted to $52,000 or 1.0% of net assets.
Glossary of Terms:
GDR-Global depository receipt
GDS-Global depository security
See notes to financial statements.

STATEMENT OF ASSETS AND LIABILITIES Alliance All-Asia Investment Fund
April 30, 1995 (unaudited)]

ASSETS
Investments in securities, at value (cost $5,341,688) $5,403,643
Cash, at value (cost $382,749) 382,401
Receivable for investment securities sold 1,290,672
Receivable from investment advisor 180,530
Deferred organization expense 174,261
Receivable for capital stock sold 48,349
Dividends and interest receivable 14,856
Total assets 7,494,712
LIABILITIES
Payable for investment securities purchased 2,276,122
Advisory fee payable 15,721
Payable for capital stock redeemed 3,123
Distribution fee payable 2,915
Accrued expenses 76,039
Total liabilities 2,373,920
NET ASSETS $5,120,792
COMPOSITION OF NET ASSETS
Capital stock, at par $5,005
Additional paid-in capital 5,023,552
Undistributed net investment income 47,184
Accumulated net realized loss on investments and foreign
currency transactions (18,904)
Net unrealized appreciation of investments and foreign currency
denominated assets and liabilities 63,955
$5,120,792
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share ($1,916,569/187,137
shares of capital stock issued and outstanding) $10.24
Sales charge--4.25% of public offering price .45
Maximum offering price $10.69
Class B Shares
Net asset value and offering price per share ($3,018,837/295,243
shares of capital stock issued and outstanding) $10.22
Class C Shares
Net asset value, redemption and offering price per share
($185,386/18,109 shares of capital stock issued and outstanding) $10.24

* Commencement of operations.
See notes to financial statements.

STATEMENT OF OPERATIONS
November 28, 1994* to April 30, 1995 (unaudited)
Alliance All-Asia Investment Fund

INVESTMENT INCOME
Interest $ 36,697
Dividends (net of foreign taxes withheld of $855) 20,376 $ 57,073
EXPENSES
Advisory fee 15,722
Distribution fee-Class A 1,774
Distribution fee-Class B 9,291
Distribution fee-Class C 515
Custodian 40,978
Audit and legal 30,862
Registration 28,321
Transfer agency 17,226
Amortization of organization expenses 15,725
Printing 13,912
Trustees' fees 10,125
Administrative 2,358
Miscellaneous 3,258
Total expenses 190,067
Less expenses waived and assumed by
advisor (see Note B) (180,178)
Net expenses 9,889
Net investment income 47,184

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on security transactions 28,741
Net realized loss on foreign currency transaction (47,645)
Net change in unrealized appreciation of:
Investments 61,955
Foreign currency denominated assets and liabilities 2,000
Net gain on investments and foreign currency transactions 45,051
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 92,235

* Commencement of operations
See notes to financial statements.

STATEMENT OF CHANGES IN NET ASSETS
November 28, 1994* to April 30, 1995 (unaudited)
Alliance All-Asia Investment Fund

INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income. $47,184
Net realized loss on investments and foreign currency transactions (18,904)
Net change in unrealized appreciation of investments and foreign
currency denominatied assets and liabilities 63,955
Net increase in net assets from operations 92,235
CAPITAL STOCK TRANSACTIONS
Net increase 4,926,557
Total increase 5,018,792
NET ASSETS
Beginning of period 102,000
End of period $5,120,792

* Commencement of operations
See notes to financial statements.

NOTES TO FINANCIAL STATEMENTS
April 30, 1995 (unaudited) Alliance All-Asia Investment Fund

NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance All-Asia Investment Fund, Inc. (the 'Fund'), organized as a Maryland
corporation on September 21, 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 and Class C shares, of common stock for the aggregate amount of
$102,000 on October 18, 1994. Class A, Class B and Class C shares commenced
operations on November 28, 1994. The Fund offers three classes of 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. Class C shares are sold without an initial or
contingent deferred sales charge. All three classes of shares have identical
voting, dividend, liquidation and other rights, except that each class bears
different distribution expenses and has exclusive voting rights with respect to
its distribution plan. The following is a summary of significant accounting
policies followed by the Fund.

1. SECURITY VALUATION
Portfolio securities traded on 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 $192,000 have been deferred and are
being amortized on a straight-line basis through October, 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 loss on foreign currency transactions of $47,645 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 acutally 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 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.

NOTES TO FINANCIAL STATEMENTS (continued) Alliance All-Asia Investment Fund

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.

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 $1,829 from the sale of Class A shares and $475 in
contingent deferred sales charges imposed upon redemptions by shareholders of
Class B for the period ended April 30, 1995.

Brokerage commissions paid on securities transactions for the period ended
April 30, 1995, amounted to $40,400, 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
$349,576 and $3,891 for Class B and Class C shares respectively; such costs may
be recovered from the Fund in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs, incurred by the Distributor, beyond the
current fiscal year for Class A shares. The Agreement also provides that the
Adviser may use its own resources to finance the distribution of the Fund's
shares.

NOTE D: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $5,333,591 and $1,020,644, respectively, for the period ended April
30, 1995. There were no purchases or sales of U.S. Government and government
agency obligations for the period ended April 30, 1995. At April 30, 1995, the
cost of securities for federal income tax purposes was the same as the cost for
financial reporting purposes.

Alliance All-Asia Investment Fund

NOTE E: CAPITAL STOCK
There are 9,000,000,000 shares of $0.001 par value capital stock authorized,
divided into three classes, designated Class A, Class B and Class C. Each class
consists of 3,000,000,000 authorized shares.

Transactions in capital stock were as follows:

SHARES AMOUNT
-------------- --------------
November 28, November 28
1994* 1994*
to to
April 30, 1995 April 30, 1995
-------------- --------------
CLASS A
Shares sold 208,281 $2,089,368
Shares redeemed (31,144) (311,012)
Net increase 177,137 $1,778,356
CLASS B
Shares sold 331,357 $3,331,911
Shares redeemed (36,214) (364,848)
Net increase 295,143 $2,967,063
CLASS C
Shares sold 37,741 $ 379,025
Shares redeemed (19,732) (197,887)
Net increase 18,009 $ 181,138

NOTE F: CONCENTRATON 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 economies 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.

* Commencement of operations

FINANCIAL HIGHLIGHTS Alliance All-Asia Investment Fund

Selected Data For A Share of Capital Stock Outstanding Throughout Each Period

CLASS A CLASS B CLASS C
------------ ---------- -----------
Nov. 28, Nov. 28, Nov. 28,
1994* to 1994* to 1994* to
April 30, April 30, April 30,
1995 1995 1995
--------- ---------- ------------
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00

INCOME FROM INVESTMENT OPERATIONS
Net investment income .11** .09** .08**
Net realized and unrealized loss on
investments .13 .13 .16
Net increase in net asset value from
operations .24 .22 .24
Net asset value, end of period $ 10.24 $ 10.22 $ 10.24

TOTAL RETURN
Total investment return based on
net asset value(b) 2.40% 2.20% 2.40%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,917 $3,019 $ 185
Ratio to average net assets of:
Expenses, net of waivers/reimbursements .19%(a) .90%(a) .71%(a)
Expenses, before waivers/reimbursements 11.71%(a) 12.35%(a) 11.80%(a)
Net investment income, net of
waivers/reimbursements 3.44%(a) 2.73%(a) 2.87%(a)
Portfolio turnover rate 51% 51% 51%

* Commencement of operations.
** Net of fee waived and expenses reimbursed by the Adviser.
(a) Annualized.
(b) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or contingent
deferred sales charges are not reflected in the calculation of total investment
return. Total investment return calculated for period of less than one year is
not annualized.

<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

A-1

<PAGE>

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
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

A-2

<PAGE>

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 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

A-3

<PAGE>

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-4
00250157.BA1

<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

B-1

<PAGE>

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 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, when the Fund has sold futures to hedge its portfolio

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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 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

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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 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

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<PAGE>

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.

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

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<PAGE>

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.

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 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

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<PAGE>

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 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-

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<PAGE>

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.

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<PAGE>

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 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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00250157.BA1

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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

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future. Uncertainty of position characterizes bonds in this
class.

B: Bonds which are rated B generally lack
characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be
small.

Caa: Bonds which are rated Caa are of poor
standing. Such issues may be in default or there may be
present elements of danger with respect to principal or
interest.

Ca: Bonds which are rated Ca represent obligations
which are speculative 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

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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 Rating Group

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.

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

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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.

Duff & Phelps Long-Term Rating Scale

AAA: Highest credit quality. The risk factors are
negligible.

AA+, AA, AA-: High credit quality. Protection
factors are strong. Risk is modest but may vary slightly
from time to time because of economic conditions.

A+, A, A-: Protection factors are average but
adequate. However, risk factors are more variable and
greater in periods of economic stress.

BBB+, BBB, BBB-: Below average protection factors
but still considered sufficient for prudent investment.
Considerable variability in risk during economic cycles.

BB+, BB, BB-: Below investment grade but deemed
likely to meet obligations when due. Present or prospective
financial protection factors fluctuate according to industry
conditions or company fortunes. Overall quality may move up
or down frequently within this category.

B+, B, B-: Below investment grade and possessing
risk that obligations will not be met when due. Financial
protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating
grade.

CCC: Well below investment grade securities.
Considerable uncertainty exists as to timely payment of
principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with

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unfavorable economic/industry conditions, and/or with
unfavorable company developments.

DD: Defaulted debt obligations. Issuer failed to
meet scheduled principal and/or interest payments.

Fitch Investors Service Bond Ratings

AAA. Securities of this rating are regarded as
strictly high-grade, broadly marketable, suitable for
investment by trustees and fiduciary institutions, and
liable to but slight market fluctuation other that through
changes in the money rate. The factor last named is of
importance varying with the length of maturity. Such
securities are mainly senior issues of strong companies, and
are most numerous in the railway and public utility fields,
though some industrial obligations have this rating. The
prime feature of an AAA rating is showing of earnings
several times or many times interest requirements with such
stability of applicable earnings that safety is beyond
reasonable question whatever changes occur in conditions.
Other features may enter in, such as a wide margin of
protection through collateral security or direct lien on
specific property as in the case of high class equipment
certificates or bonds that are first mortgages on valuable
real estate. Sinking funds or voluntary reduction of the
debt by call or purchase are often factors, while guarantee
or assumption by parties other than the original debtor may
also influence the rating.

AA. Securities in this group are of safety
virtually beyond question, and as a class are readily
salable while many are highly active. Their merits are not
greatly unlike those of the AAA class, but a security so
rated may be of junior though strong lien-- in many cases
directly following an AAA security--or the margin of safety
is less strikingly broad. The issue may be the obligation
of a small company, strongly secured but influenced as to
ratings by the lesser financial power of the enterprise and
more local type of market.

A. A securities are strong investments and in many
cases of highly active market, but are not so heavily
protected as the two upper classes or possibly are of
similar security but less quickly salable. As a class they
are more sensitive in standing and market to material
changes in current earnings of the company. With favoring
conditions such securities are likely to work into a high

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rating, but in occasional instances changes cause the rating
to be lowered.

BBB. BBB rated bonds are considered to be
investment grade and of satisfactory quality. The obligor's
ability to pay interest and repay principal is considered to
be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to weaken this
ability than bonds with higher ratings.

Fitch Commercial Paper and
Certificate of Deposit Ratings

Fitch Commercial Paper Ratings are assigned at the
request of an issuer to debt obligations with an original
maturity not in excess of Z70 days. The ratings reflect
Fitch current appraisal of the degree of assurance of timely
payment of such debt. Fitch compensated for this service by
an annual fee paid by the issuer under a contractual
agreement which specifies among other things that ratings
may be changed or withdrawn at any time if, in Fitch's sole
judgment, changing circumstances warrant such action.

Fitch Certificate of Deposit ratings are assigned
at the request of the issuer to deposits with maturities of
up to three years. Ratings apply to uninsured principal and
interest and reflect only those credit characteristics
inherent in certificates of deposit. Such ratings should be
considered only in the context of ratings assigned to
certificates of deposit and not to ratings which may be
assigned to non-deposit liabilities. Ratings for CDs with
maturities over 3 years will be assigned bond rating
symbols. For definitions refer to page 1 of the Rating
Register.

Fitch commercial paper ratings are grouped into
four categories, two of which are defined below:

Fitch-1 (Highest Grade) Commercial paper assigned
this rating is regarded as having the strongest degree of
assurance for timely payment.

Fitch-2 (Very Good Grade) issues assigned this
rating reflect an assurance of timely payment only slightly
less in degree than the strongest issues.

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Fitch Investment Note Ratings

Fitch investment Note Ratings are grouped into four
categories with the indicated symbols. The ratings on notes
with maturities generally up to three years reflect Fitch's
current appraisal of the degree of assurance of timely
payment, whatever the source.

FIN-1 -- Notes assigned this rating are regarded as
having the strongest degree of assurance for timely payment.

FIN-2 -- Notes assigned this rating reflect a
degree of assurance for timely payment only slightly less in
degree than the highest category.

A plus symbol may be used in the three highest
categories to indicate relative standing. The Note Ratings
will usually correspond with Bond Ratings, although certain
security enhancements or market access may mean that notes
will not track bond.

C-7
00250157.BA1

<PAGE>

APPENDIX D: JAPAN

Japan, located in eastern Asia, consists of four
main islands, Hokkaido, Honshu, Kyushu and Shikoku, and many
small islands. Its population is approximately 125 million.

The government of Japan is a representative
democracy whose principal executive is the Prime Minister.
Japan's legislature (known as the Diet) consists of two
houses, the House of Representatives (the lower house) and
the House of Councillors (the upper house).

Politics

From 1955 to 1993, Japan's government was
controlled by the Liberal Democratic Party (the "LDP"), the
major conservative party. In August 1993, after a main
faction left the LDP over the issue of political reform, a
non-LDP coalition government was formed consisting of
centrist and leftist parties and was headed by Prime
Minister Morihiro Hosokawa. In April 1994, Mr. Hosokawa
resigned due to allegations of personal financial
irregularities. The coalition members thereafter agreed to
choose as prime minister the foreign minister, Tsutomu Hata.
As a result of the formation of a center-right voting bloc,
however, the Social Democratic Party of Japan (the "SDPJ"),
a leftist party, withdrew from the coalition. Consequently,
Mr. Hata's government was a minority coalition, the first
since 1955, and was therefore inherently unstable. In June
1994, Mr. Hata and his coalition were replaced by a new
coalition made up of the SDPJ, the LDP and the New Party
Harbinger. This coalition is led by the present prime
minister Tomiichi Murayama, the first Socialist prime
minister in 47 years. Various political parties within the
present coalition are calling for political reform that
could split the government and lead to new political
alignments. Thus, the stability of the current ruling
coalition is not assured.

Economy

The Japanese economy maintained an average annual
growth rate of 3.9% in real GDP terms from 1980 through
1992, compared with 2.1% for the United States during the
same period. In 1992, Japan's real GDP growth rate fell to
1.3% and there was little or no growth in GDP in 1993.

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Inflation has remained low, estimated at 1.5% for 1993.
Consumer expenditures dropped 0.9% in 1993 from 1992 due to
prevalent fears that have affected consumer and business
sentiment, such as the fear of corporate restructuring.
Recently, Japanese companies have taken steps designed to
address the economic downturn. These steps include reducing
overtime and bonus payments and initiating or accelerating
early retirement programs. Overall employment, however,
increased in 1993. Employment growth has been shifting from
the manufacturing to the service industry, a trend expected
to continue in 1994. Although investment has declined from
the high levels of the late 1980s and the recent
appreciation of the Japanese Yen against the U.S. Dollar has
curtailed business profits and weakened exports, increases
in housing and public investment and a decline in imports in
the early part of 1993 have provided some buffers to the
economy's recent downturn.

Japan's post World War II reliance on heavy
industries has shifted to higher technology products
assembly and, most recently, to automobile, electrical and
electronic production. Japan's success in exporting its
products has generated sizeable trade surpluses. Japan is
in a difficult phase in its relations with its trading
partners that is partly due to the concentration of Japanese
exports in products such as automobiles, machine tools and
semiconductors and the large trade surpluses ensuing
therefrom, recent large and visible Japanese real estate
investments in the U.S. and an overall trade imbalance as
indicated by Japan's balance of payments. Although probable
that the recent improvement of the U.S. economy, a
significant decrease in the U.S. trade deficit with Japan
and an increased competitiveness and success in
manufacturing, such as with the U.S. automobile industry,
has had a negative effect on Japan's growth, Japan's overall
trade surplus for 1993 remained the largest in its history,
amounting to $120 billion. Exports totaled $362 billion, up
6.2% from 1992, and imports were $242 billion, up 3.5% from
1992. The current account surplus in 1993 was a record $131
billion. Consequently, Japan has become the largest
creditor nation and a significant donor of foreign aid. On
October 1, 1994, the U.S. and Japan reached an agreement
that may lead to more open Japanese markets with respect to
insurance, glass and medical and telecommunications
equipment. 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

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Japan. The sanctions process takes twelve to eighteen
months and, therefore, it will be late 1995 at the earliest
before any trade sanctions are imposed upon Japanese
exports.

In response to pressures exerted by the slumping
economy and the growing trade surplus, the government, in
April and September 1993, announced emergency economic
packages which included stimulus plans totaling 19.2
trillion Yen for 1994 and numerous legislative provisions.
A significant amount of the expenditures was allocated for
improving infrastructure, public works projects, low-
interest loans used for housing, and low interest small
business loans. Most importantly, the September 1993
package includes an elimination or relaxation of government
regulations, a reduction of import costs, an extension of
subsidies to companies for sustaining excess workers in
order to curb unemployment, and an offer of tax breaks to
middle-incometaxpayers for educational expenses and to
companies for operational streamlining in order to influence
lower retail costs. In early 1994, the government responded
to the business and financial communities by providing an
immediate income-tax cut.

The Japanese Yen has been generally appreciating
against the U.S. Dollar for the past decade. In 1994,
through September 30, the Japanese Yen high against the U.S.
Dollar was 96.81 Yen per dollar and the low was i113.10 per
dollar. The average for 1994 through September 30 was
W103.37 per dollar. On October 19, 1994, the exchange rate
was i97.36 per dollar.

Japanese Stock Exchanges

Currently, there are eight stock exchanges in
Japan. The Tokyo Stock Exchange (the "TSE"), the Osaka
Securities Exchange and the Nagoya Stock Exchange are the
largest, together accounting for approximately 99% of the
share trading volume and for about 98.9% of the overall
market value of all shares traded on Japanese stock
exchanges during the year ended December 31, 1993. The
other stock exchanges are located in Kyoto, Hiroshima,
Fukuoka, Niigata and Sapporo. The chart below presents
share trading volume and overall market value information of
each of the three major Japanese stock exchanges for the
years 1989 through 1993.

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<PAGE>

Share Trading Volume and Market Value
on Japanese Stock Exchanges
(mils. of shares, yen bils.)
<TABLE>
<CAPTION>
All Exchanges Tokyo Osaka Nagoya
Volume Value Volume Value Volume Value Volume Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1989 256,296 386,395 222,599 332,617 25,096 41,679 7,263 10,395
1990 145,837 231,837 123,099 186,667 17,187 35,813 4,323 7,301
1991 107,844 134,160 93,606 110,897 10,998 18,723 2,479 3,586
1992 82,563 80,456 66,408 60,110 12,069 15,575 3,300 3,876
1993 101,173 106,123 86,935 86,889 10,440 14,635 2,780 3,459
</TABLE>

Sources: The Tokyo Stock Exchange 1994 Fact Book and 1993
Fact Book. Trading volume and value of foreign
stocks are not included.

At end of the third quarter of 1994, the market
capitalization of the First Section of the TSE (described
below) was approximately 40% below its all-time high reached
in 1989. Although the price/earnings ratios of individual
companies vary widely from company to company, absolute
Japanese price/earnings ratios are high in comparison with
other major stock markets. Other valuation measures, such
as price-to-book value and price-to-cash flow ratios, show
that the Japanese market is near its lowest level in the
last 20 years relative to other world markets.

The Tokyo Stock Exchange

Overview of the Tokyo Stock Exchange. The TSE is
the largest of the Japanese stock exchanges and as such is
widely regarded as the principal securities exchange for all
of Japan. In 1993, the TSE accounted for 81.9% of the
market value and 85.9% of the share trading volume on all
Japanese stock exchanges. A foreign stock section on the
TSE, consisting of shares of non-Japanese companies, listed
110 non-Japanese companies at the end of 1993. The market
for stock of Japanese issuers on the TSE is divided into a
First Section and a Second Section. The First Section is
generally for larger, established companies (in existence
for five years or more) that meet stringent listing criteria
relating to the size and business condition of the issuing
company, the liquidity of its securities and other factors
pertinent to investor protection. The TSE's Second Section
is for smaller companies and newly listed issuers.

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<PAGE>

Sector Analysis of the First and Second Sections.
The TSE's domestic stocks include a broad cross-section of
companies involved in many different areas of the Japanese
economy. At the end of 1993, the four largest industry
sectors, based on market value, listed on the TSE were
banking, with 101 companies representing 23.8% of all
domestic stocks listed on the TSE; electric appliances, with
172 companies representing 10.2% of all domestic stocks so
listed; transportation equipment, with 82 companies
representing 6.6% of all domestic stocks so listed; and
electric power and gas, with 16 companies representing 5.4%
of all domestic stocks so listed. No other industry sector
represented more than 5% of TSE listed domestic stocks.

Market Growth of the TSE. The First and Second
Sections of the TSE grew in terms of both average daily
trading value and aggregate year-end market value from 1982,
when they were Y128,320 million and Y98,090 billion,
respectively, through the end of 1989, when they were
Y1,335,810 million and Y611,152 billion, respectively.
Following the peak in 1989, both average daily trading value
and aggregate year-end market value declined through 1992
when they were #243,362 million and Y289,483 billion,
respectively. In 1993, both average daily trading value and
aggregate year-end market value increased and were Y353,208
million and i324,357 billion, respectively.

Market Performance of the First Section. 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.

Japanese Foreign Exchange Controls

Under Japan's Foreign Exchange and Foreign Trade
Control Law and cabinet orders and ministerial ordinances
thereunder (the "Foreign Exchange Controls"), prior
notification to the Minister of Finance of Japan (the
"Minister of Finance") of the acquisition of shares in a
Japanese company from a resident of Japan (including a
corporation) by a non-resident of Japan (including a
corporation) is required unless the acquisition is made from
or through a securities company designated by the Minister

D-5

<PAGE>

of Finance or if the yen equivalent of the aggregate
purchase price of shares is not more than 100 million Yen.
Even in these situations, if a foreign investor intends to
acquire shares of a Japanese corporation listed on a
Japanese stock exchange or traded on a Japanese over-the-
counter market (regardless of the person from or through
whom the foreign investor acquires such shares) and as a
result of the acquisition the foreign investor would
directly or indirectly hold 10% or more of the total
outstanding shares of that corporation., the foreign
investor must file a report within 15 days from and
including the day of such acquisition with the Minister of
Finance and any other minister with proper jurisdiction. In
instances where the acquisition concerns national security
or meets certain other conditions specified in the Foreign
Exchange Controls, the foreign investor must file a prior
notification with respect to the proposed acquisition with
the Minister of Finance and any other minister with proper
jurisdiction. The ministers may make a recommendation to
modify or prohibit the proposed acquisition if they consider
that the acquisition would impair the safety and maintenance
of public order in Japan or harmfully influence the smooth
operation of the Japanese economy. If the foreign investor
does not accept the recommendation, the ministers may issue
an order modifying or prohibiting the acquisition. In
certain limited and exceptional circumstances, the Foreign
Exchange Controls give the Minister of Finance the power to
require prior approval for any acquisition of shares in a
Japanese company by a non-resident of Japan.

In general, the acquisition of shares by non-
resident shareholders by way of stock splits, as well as the
acquisition of shares of a Japanese company listed on a
Japanese stock exchange by non-residents upon exercise of
warrants or conversion of convertible bonds, are not subject
to any of the foregoing notification or reporting
requirements. Under the Foreign Exchange Controls,
dividends paid on shares held by non-residents of Japan and
the proceeds of any sales of shares within Japan may, in
general, be converted into any foreign currency and remitted
abroad.

Regulation of the Japanese Equities Markets

The principal securities law in Japan is the
Securities and Exchange Law which provides overall
regulation for the issuance of securities in public
offerings and private placements and for secondary market

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<PAGE>

trading. Insider trading provisions are applicable to debt
and equity securities listed on a Japanese stock exchange
and to unlisted debt and equity securities issued by a
Japanese corporation that has securities listed on a
Japanese stock exchange or registered with the Japan
Securities Dealer's Association (the "JSDA"). In addition,
each of the eight stock exchanges in Japan has its own
constitution, regulations governing the sale and purchase of
securities and standing rules for exchange contracts for the
purchase and sale of securities on the exchange, as well as
detailed rules and regulations covering a variety of
matters, including rules and standards for listing and
delisting of securities.

The loss compensation incidents involving
preferential treatment of certain customers by certain
Japanese securities companies, which came to light in 1991,
provided the impetus for amendments to the Securities and
Exchange Law, which took effect in 1992, as well as two
reform bills passed by the Diet in 1992. The amended
Securities Exchange Law now prohibits securities companies
from the operation of discretionary accounts, loss
compensation or provision of artificial gains in securities
transactions, directly or indirectly, to their customers and
making offers or agreements with respect thereto. To ensure
that securities are traded at their fair value, the JSDA and
the TSE have promulgated certain rules, effective in 1992,
which, among other things, explicitly prohibit any
transaction undertaken with the intent to provide loss
compensation or illegal gains regardless of whether the
transaction otherwise technically complies with the rules.
The reform bills passed by the Diet, which took effect in
1992 and 1993, provide for the establishment of a new
Japanese securities regulator and for a variety of reforms
designed to revitalize the Japanese financial and capital
markets by permitting banks and securities companies to
compete in each other's field of business, subject to
various regulations and restrictions.

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00250157.BA1